Filling the Gap

Filling the Gap by Reinstating the Commuter Tax

NYSCapitolPanoramaThis article is the fifth 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.

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.

V. Filling the Gap by Reinstating the Commuter Tax

“We want to make it loud and clear before it gains any traction that we will oppose a commuter tax.”

Thus spoke Edward Romaine, Brookhaven Town Supervisor, after several NYC mayoral candidates showed support for reinstating the Commuter Tax during the last election. If there’s strong opposition to the Payroll Mobility Tax (and any discussion of increasing it) by elected officials in New York City’s suburban communities, there’s even greater opposition to reinstating the commuter tax. After 33 years and hundreds of millions of dollars to fund essential services in New York City such as the NYPD, NYFD, and the MTA, former Senate Majority Leader Dean Skelos led the campaign to repeal the commuter tax — and his sponsored legislation brought it to a screeching halt in 1999.

Nearly as quickly as the tax was repealed, however, came attempts to bring it back, primarily by City officials, and most often in response to a financial crisis. After the terrorist attacks in 2001, it was viewed as a way to buffer the city from lost revenue. But a strong coalition of opponents kept it at bay. E.J. McMahon argued in a NY Post Op-Ed that it was an unfair taxing scheme:

“Unlike the regular income tax (with its graduated rate schedule for different income brackets), the commuter tax was a flat rate applied to a worker’s entire city income. This meant it hit commuters as hard as a 7 to 10 percent add-on to their state income tax.”

The tax was 0.45 percent on income earned within the five boroughs — roughly $350/year for those earning $75,000; $450/year for a $100,000 income.

In 2008, with Wall Street upended, Mayor Bloomberg again called for the return of the tax. Then-Assembly Speaker Sheldon Silver, who had joined Skelos in repealing the commuter tax in 1999, went on record in support of Bloomberg’s proposal and urged Skelos to take the lead on introducing new legislation. Skelos’s response: “Absolutely not.” And that was that.

It reared its head again during the last NYC mayoral election and became a hot button issue; countless elected officials joined Town Supervisor Romaine to stop the growing momentum. Opposition didn’t just come from New York pols and commuters though. The tax was imposed on neighboring New Jersey and Connecticut residents as well, and their representatives have been more than vocal in making their opinions known. Governor Chris Christie has described it as “penny-wise and pound-foolish.” And a chorus of Connecticut electeds have denounced the idea: House Republican leader Larry Cafero attacked mayoral candidate Scott Stringer for raising it, and Governor Daniel P. Malloy called such a tax “unfair.”

The latest financial crisisfillthegapny

With Silver and Skelos both stripped of their power, is there a chance the commuter tax could be reinstated to fill the MTA’s $14 billion gap? 

In 2014 the NYC Council issued their State Budget and Legislative Agenda 2014-2015 and listed the commuter tax under Economic and Revenue Measures:

Restore the Non-Resident Income Tax (Commuter Tax)

The New York City Council calls for the reinstatement of New York City’s nonresident income tax. Due to the State’s elimination of the City’s modest “Commuter Tax” in 1999, individuals who work in the City yet live elsewhere pay no tax to the City on the income that they earn within its borders. This modest charge amounted to 0.45 percent of wage earners’ income, and 0.65 percent of the earnings of the selfemployed. The added fiscal burden caused by the repeal of the commuter tax has cost billions in cumulative revenue since its repeal. The increased revenue from the re-imposition of the commuter tax would help the City pay the cost of police, fire, transportation and other essential city services utilized not only by city residents but also by commuters who come to the City every day. Commuter taxes are not unusual in the United States. New York State, New Jersey, Connecticut, and many other states tax all personal income earned within their borders. According to data from the Tax Foundation, there are 420 local commuter taxes in the United States, including in cities like Denver, Baltimore, Philadelphia, and San Francisco. If the commuter tax is reinstated, the City can raise an estimated $856 million in City Fiscal Year 2015. It would cost the typical commuter around $2.80 a day. P. 2

But other than a mention on a News12 Long Island broadcast, it doesn’t seem to have gotten much footing — positively or negatively.

While a new commuter tax could, according to the City Council, inch close to the annual revenues generated by the Move NY Fair Plan, it seems unlikely there’s an appetite for reinstating it beyond the chambers of City Hall.

Which brings us back to Move NY.

Last weekend the Daily News wrote an editorial declaring Move NY “the single most viable funding option,” and called on elected officials to get to work on ensuring our transit system is fully funded — now, not later:

“With subway delays creeping ever upward and packed trains creeping ever slower, New Yorkers are getting a grim preview of where things are headed if Albany keeps starving the Metropolitan Transportation Authority for cash:

Destination, commuter hell.

The MTA says it needs to invest $32 billion over the next five years to shore up decaying infrastructure, modernize aging equipment and accommodate record-high ridership. It has just $18 billion in capital funding available — leaving a whopping $14 billion gap.

And what are Gov. Cuomo and the Legislature doing to address this crisis for the mass transit system that’s critical to the region’s economy?

Nothing — apart from punting the hard but unavoidable choices to an indefinite future.

Even by the standards of New York State government, the dereliction is appalling …

… City pols who lack the vision and courage to back that sensible plan — from Cuomo and Mayor de Blasio on down — have a duty to offer a viable alternative, and now.

The MTA and the millions of New Yorkers who depend on it each day cannot afford to wait.”

Move NY does what no other funding option discussed can do: reduce traffic congestion and improve travel times, make our streets safer for pedestrians and cyclists, provide for the first time dedicated revenue to city roads and bridges, provide tangible relief to communities with transit gaps, and bring much-needed toll relief to New Yorkers who have seen seven toll increases in the last 12 years. The legislative session ends in a little over a week … and we are at risk of witnessing Albany kick the can down the road, which just happens to be the last in our series on filling the gap. Until then, you can let your elected officials know you support the Move NY Fair Plan by visiting our website.

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