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- New York Local Income Tax for Transit Ruled Unconstitutio...
New York Local Income Tax for Transit Ruled Unconstitutional
New York City residents and employers pay hefty taxes. In addition to various state taxes, city residents pay a local income tax and their employers pay a 0.34% tax on their payroll. This last tax is imposed on a 12-county area surrounding New York City to support the region's Metropolitan Transportation Authority (MTA), the operator of the subway system, buses, and several tunnels and bridges.
Yesterday, a New York state judge ruled that this tax is unconstitutional for failing to get a two-thirds legislative majority when it was enacted:
By limiting the tax to Nassau County, New York City, and the ring of suburban counties that lie north of the city, including Dutchess County, the legislature signaled that it was not "a substantial state concern" but instead a special law, Judge Bruce Cozzens, a state Supreme Court judge in Nassau County, said in his ruling.
The legislature was required to enact the law with a home-rule message or with a message of necessity, which requires two-thirds of the Senate and Assembly to approve the measure, Cozzens said. By failing to meet either condition, the legislature enacted the law unconstitutionally, he concluded.
Sure sounds like the tax needed two-thirds to pass, as a local issue.
The tax was expected to raise $1.26 billion this year, a significant part of the MTA's $12 billion annual operating budget. The MTA says it will appeal the decision, noting it has won four previous challenges to the payroll tax.
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The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.