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Mike BarryEye on the Island

By Mike Barry
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Payroll Tax Dilemma

The partial repeal of the Metropolitan Transportation Authority’s (MTA) payroll tax, incorporated into a bill which won near-unanimous state Legislative support in Albany last week, is at first glance welcome news.

The MTA payroll tax extracts 34 cents out of $100 earned in New York’s 12 downstate counties and re-routes those monies to the MTA.

“This plan repeals the devastating MTA payroll tax for about 78 percent, or more than 704,000, of the business entities that currently pay it. This includes eliminating the tax for 290,000 employers with payrolls of less than $1.25 million; 415,000 self-employed taxpayers; and all public and non-public schools,” stated state Senator Jack Martins (R-Mineola), who voted in favor of the measure. The new law goes into effect on April 1, 2012.

Here’s the problem. There appears to be no definitive plan to compensate the MTA for the estimated $250 million in lost MTA payroll tax revenue beyond a sentence in a gubernatorial news release saying the state would fill the gap. Readers of this space already know my favored remedy for boosting the MTA’s coffers is to place tolls on the four toll-free East River bridge crossings after transferring their ownership to the MTA from the city. The recommendation, which would generate hundreds of millions of dollars annually while discouraging non-essential urban driving, has been ignored by state lawmakers ever since the Ravitch Commission proposed it a few years ago.

The MTA’s payroll mobility tax, as it is formally known, was enacted in 2009 and generated $1.35 billion for the MTA in 2010, according to the MTA’s website. That dollar amount constituted about eight percent of the MTA’s total revenues last year. Indeed, the MTA estimated last month that by year-end 2011, the MTA payroll tax will raise $1.41 billion for their operations this year.

The 2009 MTA payroll mobility tax legislation, created and enacted when the Democrats controlled both the Assembly and the Senate, also included the imposition of these new fees and taxes to support the MTA’s finances: 1) a supplemental fee of $1 for each six-month period of validity of a learner’s permit or license issued to a person residing in the MCTD (the metropolitan commuter transportation district); 2) a supplemental fee of $25 per year on the registration and registration renewals of those who reside within the MCTD; 3) a tax of 50 cents per ride for taxicab trips originating in New York City and terminating within the MCTD; and 4) a supplemental tax of five percent on rental car bills within the MCTD. The MCTD includes New York City, Long Island, and five upstate counties: Dutchess, Rockland, Orange, Putnam, and Westchester. No one ever said Albany wasn’t creative when it came to shaking down the populace.

Governor Cuomo incorporated the partial MTA payroll tax repeal provision into a larger piece of legislation that overhauled the state’s income tax rate structure, among other things. That bill was rightfully criticized for having been conceived behind closed doors. The question I’m asking—where is the MTA going to find the estimated $250 million it is about to lose?—should have been answered specifically before the measure came to a vote.

 

Mike Barry, a corporate communications consultant, has worked in government and journalism. Email: MFBARRY@optonline.net