The zombie lawsuit to overturn the MTA payroll mobility tax has finally hit a dead end. New York’s Court of Appeals, the state’s top judicial body, has upheld the tax. The measure, a 34-cent tax on every $100 of payroll, has not been popular amongst Republican suburban legislators, but the MTA has long maintained, as they did last June, that “removal of the tax’s revenues would have had a catastrophic impact” on the region’s economy and transit system. Today’s dismissal, without comment from any judges, is a victory and should put an end to the legal wrangling over the tax.
The PMT grew out of the MTA’s last financial crisis when state legislators approved a mix of fees and taxes to bolster the agency’s bottom line. It was deeply unpopular outside of the city, and after a variety of unsuccessful challenges, plaintiffs found a sympathetic ear on Long Island. While one judge found the tax unconstitutional on shaky legal grounds, the Appellate Division revsered course. For the tax to fall now, politicians will have to step in with better solutions and replacement funds.
In responses to today’s ruling, those politicians are well aware of what awaits. Lee Zeldin, who has made a career out of opposition to the payroll tax, spoke against the court’s decision, and Nassau County Executive Ed Mangano declared a Pyrrhic victory as the structure of the tax has changed over the years. Meanwhile, other state reps from north of the city have recognized that the tax is, absent a significant amount of horse-trading, here to stay.
15 comments
Those politicians should worry about their high property taxes – not this. The MTA allows the high earners who live in their districts to get into and out of the city efficiently. They don’t seem to understand why their young ppl are increasingly moving away.
Nothing says “open for business” quite like a $1.2 billion payroll tax. Kudos New York!
I realize I’m falling for your obvious troll, but is there an example of a business leaving New York because of a payroll tax that is, at most, 0.34% and enables NY and its environs to have a functional transit system? It is of course easier to speak in platitudes and ideologies, but I’m genuinely curious.
I doubt it. If there is one – they would have already done so.
You think having no working transportation system is better? That amounts to around 0.1% of the gross state product.
Nothing quite says ‘open for business’ like $300 monthly metrocards and $800 commuter rail passes.
Not a big fan of payroll taxes. And if the amount is so small then why not raise fares to cover it rather than tax wages. You tax what you want to disincentivize, which in my book does not include “paying people”.
Because if you raise fares to cover it then you incentivize commuters to drive rather than use transit.
The payroll tax raises approx 10% of total MTA income (approx $12bn) so hardly a small amount. It is only small in terms of the rate it is applied at compared to other payroll taxes.
If you were to require that to be covered by fares that would need a 20% increase in fares – $1.2 is 20% of the current approx $6bn farebox income (approx 50% of all income).
Somehow I can’t see anyone wanting that to happen.
I can buy it’s not optimal, but it’s not like employers don’t benefit by having their employees be able to get to work.
1/4 of your metrocard goes to retires. The other 1/4 goes towards interest on debt the MTA never plans to payback principal on.
Property taxes in the suburban counties are much more of a “problem” than a tax that supports the transit system that allows those counties high earners to live in the suburbs and work in Manhattan.
For reference, in a typical county (outside NYC), half of the property taxes are for schools, and 1/4 of the property taxes are for Medicaid, because this is the only state in the country which uses counties to pay for Medicaid.
The remaining 1/4 of the property tax is squeezed horribly trying to cover everything else (roads, fire departments, police, water, sewer).
The state government needs to fund Medicaid out of income tax and stop making the counties pay for it.
(And of course the state government needs to fund the schools out of income tax too. It’s been ruled repeatedly that the property tax system of funding is inequitable and unconstitutional, but it never gets fixed.)
Someone ought to ask the Zeldin’s of the world why they stuck those coming after with such a huge overload of debt and underfunded pensions.
Nassau County and Rockland County are dead broke, despite being relatively affluent places. The school districts are jobs programs. All Generation Greed’s doing.