Gasoline consumption, air pollution and traffic congestion can all be reduced in a surprisingly simple and quick way. Oddly, it can be done either by offering free parking to more downtown workers or by charging all drivers the full cost of parking at work. Our first proposal is to cut driving by offering more rather than less free pakring. Take the case of an employer who pays $50 per month for off-street parking spaces that are in turn offered to employees for only $25 per month. This common sort of arrangement has the advantage of giving a tax-exempt fringe benefit of $25 per month to employees who drive to work. Suppose that this employer decides to allow car-poolers to park free. Those continuing to drive alone would pay the same $25 parking price as before. But two drivers who each pay $25 per month for parking could now park free by car pooling - and save a bit more by splitting the driving costs. The employer's cost would not rise, because he would simply be paying one subsidy of $50 per month for one parking space instead of two subsides of $25 for two parking spaces. The Metropolitan Washington Council of Governments has estimated that 40 percent of all downtown Washington employees park free at work, in an area where the market price of parking is close to $50 per month. Thus, many employers who now offer free parking to employees could also offer free parking and a cash bonus of $50 per month to an two drivers who form a new car pool - without increasing the total parking subsidy. Each new car-pooler would receive free parking and an extra $25 per month in cash as the reward for sharing a ride. Likewise, each member of a newly formed three-person car pool could be given free parking and over $33 per month at no increase in the employer's total outlay. And those driving alone would still park free. A few employers alredy give some preference that this can be done without costing anything. Reduced car-pool parking prices would complement other strategies (such as exclusive freeway lanes for buses and car pools, computer matching of car pools, ramp metering and mass transit) to reduce the social costs of excessive automobile use. The initial problem with free parking is that it offers the same parking subsidy to every car rather than to every employee. Instead of offering all employees free parking, it would be fairer for firms to grant all workers a travel allowance that could be used to pay for parking, bus fare or any other travel cost. As well as treating all employees equally, a cash travel allowance in lieu of free parking and driving with anyone who has similar travel patterns, rather than obligate the commuter to travel with a fellow employee from the same firm to receive a car-pool discount. A cash allowance would also remove the free-parking bias against commuting by bus. Our second proposal to cut single-occupant auto trips is to amend the Internal Revenue Code to permit employers to pay employees a tax-exempt travel allowance in lieu of $ free or subsidized parking. To emphasize the necessary choice between free parking or a cash travel allowance, employers seeking permission from the IRS to classify part of their employees' wages as a tax-exempt cash travel allowance would be required in return to certify to the IRS that they provide no employee parking subsidy of any kind. If this tax change were made, employers could offer either a parking subsidy or a tax-exempt travel allowance to all employees, but not both. If an employer unilaterally or in collective bargaining "cashes out" the value of free parking to give employees a tax-free travel allowance, employees could not later ask for free parking without giving up the tax-exempt allowance, because employers would be prohibited by the Internal Revenue Code from giving both. Employers who now offer no free parking could simply classify part of each employees' wages as tax-exempt without raising wages at all. A tax-exempt travel allowance would eliminate the federal income tax advantage of employer-paid parking. If this tax reform were adopted, each firm, in consultation with its employees, could voluntarily choose between the alternative travel fringe-benefit options. Employers would not need to compete with one another by offering free parking, and many employees would, for the first time, begin to face the full market price of parking in their work trip travel choices. A tax-exempt travel allowance would also be much more fairly distributed than free parking is now because it would benefit the entire working population, not just those who drive to work. Those who already park free would be exchanging a tax-free parking fringe benefit for a tax-free travel allowance, and would benefit only if the allowance is greater than the value of their free parking space. Thus, the new tax exemption would give the greatest advantage to those who do not park free, and this group consists disproportionately of lower wage and minority employees. This travel allowance proposal could be tested by a demonstration project as part of President Carter's recently announced plan to charge all federal employees for parking. If the "windfall" increase in federal parking revenues were returned to all federal employees in the form of a tax-exempt travel allowance, the artificial incentive to drive would be eliminated and all employees would be treated equally, regardless of how they get to work. Research recently done for the Department of Transportation suggests that granting employees a tax-free travel allowance in lieu of free parking would lead at least 20 percent of commuters who now drive alone and park free to switch to car pools, mast transit or other means of travel. Because approximately 40 percent of all auto commuters to downtown Washington now park free, a travel allowance could thus divert from their cars at least 8 percent of all who now drive alone to a downtown work-place.