Eric Schillinger, Staff Writer, ESchillinger@albanylaw.edu
In his inaugural address this past Tuesday, President Obama challenged Americans to confront the many crises facing the nation.1 One such crisis is America’s continued reliance on foreign oil for energy. President Obama noted the need for the country to move away from this reliance, stating that “each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet.”2 President Obama’s vision for an energy efficient and independent America will hopefully inspire Americans to take responsibility for how they approach energy consumption by working to minimize fuel use in favor of “green” transportation.
Ironically, when former President George W. Bush signed the Emergency Economic Stabilization Act3 of 2008 (EESA) into law last fall he helped lay the ground work for a potential, federally funded bicycle commuting program that may help decrease America’s reliance on foreign oil, discourage urban flight and suburban sprawl, and increase the health and well being of Americans.
The EESA contains three separate divisions, each a discrete Act unto itself.4 Section 211 of Division B, a little publicized line item provision within the 451-page EESA, has little logical connection to the economic bailout necessitated by the sub-prime mortgage crisis.56 Division B of the Act began as a separate bill, but the House eventually tacked it onto the proposed bailout bill as the Energy Improvement and Extension Act of 2008 (EIEA).7 With just one small provision titled “Transportation fringe benefit to bicycle commuters,” Section 211 of the EIEA amends the Tax Code to exempt bicycle commuting costs paid to employees by employers.8 In part, Section 211 states:
The term ‘qualified bicycle commuting reimbursement’ means, with respect to any calendar year, any employer reimbursement during the 15-month period beginning with the first day of such calendar year for reasonable expenses incurred by the employee during such calendar year for the purchase of a bicycle and bicycle improvements, repair, and storage, if such bicycle is regularly used for travel between the employee’s residence and place of employment.9
Simply put, the bicycle provision of the Act provides a tax incentive for bicycle commuters. Employers may now offer, as a tax-free fringe benefit, reimbursement of costs associated with cycling to work. The provision requires the rider to show that he or she “regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment. . . . “10 If the rider fulfills these requirements, then he or she is eligible to exclude employer reimbursement for bicycle commuting costs up to $20 per month (for a maximum of $240 per year) from gross income.
Initially, the twenty dollar per month/two hundred and forty dollar annual deduction may seem laughable to the experienced cyclist.11 With performance bicycles12 costing many thousands of dollars, and the price of even a basic commuter bike13 easily surpasses the annual reimbursement cap, the possibility of receiving two-hundred and forty untaxed dollars as motivation to ride to work is, in itself, unlikely to sway an individual to convert from a car-centered commuter to a committed bicycle commuter.
To be sure, twenty dollars per month does not cover much more then a couple of flat tires,14 but the benefits extend far beyond the immediate cash return. If Section 211 can successfully spark people to give bicycle commuting a try by helping to initiate a commuter movement with a small cash incentive, it has a good chance of fostering a broad movement away from the car-based society we presently live in. The key to Section 211’s success is not the tax-break provided by the government – it is actually the intangible and semi-tangible benefits that will cause the bicycle to emerge as a logical method of transportation.
While receiving a small amount of money to defray the costs of riding a bike to work can only help, still other substantial benefits exist. Chief among them is health. 15 Comparisons of the average bicycle commuter to the average motor vehicle commuter has revealed that the bicycle commuter is typically more fit.16
The financial benefits of bicycle commuting extend beyond a qualified reimbursement program as well. Riding a bike saves fuel and maintenance costs on automobiles. Because the bike commuter exercises by going to and from work, the need for an individual’s trip to the gym decreases. The savings, however, do not stop here. The fiscal benefits of bicycle commuting extend to city infrastructure as well. Bicycles are light weight, low impact forms of transportation. The stress placed on roadways from a twenty-five-pound bicycle and one-hundred-seventy-pound rider are drastically lower then the impact of even a small automobile, let alone large SUVs or trucks. If more people ride bikes, the roads themselves will require less maintenance, allowing money budgeted for road reconstruction to be deferred to other areas or returned to taxpayers.
The economic benefits generated through bicycle commuting are clearly wide ranging. Taking into account the substantial environmental friendliness of the bicycle as a form of transportation,17 there is little doubt that federal policies encouraging the use of bicycles for transportation are one of the rare forms of legislation that have a universally positive impact on the country.
Despite the notable benefits of this provision, there is an interesting aspect of the “Transportation fringe benefit to bicycle commuters” section of the Emergency Economic Stabilization Act of 2008, namely, it seems to have little to do with the rest of the Act which contains it. Even a cursory examination of the title of Section 211, compared to the Act’s commonly understood name and purpose immediately displays significant incongruity. What, if anything, does bicycle transportation have to do with emergency stabilization of the economy? In fact, Section 211 qualifies in some sense as “pork.” Pork, of course, is the term for superfluous line item sections of bills added when the legislative sponsor knows the bill will pass regardless of the unrelated line items. Pork is typically a comparatively small section of a bill, and usually favors a legislator’s pet project.
Debates over pork issues have become commonplace in politics evidenced by the most recent election season, with the phrase having a near universal negative connotation. Section 211 is unique among “pork” because of its national focus. In comparison to the typical line item pork, Section 211 does not focus on a specific geographic place (typically the sponsoring representative’s district). Instead, Section 211 has a national scale – although one could argue that bike commuters in San Diego may be able to take greater advantage of the benefit in the winter than those in Minneapolis, the technical application of Section 211 is not limited to its sponsoring congressman’s district. Thus, the question arises, is this really pork, or is it something new?
Arguments suggesting that bicycle commuting will help revive the economy may not be ill-founded, but realistically, even if everyone in the country rode their bicycles to work tomorrow, our economy would likely still be in a recession. Thus, while Section 211 does not have the typical geographic handicap associated with pork, it certainly seems less relevant to the major elements of the bill it was passed in.
It seems in fact, that Section 211 of the Act has defined another form of the randomly inserted line item. Its small size, combined with a policy that clearly opposes the auto and oil industries, and their powerful lobbyists, forced its inclusion in a much larger bill in order to guarantee its safe passage. In fact, Section 211 is something new, a line item for the common good. It turns out, the bicycle commuter is not fueled by pork after all.
Thus, it seems that a surprising series of events, stemming from one legislator’s pet project and a former president’s need to ignore line items to bail out the banking industry and save the greater economy resulted in a useful early step in the Federal government encouraging a march, or perhaps a ride, away from its reliance on oil for transportation. President Obama’s vision for an energy independent America may in fact be only a few more subsidies and pedal strokes away from reality.
Steven Sharp & Daniel Wood, editors.
3 Emergency Economic Stabilization Act of 2008 (EESA), Pub. L. No. 110-343, 122 Stat. 3765 (2008), available at http://www.rules.house.gov/110/text/110_hr4221_text.pdf.
4 Division A is the actual Emergency Economic Stabilization Act, by which the entire law is most commonly known. Division B is the Energy Improvement and Extension Act of 2008. EIEA, Pub. L. No. 110-343, Div. B, 122 Stat. 3807 (2008). Division C is the Tax Extenders and Alternative Minimum Tax Relief Act of 2008, which also contains two additional Acts within its subtitles: the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act, and the Heartland and Hurricane Ike Disaster Relief Act.
5 See generally 2 Alb. Gov’t L. Rev. 1, (forthcoming).
6 Congress Passes Commuter Act, Bicycle Retailer and Industry News, Oct. 2, 2008, http://www.bicycleretailer.com/news/newsDetail/1878.html.
7 Energy and Tax Extenders Act of 2008, H.R. 6049, 110th Cong. (2008). H.R. 6049 later attached to the bailout bill as the “Energy Improvement and Extension Act of 2008.” Energy Improvement and Extension Act of 2008, Pub. L. No. 110-343, Div. B, 122 Stat. 3807 (2008 ) (amending the Internal Revenue Code of 1986).
8 EIEA, § 211.
11 See generally, Capital Bicycle Racing Blog, http://capitalbicycleracing.blogspot.com.
12 Felt Bicycles, AR Team Issue, http://www.feltracing.com/09/product.aspx?catid=1590,1714,1715&pid=8909 (last visited Oct. 28, 2008).
13Felt Bicycles, X:City, http://www.feltracing.com/09-catalog/urban-alternative/x-city/09-x-city-d.aspx (last visited Oct. 28, 2008).
14 Cycle Knowledge Corp, http://www.ckcycles.com/ -click on service tab at top of page (last visited Oct 28, 2008). Professional repair of one flat tire costs $13. Clearly the government’s $20 per month stipend does not stretch that far in terms of covering actual costs of cycling. Id.
15 Cycling and Health, http://www.cyclingandhealth.com (last visited Oct. 28, 2008).
17 League of American Bicyclists, Ride for the Environment, http://www.bikeleague.org/resources/why/environment.php. (last visited Oct. 28, 2008).