San Francisco treat for commuters

Here's a question to ponder: Who is smarter -- legislators in San Francisco or Los Angeles?

Read on . . . and perhaps you'll find an answer.

Late last month, San Francisco supervisors passed a law that requires employers to make mass transit part of an employee's benefits package. It is called the "commuter benefits ordinance," and it says employers with 20 or more employees must do one of three things:

1. Allow employees to pay for mass transit on a pretax basis.

2. Provide employees with transportation to and from work.

3. Pay for employees' transportation to and from work.

You're probably looking at this and saying that Nos. 2 and 3 are pretty unappetizing if you're an employer. And you would be right. No. 2 and No. 3 are costly unless you're a firm like Google, which does provide transportation. But there's a reason that No. 2 and No. 3 are dogs: The idea is to make choice No. 1 more attractive.

The Internal Revenue Code already allows employees to deduct the cost of mass transit on a pretax basis. The problem is that not many employers provide this benefit.

Here's how it works:

Let's say you buy a $62 monthly pass from Metro in Los Angeles County. If you deduct the cost of the pass on a pretax basis, that's $744 of annual income you don't have to pay taxes on each year.

To put it another way, if you report $50,000 in annual taxable income to the feds, your tax bill would be lowered by $187 a year.

That's the equivalent of a $15.59 discount each month on your Metro pass, bringing its cost from $62 to $46.41. Imagine the savings if you ride Metrolink to work every day between L.A. and Anaheim. A monthly pass costs $198.75, or $2,385 annually. In the above scenario, that's a tax savings of $550 over the course of a year -- dropping the cost of the monthly pass from about $200 to about $150.

Not bad.

Los Angeles City Councilwoman Wendy Greuel met last week with San Francisco Supervisor Ross Mirkarimi, who introduced the law. Will Greuel, who is the chairwoman of the council's Transportation Committee, introduce similar legislation here?

"We are working on something; once we do have something, you'll be the first to know," said Patty Park, a Greuel spokesperson.

This is a law that would seemingly work in any city, although I'm curious to see if business would fight it here. To emphasize the point again, it doesn't take money out of the pockets of business, although it certainly requires some paperwork.