The MTA’s controversial payroll tax went back to court this week as an Appellate Division court in Brooklyn heard oral arguments from attorneys on both sides of the issue. The tax, which delivers $1.8 billion in badly needed revenue to the MTA’s coffers, was overturned by a Nassau County judge last summer in a deeply flawed ruling. The state has continued to collect the tax as the appeal has wound its way through the state court system, and now we’re awaiting a ruling once again on its constitutionality.
Judy Rife of the Times Herald-Record filed a brief report from the court earlier this week. Although the initial ruling focused on home rule measures, lawyers wisely have opted not to pursue this line of reasoning as state precedence does not support the decision. Rather, as Rife writes, “Steven Cohn and Justin Adin, lawyers for the municipalities, now argue that the state is required to impose a tax throughout New York when it benefits an agency of statewide concern such as the MTA.”
This argument is a bold but dangerous one for these lawyers to make. Attorneys for the state and MTA have said that the state “has the authority to enact the tax and to levy it selectively,” but if the court rules differently, the entire MTA funding scheme could collapse. Already, various taxes imposed only in New York City and the surrounding counties bolster the MTA’s bottom line, and denying the state the authority to levy these taxes could send the transit agency’s fragile budget into a tailspin. The odds of such a ruling though are remote, but I’ll feel better about it once the Appellate Division issues its ruling. The payroll tax is far from perfect, but without action from Albany, the alternatives are dire.
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“Steven Cohn and Justin Adin, lawyers for the municipalities, now argue that the state is required to impose a tax throughout New York when it benefits an agency of statewide concern such as the MTA.”
They probably want upstate New York to pay their LIPA bills, too.