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New York City MTA Income Tax Shift Proposed By Governor Paterson

1 min readBy: Joseph Bishop-Henchman

Last year, New York imposed a 0.34% payroll taxA payroll tax is a tax paid on the wages and salaries of employees to finance social insurance programs like Social Security, Medicare, and unemployment insurance. Payroll taxes are social insurance taxes that comprise 24.8 percent of combined federal, state, and local government revenue, the second largest source of that combined tax revenue. on workers in New York City and seven surrounding counties to help fund the local transit provider, the MTA. Officials estimated that the taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. would raise $1.54 billion.

Now in place, actual revenue collections will be $230 million short. Rather than just raise the tax, New York Governor David Paterson (D) has proposed shifting some of its burden to those working in the city:

The new proposal calls for raising the New York City level to 0.54 percent, and dropping the suburban tax to 0.17 percent. Under the proposed structure, 88 percent of tax revenues would come from New York City, according to numbers from the Paterson administration, up from 70 percent now.[…]

The proposal also offers a carrot to small business as well, exempting self-employed individuals with incomes under $100,000, up from $10,000.

New York City Mayor Michael Bloomberg (I) has come out against the change:

The idea that the State can spare the suburbs while sacking the City is terrible economics, grossly unfair, and contrary to every principle of good regional development. We in New York City saw the MTA’s problems coming and came up with a plan that would have created a steady stream of revenue for capital programs. Now the Governor proposes to shift an extra half billion dollar burden onto New York City taxpayers, who are the economic heart of our region.

More on New York here.