Politics & Government

Update: State Court Rules MTA Payroll Tax is Unconstitutional

Transit agency says it will fight ruling.

The Metropolitan Transportation Authority says it is going to fight a Wednesday state court decision that ruled the enacted to bolster the agency's budget is unconstitutional.

However, the ruling by state Supreme Court Judge R. Bruce Cozzens Jr. in Nassau County quickly recieved cheers from government officials in the counties affected by the payroll tax, including Westchester, Rockland and Putnam.

“This is good news for Westchester County and its municipalities," said Westchester County Executive Robert P. Astorino. "The MTA payroll tax is essentially an unfunded mandate from Albany. In this case, we were allowed to challenge it. We did. And now we’ve won an important victory with the court’s decision that this unfair burden on taxpayers was unconstitutional.”

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The tax was also vehemently opposed by Rockland County Executive C. Scott Vanderhoef, who argued the tax hit Rockland especially hard. In addition to creating a new tax for employers, Vanderhoef argued the tax broadened the gap between what Rockland pays to the MTA and the transit services it gets back from the agency.

“The Payroll Tax is one of the insidious ‘hidden taxes’ that have made the public mistrust the state government,” Vanderhoef said. “It places an unfair, job-stifling burden on businesses that receive little if any benefit from the MTA. The Payroll Tax is little more than a shift of hard-earned money from suburban business owners and employees to New York City. It is another unfunded burden from the state on our taxpayers.”

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Vanderhoef contends the MTA should address its "out-of-control spending and inflated overtime costs," not impose rising fees and taxes on the region’s residents and businesses.

“The MTA is supposed to be a public service, not a public burden,” Vanderhoef said.

Cozzens found in his decision that the payroll tax was not properly enacted by the state Legislature in 2009. The tax was created to cover a massive budget deficit at the MTA.

The tax was opposed by county and local officials, who criticized it for adding a new layer of taxes at a time when local economies could least afford the additional burden.

Wednesday's ruling, however, did not come with an order to halt tax collections.

Assemblyman  (D-Rye), said the elimination of the MTA Payroll Tax would directly help Westchester taxpayers. 

"Under Gov. (Andrew) Cuomo’s leadership, we were able to eliminate the mobility tax for 25,000 small businesses in Westchester alone and now that the MTA has begun to stabilize its finances by controlling costs rather then balancing the books on the backs of suburban taxpayers, we can deliver real relief to Westchester residents," Latimer said. "I hope that with this new ruling we will be able to finally pass the legislation that I have introduced that fully repeal the MTA Payroll Tax.”

Latimer's opponent in the upcoming election for state Senate, , R-New Rochelle, also applauded the court decision. But he was quick to place part of the blame for the creation of the payroll tax on Latimer

"This is great news for Westchester small businesses and other entities that have been unfairly burdened by this unconstitutional tax," Cohen said. "This tax was passed by short-sighted Albany politicians, including my opponent George Latimer, who think new and higher taxes are the answer to every problem. This MTA payroll tax has cost Westchester businesses millions of dollars and an untold number of jobs. Mr. Latimer's tax has been ridden out of town on a rail."

New York State Senator Greg Ball (R, C — Patterson), said after the ruling, "Since this tax was created, I have been fighting for a full repeal, and this ruling will allow us to make our 80 percent repeal a full repeal and on an expedited time frame. I am so happy to hear that this job-killing tax was ruled unconstitutional, and now its time to demand a full repeal as well as a retroactive refund! I will be working with my colleagues in the legislature along with the Governor to expedite this process and finally repeal this horrific tax, the vampire of all taxes, for good."


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