A Win for Commuters
We are thrilled that the MBTA is moving forward to expand its corporate pass program (CPP) as recommended by Pioneer Institute in January. Pioneer believes the program has great potential to increase both ridership and revenue.
The MBTA’s corporate pass program allows employees to purchase T passes through their employers with pre-tax dollars, which in turn reduces employee taxable income and employers’ payroll taxes. The program allows companies to subsidize passes for employees as a pre-tax benefit. The goal is to incentivize more people to use public transportation and improve the environment. Everybody wins.
Under commuter benefit programs, employers can provide their employees with a tax-free transit subsidy and/or exclude from taxable wages a total of up to $260 monthly. These benefits can cut employee commuting costs by as much as 40 percent. At the same time, employers save the 7.65 percent payroll tax on money that is no longer considered wages.
In its study, Pioneer found that only about 45 percent of the more than 350,000 employees who work within half a mile of an MBTA subway stop currently have access to the CPP. Among employers who do offer it, only about a third of employees participate. If more companies took advantage of the corporate pass program and that resulted in a 20 percent increase in the number of employees enrolled in the program, the MBTA would generate up to $70 million in additional revenue annually.
“Perq,” the new name of the corporate pass program, has been widely advertised by the MBTA in an effort to draw commuters and employers to its website to learn more about how it can save them money. Pioneer urges all those who do not participate in the program to check out the site.
Pioneer Institute is an independent, non-partisan, privately funded research organization that seeks to improve the quality of life through civic discourse and intellectually rigorous, data-driven public policy solutions based on free market principles, individual liberty and responsibility, and the ideal of effective, limited and accountable government.