Home MTA Economics With MTA taxes levied, complaints mount

With MTA taxes levied, complaints mount

by Benjamin Kabak

Today is Collection Day for the MTA. As the agency continues along without drastic fare hikes and service cuts after last year’s Doomsday budget scare, they do so at the expense of all of us. Taxi fares rose by 50 cents yesterday, and car registration and driver licensing fees increased a few months ago. Today, though, is the first day of collection for the payroll tax, and no one is happy about it.

To recap: After nearly six months of warnings, hearings and general politicking about the MTA’s $1.9 billion budget gap, the New York State legislature averred a 33 percent fare hike and some very steep service cuts by enacting a piece-meal bailout package. Although congestion pricing and East River bridge tolls were a few of the more equitable options on the table, the state tried to spread the pain around. by levying a 0.33 percent payroll tax, an MTA taxi surcharge, an auto-rental tax increase and, as I mentioned above, higher registration and licensing fees.

With those taxes and fees now a reality, Michael Grynbaum explores how few find them acceptable in practice. In theory, of course, bridge toll opponents claimed those tolls would harm the economy, but in reality, these taxes are far worse. Reports Grynbaum:

But the payroll tax has prompted the most animosity so far, most of it coming from suburban business leaders in the 12-county region who argued that their tax burden greatly outweighed the benefits they receive from the transportation authority. The tax also has drawn strong objections from private and religious schools whose officials say they are being forced to cut services and possibly raise tuition while public schools in the area get a pass.

Under terms hammered out in May by state lawmakers, public school districts will be reimbursed for the tax, which costs businesses 34 cents for every $100 of wages. The unusual provision was intended by the bill’s backers to win over reluctant legislators, but other nonprofit groups were not exempted.

“It’s really an issue, I think, of basic fairness,” said James Cultrara, education director for the New York State Catholic Conference, an advocacy group that represents the state’s Catholic schools. “Certainly we can understand why the Legislature would want to reimburse the public schools. Why not then also reimburse the Catholic and other private schools?”

Grynbaum notes that Albany may eventually allow reimbursement to independent schools as well, but for now, there is no relief in sight. With donations down to due to a slumping economy, schools are among the hardest hit. One school in Harlem will shutter its after-school basketball program to make up for the payroll tax short fall while others will try to hit up potential donors for more money.

Still, some government officials noted that the alternative — a drastically reduced MTA — is worse. “The MTA is part of the economic lifeblood of the region itself,” Tom Bergen from the state’s Department of Taxation and Finance, said. “Businesses benefit substantially from having the MTA serving as a transportation infrastructure.”

Some advocates called for a better solution from Albany and an end to unfair taxes. The answer is simple: Toll the East River bridges or institute a form of congestion pricing. The technology exists so that bridge tolls do not slow down traffic. Meanwhile, since numerous transit options exist in between the geographical landmass of Long Island and Manhattan, the tolls would simply be the cost of driving as opposed to the cost I pay to ride the subway.

Small businesses will object, but those owners will benefit from decreased traffic due to less congestion. Meanwhile, they are also better positioned to pass the incrementally higher costs on to consumers. Bridge tolls would, in fact, increase revenues for those people who rely on the roads and cross the river numerous times a day.

For now, everyone will suffer with this payroll tax. The MTA alternative was worse, but tolling the bridges would be a way out of this mess for all involved. Who has the political will to make it a reality?

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AK November 2, 2009 - 10:16 am

I know we assaulted taxi-lovers last week, but I cannot help but laugh at the following quote from the cited article:

“On shorter fares, riders will opt to walk or take the subway,” said Bhairavi Desai, executive director of the New York Taxi Workers Alliance, a drivers’ group that held a rally outside Pennsylvania Station on Sunday.

People walking? Taking public transit?? Surely this must be stopped!

Benjamin Kabak November 2, 2009 - 10:23 am

I’ve taken Desai to task in the past. While I appreciate that her job is to defend the TWA, her statements often make her sound like a fool. Heaven forbid people don’t take a cab when they can just as easily walk or — gasp! — take the subway. Heaven forbid there are fewer cars on the road, cleaner air for us and a more livable city for all.

AK November 2, 2009 - 10:44 am

Exactly. She should represent the interests of her employees, which may not be aligned with the continued use of road/environment clogging transport, but rather with directing some of the funds raised from the taxi tax to go toward (in addition to public transit) job training for drivers. By analogy, tobacco-pickers are “hurt” by limits on smoking, but they are hurt more in the long run (as is the rest of society) by the perpetuation of detrimental behaviors (like smoking and driving in NYC).

SEAN November 2, 2009 - 10:40 am

Suck it up. If you don’t like what’s going on with the payroll tax, you should have been fighting for congestion pricing or at least bridge tolls. Not to repeat myself but, suck it up.

Marc Shepherd November 2, 2009 - 10:51 am

Exactly: The payroll tax was the 3rd-best option, after the first two (CP and bridge tolls) failed to pass.

Alon Levy November 2, 2009 - 5:56 pm

CP and bridge tolls are the same policy. The difference is that one was advocated by Bloomberg and the other was not.

Marc Shepherd November 2, 2009 - 6:36 pm

They are similar strategies, but they wouldn’t have affected the same people in necessarily the same ways.

Chris November 2, 2009 - 3:49 pm

Sean, when was Ben not fighting for those things? The reason we ended up with the payroll tax was not because proponents of tolling didn’t fight enough, but rather exactly for the reason that Ben cites: a lack of political will.

On Election Day, musings about transit’s role :: Second Ave. Sagas | A New York City Subway Blog November 3, 2009 - 12:02 am

[…] City. The state legislature begrudgingly approved a bailout for the MTA that is now proving to be rather unpopular with, well, everyone. The city eschewed an opportunity for $354 million from the federal government […]


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