Affordable Transit

Filling the Gap with an Increased Sales Tax

NYSCapitolPanoramaThis article is the third in a series examining mechanisms to fund the MTA’s Capital Plan for 2015-2019. The agency that serviced over 1.75 billion subway riders last year — 5.6 million riders on an average weekday and 6 million on weekends — has proposed a $32 billion budget to fund standard maintenance and repair, service expansion and improvements, and continued construction of the 2nd Avenue line, among many other projects that will ease overcrowding, delays, and breakdowns of our trains, subways, and buses. Unfortunately, a $14 billion funding gap ($1B was funded in the State budget approved in March) threatens the continued viability of the MTA. The Move NY Fair Plan is the only viable proposal on the table which can provide much of the funding needed to fill the gap, but unless serious discussions are had in Albany in the last weeks of the legislative session, the future of the MTA — and our lifeline to work, entertainment, shopping, and family & friends — is very much up in the air. And as the MTA goes, so goes the entire New York State economy.

In the coming days, we will look at fill-the-gap alternatives to the Move NY plan, none of which individually or collectively can bring faster, safer, fairer transportation to New Yorkers and many of which are dead on arrival: Filling the Gap with More Debt; Filling the Gap with a New Gas Tax; Filling the Gap with an Increased Sales Tax; Filling the Gap by Increasing the Payroll Mobility Tax; Filling the Gap by Reinstating the Commuter Tax; Kick the Can Down the Road: Doing Nothing.

III. Filling the Gap with an Increased Sales Tax

Of the many taxes and fees supporting the MTA is a regional sales tax surcharge of 0.375%. One of the options to cover the $14 billion hole in the MTA’s Capital Program would be to raise this surcharge by between two-thirds to three-quarters of a percent.

This is simply the least palatable of the alternatives to Move NY. From a pure numbers perspective, it would worsen the already disproportionate tax burden in the 12-county MTA region. New York City’s rate, currently a heavy lift at 8.875%, would spike to 9.6%, barely behind the nation-high rate of 9.75% in several municipalities in Tennessee.

More fundamentally, increasing the sales tax rate is the most regressive way to fund our transit needs. It would hit poor families the hardest and widen the equity gap. As the accompanying chart illustrates, the effective sales and excise tax for the poorest fifth of New York State residents is twice that of the wealthiest fifth: 7.4% of income vs. 3.7%.

sales tax chart moveny blog

Institute on Taxation & Economic Policy

There’s also no real nexus between a sales tax surcharge and transportation use. The most rational – and fairest – levy is one that charges people for using the road and transit network and who benefit from less people jumping in their cars to go from A to Z, when there is mass transit available. A 2014 study conducted by HTNB found that a high majority of Americans support new tolls if they go toward improving their travel:

“According to the survey, more than 3 in 4 (79 percent) Americans would support the addition of a toll on a non-tolled surface transportation facility if it resulted in a safer, congestion-free and more reliable trip. In fact, 83 percent would support tolling on existing highways. They would be motivated to use toll roads more if the funds were going toward improving the safety of interstates (52 percent), local roads, bridges and highways (51 percent) and the highway that’s being tolled itself (42 percent). Others would approve tolls on existing facilities if the money went toward congestion-related improvements, including reducing bottlenecks on interstates in urban areas (45 percent) and adding capacity to improve a section of an interstate (39 percent).”

The Move NY Fair Plan does just this by assessing a toll for motorists using all East River crossings, while equitably distributing the toll burden by lowering the rates on the MTA crossings (by almost 50% in some cases). For the first time, there would be a dedicated revenue stream for our City’s roads and bridges ($375 million annually) and improved travel times by up to 20% in Manhattan’s Central Business District, and up to 6% in the neighborhoods on either side of the East River bridges.

The rest of the revenue generated – $1.125 billion — would go to transit capital and service enhancements as well as fill transit deserts. In addition, it provides fare relief to those seeking to reduce long-travel times by dropping express bus fares by $1 and making commuter rail within city limits more affordable through a 7-day discounted City Ticket program on the LIRR and MetroNorth. These programs are key to improved mobility for some of the most disenfranchised residents within the MTA network — bringing them to work and school faster, safer, and fairer.

A recent article in The Atlantic interviews Rosabeth Moss Kanter, a Harvard University professor and author of a new book Move: Putting America’s Infrastructure Back in the Lead, who notes, “Without really good public transportation, it’s very difficult to deal with inequality.”

“Access to just about everything associated with upward mobility and economic progress—jobs, quality food, and goods (at reasonable prices), healthcare, and schooling— relies on the ability to get around in an efficient way, and for an affordable price. A recent study from Harvard found that geographic mobility was indeed linked to economic mobility, and a 2014 study from NYU found a link between poor public-transit access and higher rates of unemployment and decreased income in New York City.” The Atlantic

The Move NY Fair Plan is one of the surest ways to achieve Mayor De Blasio’s goal of closing the gap between the haves and have-nots. Car owners are better off than people who don’t own cars and have no choice but to rely on a transit system that more and more fails to meet their needs. And it does so without requiring them to dig deeper in their wallets, while a sales tax increase effectively robs Peter to pay Paul.

Tell your elected officials to read your lips: no new taxes. What the region needs is the Move NY Fair Plan.

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