Governor Paterson Announces Proposed Improvements to MTA Mobility Tax

ALBANY, NY (02/08/2010)(readMedia)-- Governor David A. Paterson today announced that he will put forward proposed improvements to the MTA mobility tax in his 21-day amendments to the 2010-11 Executive Budget that will help preserve that transit system as the economic lifeblood of the metropolitan region. This revised proposal would ensure that the MTA will receive previously projected mobility tax revenues in 2010 and in future years in order to help mitigate the impact of the authority's budget difficulties on straphangers; improve regional equity by introducing a two-tiered tax rate that brings tax collections more in line with local ridership; and deliver substantial additional tax relief for small businesses during the current economic downturn.

"The new proposal I am putting forward will provide relief to straphangers, as the MTA makes the difficult decisions necessary to balance its budget during an historic fiscal crisis that is significantly impacting all levels of government," Governor Paterson said. "In addition, it also makes key improvements to the current tax structure, promoting regional equity and delivering relief to small businesses."

The amended proposal eliminates the current flat Mobility Tax structure (0.34 percent of payroll for all MCTD counties). It increases the tax rate for New York City businesses to 0.54 percent of payroll. It also cuts the tax rate in half for businesses outside of New York City in the Metropolitan Commuter Transportation District (MCTD) to 0.17 percent. Under the new proposal, New York City businesses would now contribute 88 percent of all mobility tax revenues, up from 70 percent. This will ensure a more equitable distribution of tax liability in line with the fact that New York City is the destination for over 90 percent of weekday ridership.

The new structure will restore 2010 MTA mobility tax revenues to $1.54 billion, which is equal to original projections (net additional revenue of approximately $230 million for MTA). It also addresses projected out-year deterioration, providing more than $200 million in additional annual revenue on an ongoing basis in 2011 and beyond.

Self-employed individuals and partners with income below $100,000 would be exempt from the payroll tax, up from the current threshold of $10,000. As a result, an additional 400,000 small businesses would now be exempt from the payroll tax.

A summary of the revised proposal is included below:

Previous Law Amended Proposal Notes
Mobility Tax Rate 0.34% for All MCTD Counties 0.54% for NYC,
0.17% for All Other MCTD Counties
Cuts tax rate for businesses outside NYC by one-half

Percentage of Mobility Tax Receipts from NYC

70% 88% NYC Destination for over 90 Percent of Weekday Ridership
Exempts self-employed individuals and partners with income under: $10,000 $100,000 Additional 400,000 small businesses would be exempt
Expected 2010 Revenue $1.3B $1.54B Preserves expected revenue from May 2009 forecast ($1.54B)
Out-year Revenue Deterioration Approximately $200M annually None Preserves out-year revenue expected from original May 2009 forecast ($1.6B in 2011, $1.7B in 2012)


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