A controversial payroll tax on businesses in counties served by the Metropolitan Transportation Authority has been eliminated in many cases and reduced for others as part of a new tax plan developed by the governor and legislators last week. Photo by AP.
December 12, 2011Gov. Andrew Cuomo was in West Hempstead, Nassau County Monday morning to sign into law the measure that will reduce the MTA payroll tax as part of his New York Works Agenda unveiled last week.
The previous tax was 34 cents per $100 of payroll for businesses and also covers certain schools and self-employed individuals located in the 12 counties that are serviced by the Metropolitan Transportation Authority.
Businesses with a payroll under $1.25 million will no longer pay the tax that helps support the MTA.
Also under the new plan, parochial and private schools would join public schools in being exempt from the tax, and small businesses with a payroll under $1.5 million would see their rate fall from 0.34 percent to 0.11 percent. Those businesses with payrolls under $1.75 million would have to pay a 0.23 percent rate.
"Small businesses are New York's growth engine and this tax reduction will help create jobs and get our state's economy back on track without jeopardizing funding of the MTA," said Cuomo. "I thank the leadership as well as the members of the Legislature for their dedication in seeing the MTA tax reduced and working to get our economy moving again.
"I want to thank Governor Cuomo and my legislative colleagues for their partnership to help begin repealing the job-killing MTA Payroll Tax," said Sen. Lee Zeldin, R-Shirley. "The MTA Payroll Tax has been damaging our economy and restricting the growth of quality jobs in New York. Repealing this tax for all small businesses and schools, and reducing the rate for others, spurs real economic development and helps put New York State on the path towards prosperity."
"The MTA payroll tax has been an enormous burden on businesses and today we are lifting that burden. More than 290,000 small businesses will now have a greater opportunity to invest in their businesses and invest in creating new jobs," said Senate Majority Leader Dean Skelos, R-Rockville Centre. "I want to thank the members of the Senate Republican Conference, especially Senator Lee Zeldin, for keeping up the pressure to repeal this job-killing tax; and I thank Governor Cuomo for his leadership and for signing this measure into law."
"It's a matter of fairness. Small businesses and parochial schools in the suburbs should not have to pay an MTA surcharge," said Westchester County Assemblyman George Latimer, D-Rye. "I am glad Governor Cuomo has recognized this injustice and corrected it. We need a healthy regional transit system, but the costs must be levied in proportion to those who directly benefit from the system."
The tax had been imposed on businesses in the five boroughs of New York City as well as Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk and Westchester counties.
"Today is the start of the much anticipated repeal of the MTA Payroll Tax. This is a huge victory for my constituents, the taxpayers of the Third Senate District," said Sen. Lee Zeldin, R-Shirley, who drafted legislation to completely repeal the tax that was passed by the Senate in June.
"As a result of the agreement between the Legislature and the governor, 78.2 percent of all employers (over 700,000 taxpayers) will see a total elimination of the tax," Zeldin said. "Many others will receive a reduction. I very much appreciate Governor Cuomo's good faith efforts working with Senate Republicans to remove this unfair burden on Long Island businesses, nonprofits and others. The MTA payroll tax should have never been passed in the first place, and I remain committed to our long term efforts on this issue. It's important that the MTA continue to pursue increased efficiencies in order to function with less reliance on taxpayer subsidies."
In total, the MTA payroll tax will be reduced or eliminated entirely for 294,900 taxpayers. Another 415,000 taxpayers will also see the tax eliminated through the raising of the self-employment income tax exemption. According to the governor's office, $250 million in lost revenue for the MTA will be reimbursed by the state.
"After years of leading the charge to repeal the MTA payroll tax, I am thrilled with the governor's plan," said Sen. Greg Ball, R-Patterson, who also lauded other parts of the plan such as a reduction on taxes for the middle class. "This tax cut for the middle class is exactly the shot in the arm working families need and is a great jobs-focused package that begins to adjust our unfair tax code, while eliminating the job-killing MTA payroll tax for the vast majority of payers."
"Today's legislation is a prime example of government thinking outside the box to address a fiscal crisis without breaking the back of the taxpayer," said Assemblywoman Nicole Malliotakis, R-Staten Island. "From investing in job-creating projects like infrastructure, to lowering income taxes and providing critical relief from the MTA Payroll Tax, state government has responded to what residents of New York have needed for far too long."
The tax was originally imposed to close the MTA's budget gap, which was pegged at $1.8 billion in 2009. Anger came immediately from lawmakers whose constituents were enraged at being forced to pay a tax to fund a service that in some cases is limited in their areas, such as in the Hudson Valley and Long Island.
"It takes a step in the direction of what my constituents want to see," said Latimer. "It's a step in the right direction of what I consider to be fairness."
"The reduction and, in some cases, elimination of the payroll tax is a step in the right direction," said Assemblyman Kevin Cahill, D-Kingston. "I have been fighting against this unfair tax since its inception, and this brings us closer to doing away with it entirely.
"While the MTA is important to our state and plays a significant role in our economy, the payroll tax placed an undue burden on underserved Hudson Valley communities, making them responsible for a system from which they receive no benefits. This injustice particularly impacted northern Dutchess County, and Rhinebeck specifically, where residents have no access to MTA mass transit services and minimal representation on the MTA Board."
"This legislation is good for Long Island's working class families, good for our schools and good for our businesses and job creators, providing the relief they so desperately needed," said Assemblyman Dean Murray, R-East Patchogue. "Working together in a bipartisan fashion, we've created a fair tax plan that will help create jobs and stimulate economic growth. By achieving a fair compromise, we've avoided having the political gridlock plaguing Washington from spreading to Albany."
Latimer also praised the aspect of the new agreement that relieves parochial and private schools of having to pay the tax. Two educational leaders who are involved with private schools were present in Albany for voting on the New York Works Agenda, and both expressed satisfaction at the agreement.
"We're very grateful to Governor Cuomo, [Senate Majority Leader Dean] Skelos, and [Assembly Speaker Sheldon] Silver for having reached an agreement on this issue that has been a burden to [private] schools," said James Cultrara, the director of education for the New York State Catholic Conference. "Their agreement has relieved $8 million in fiscal stress being borne by tuition-paying parents."
Cultrara noted that public schools have been reimbursed for whatever share of the tax that they've had to pay since 2009, and that "we have been fighting to be included in that reimbursement system ever since."
"We are on the same page as the Catholic Conference," said Sephardic Community Federation Executive Director Shai Franklin. "All schools have very tight budgets. We don't have any surpluses; if we did, we would be able to send more kids to our Jewish day schools."
In order to afford the payroll tax, Cultrara says that parochial schools' "only option was to transfer it into a tuition increase for parents."
Franklin said that "putting this [exemption] in is a relief to non-public schools. It's going to help a lot of families."