Feb
09

As a matter of tax…

By

Talk about taxation paternalism. In county after county in the surrounding New York Metropolitan Area, officials are dictating the wishes of their constituents as the New York State legislature gears up to determine the future of the MTA. At issue is the proposed payroll tax, and it’s prospects are looking bleak.

To recap: Part of the Ravitch Recommendations included a 0.33 percent payroll tax on businesses within the 12 counties served by the MTA. It is a way of ensuring that the people who benefit most from the New York Metropolitan Area’s extensive transit network end up supporting it. While taxes aren’t popular during economic downturns, having a sub-par and under-funded transit system would be far worse. Too bad business leaders and politicians can’t grasp that important point.

Over the weekend, two stories in papers serving Metro-North counties opined against the tax increase. The Times Herald-Record, serving the Hudson Valley, reported on a unified political opposition in Orange County to the payroll tax while the Poughkeepsie Journal found the same in Dutchess County. Everyone, it seems, wants their mass transit; no one wants to pay.

These stories raise a few issues. First, take the Times Herald-Record feature. In it, John Murphy, the head of an Orange County non-profit, worries that the revenue generated by the payroll tax would go straight into the pockets of, say, the LIRR retirees claiming false disabilities. At no point does the paper point out in a rebuttal that the revenues would go to the MTA’s operating budget. At no point does the paper note that the retiree benefits are paid by a different agency all together. In an effort to print the so-called unbiased truth, newspapers should make sure they’re not printing patently false information and calling it fact.

But that’s the lesser of the two problems. The bigger issue rests on the heads of the politicians because they don’t seem to be expressing the views of their constituents. Rather, they are telling their constituents what to think and believe about this payroll tax. Last week, a Long Island-based reader of Second Ave. Sagas forwarded me an e-mail from State Senator Dean Skelos who is urging his constituents to sign an anti-payroll tax petition. It reads:

Recently, the MTA proposed a payroll tax on all local employers. This proposal, which I am opposed to, would harm small businesses and lead to further job losses among Long Island’s workforce.

Under this proposal, all Long Island employers, including not-for-profits and those who are self-employed would be required to pay one-third of one percent of their wages to support the MTA, even if their employees do not use mass transit.

With Long Island’s economy losing over 21,000 jobs since December 2007 and having an unemployment rate of 5.8%, the last thing we need is to enact a tax increase that could lead to further layoffs.

Just as most local families are doing, the MTA should find ways to reduce its own expenses before considering a tax increase. This past November the State Comptroller issued a report stating that the MTA employs 70,000 people, including those in nonessential and redundant position. Among these employees are a total of 444 public relations professionals. The recent scandal in which LIRR employees received improper retirement-disability payments is further evidence that the MTA needs to increase accountability within its own budget.

As this reader noted, Skelos is simply dictating his position to his constituents and forcing them to support it. He isn’t trying to determine if his constituents support mass transit. He isn’t trying to determine even if his constituents would rather see their taxes go to mass transit over, say, road maintenance. It’s the same to the north of the city as it is to the west.

At some point, the bill will come due on transit. We can pay now with a payroll tax before the system collapses or we can watch these politicians scramble for money when they leave the MTA high and dry. In 45 days, the MTA will have to make a choice. Who will save them from the wrong side of that decision?



Categories : MTA Economics

2 Responses to “As a matter of tax…”

  1. >>>Part of the Ravitch Recommendations included a 0.33 percent payroll tax on businesses within the 12 counties served by the MTA. It is a way of ensuring that the people who benefit most from the New York Metropolitan Area’s extensive transit network end up supporting it.

    Wouldn’t a much more effective means of achieving that same goal be to raise fares so they actually cover the cost of operations? Come to think of it, that would ( be a 100% effective way (ignoring fare-dodgers) of ensuring that the people who use MTA pay for it. How revolutionary!

    • epc says:

      Sure, as long as anyone driving on the streets pays the real cost of upkeep for streets and highways. You think your gasoline tax even remotely covers the cost of that expressway you’re driving on?

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