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From the Desk of Senator Kemp Hannon: October 23, 2009

Call for Repeal of MTA Payroll Tax

Senator Kemp Hannon and members of the Long Island Senate Delegation joined business owners and directors of nonprofit organizations at United Cerebral Palsy Association of Nassau County Oct. 15 to call for the repeal of the Metropolitan Transportation Authority (MTA) payroll tax. Joining with Senator Hannon were Senators Charles J. Fuschillo, Jr., (8th SD), Owen H. Johnson (4th SD), Carl Marcellino (5th SD) and John Flanagan (2nd SD).

Come Nov. 2, thousands of businesses, the self-employed, non-profits and school districts will begin paying part of a $1.5 billion bailout of the MTA through a new tax that will cost them 34 cents per $100 of their payroll retroactive to March 1, 2009. According to the NYS Comptroller’s Office, the impact of the MTA payroll tax on businesses and nonprofits in Nassau is $103.9 million and in Suffolk is $87.9 million. The 12-county region surrounding New York City is required to pay the tax.

Senator Hannon said, “It’s an outrage that taxpayers are expected to carry this heavy burden on their backs in order to bailout the MTA. It’s especially crucial during this tough economic climate that we seek to create jobs and achieve new ways to increase taxpayer savings, but what does Albany do instead? It levies another tax that will force businesses to eliminate jobs and take more money out of the hands of hard working New Yorkers.”

Bob McGuire, executive director of the United Cerebral Palsy Association of Nassau County, who safely estimates that the MTA payroll tax will cost his nonprofit $100,000, said, “In a time where the economy is putting such tremendous stress on all aspects of our lives, placing this added burden on nonprofits is devastating.”

While public school districts are also required to pay the MTA payroll tax, which will further cost Nassau County schools $13.3 million and Suffolk schools $14.7 million, they expect to be reimbursed one year later; however, no guarantees were written into the law. Furthermore, local governments are required to pay without reimbursement further costing Nassau taxpayers $4.9 million and Suffolk taxpayers $4.3 million. Overall, the NYS Comptroller’s Office estimates that this payroll tax will cost Long Islanders $229 million for the 2010 calendar year.

All Democrats in the Senate voted in favor of the tax including two from Long Island, Senators Craig Johnson (7th SD) and Brian X. Foley (3rd SD), while all of Long Island’s Republican Senators and throughout the state voted against it.

Republican Senators voted against the payroll tax drafted by Senate Democrats because they said it raises taxes, can cost jobs, and jeopardizes businesses in the worst economic times. They also noted that the school tax reimbursement is not guaranteed and will further raise local school taxes.

The first installment of the MTA payroll tax, which is one-third of one percent of total payroll, is due Nov. 2 and is retroactive to March 1, 2009, covering a six-month period ending Sept. 30. The next payroll tax payment is due on Feb. 1, 2010.

Richard Bivone, chairman of the LI Business Council, said, “This tax is crippling businesses on Long Island and exemplifies how the system has failed the people of New York. The MTA payroll tax is killing any hope new businesses have to open, while encouraging existing businesses to take the train right off Long Island.”

Jackie Thresher, executive director of the Nassau Library System said, “The estimated cost of the MTA payroll tax to my organization and the 54 public libraries in Nassau County, that are all members of my consortium, is $293,000 for the first full year. Imposing such a tax on publicly supported institutions like libraries is really an additional tax on all Nassau County residents who pay taxes to support library service. This tax was levied on libraries after two years of cuts in state aid, reducing state support of public libraries back to the 1993 level. The state provides the majority of funding for library systems, which allows libraries to provide services in a cost-effective and efficient manner.

“Any tax increase will only exacerbate an already difficult situation.  Simply put, the MTA’s fiscal problems cannot be shouldered by suburban businesses that are already shortchanged by unfair MTA budget allocations, while at the same time experiencing the challenges of a bad economy.”

The payroll tax is just the latest tax hike to hit New Yorkers as a result of the 2009-10 state budget. It follows increases in the costs of driver’s licenses and motor vehicle registrations that took effect Sept. 1; increases in hunting and fishing license fees that took effect Oct. 1; and the Democrats’ elimination of STAR property tax rebate checks that would have been arriving in mailboxes right now.