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MTA Payroll Tax Ruled Unconstitutional

The tax imposed in 2009 was never passed legally, according to a State Supreme Court judge.

In a move that will likely come as a relief to many local small business owners — and school districts and municipalities, among others — a judge ruled New York State's MTA Payroll Tax unconstitutional on Wednesday.

According to Reuters, a State Supreme Court judge in Nassau County said in his ruling that because the law applies to only 12 counties in the state — and neither home rule messages nor two-thirds votes in the State Legislature were obtained — the legislation was passed illegally.

The MTA reportedly plans on appealing the ruling.

The ruling will reportedly put the MTA out about $1.5 billion per year, while that cash will remain in the pockets of businesses, municipalities, and taxing districts, many of which called the tax unnecessary, especially

"I'll bet if I polled my customers I'd be lucky to find one who gets out here using the train," Mike Acebo, the general manager at in Greenport, said at the end of 2011. "I never had anybody explain how that tax helped my business in any way, shape or form."

When adopted in 2009, the tax imposed a 34-cent tax for every $100 of payroll.

After considerable outrage throughout the first couple of years of the tax, the MTA rolled it back at the end of 2011, eliminating it entirely for businesses with an annual payroll under $1.25 million. The , though the measure never got the required support from the Assembly.

According to the office of Suffolk County Executive Steve Bellone, the ruling could save taxpayers $3.5 million per year.

Said Bellone in a statement: “This initial ruling is a big victory for Suffolk County taxpayers, many of whom get little to no service from the MTA. Since 2009, Suffolk County has paid an estimated $12.5 million as a result of the MTA payroll tax and local businesses have paid tens of millions more."

Click here to read the Reuters story.

John Pine August 24, 2012 at 04:58 AM
A Long Island Transportation Authority should be formed to oversee the operations of LIRR and the bus systems. The LIRR would be contracted to a company like Veolia which could operate the service for much less. Here in Nassau it was a shaky beginning but NICE Bus is actually working well, operating a good level of service at a much lower cost. I was a major skeptic but it is going much better than I thought. The LIRR is the most unreliable part of my travels on Long Island public transportation, where trains are late 70-80% of the time, are dirtier than any bus on LI, but keep costing more. This nonsense has to stop. Its going to take teamwork between Nassau and Suffolk but I believe we can take control of the LIRR from the city and provide better service at a lower cost.
Vito August 24, 2012 at 11:04 AM
What about the portion of this tax that only applied to the self employed?
GLENN August 25, 2012 at 11:38 PM
Verizon just added it last month.
GLENN August 25, 2012 at 11:42 PM
Stop letting 90% of the employees go out on 3/4 disability and then go on SS disability, it's a scam this place is so mismanaged. I can't believe they got away with it for this long, the answer is not stealing from us, it is better management. What if the airline, electric companies, water dept. all decided they needed a little extra..then what?
Dr. Dan August 26, 2012 at 05:52 PM
So maybe a yacht dealer in Greenport may not see the benefit of rail service but I'll bet that many of his customers make their living on the west end of Long Island and NYC where the economic benefit of the LIRR is larger. Rail freight operations have been a part of LIRR operations since the beginning and is expanding. New York & Atlantic Railway 20,000 carloads per year. How about the Brookhaven Rail Terminal in Yaphank. This is an investment of $40 million. I'm pretty sure someone see's an economic benefit from local rail service.

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