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Builders volunteer to pay ‘unconstitutional’ tax

By Holly Dutton

The New York Building Congress has vowed to voluntarily pay a tax declared unconstitutional by the courts because, it says, the money is vital to maintaining the city’s transportation infrastructure.

Scrapping the Payroll Mobility Tax that helps fund the Metropolitan Transit Authority “makes no sense,ˮ according to Richard Anderson, president of the NYBC.

“The least we can do is voluntarily pay the tax and we’re encouraging others that were exempted to pay the tax as well,” he said.


The Mobility Payroll Tax, which effectively takes 34 cents from every $100 of payroll from employers in the MTA region, was initiated in May 2009. It is imposed on certain employers and self-employed individuals engaging in business within the Metropolitan Commuter Transportation District (MCTD), according to the New York State Department of Taxation and Finance.

The MCTD area includes the five boroughs, Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess and Westchester counties.

The August decision by State Supreme Court Justice Bruce Cozzens Jr. read that “The MTA payroll tax is a special law, which does not serve a substantial state interest. This law should have been, according to the State Constitution, passed with either a Home Rule message or by message of necessity with two-thirds vote in each house. This did not occur; therefore this law was passed unconstitutionally.ˮ

The MTA tax bill was passed in 2009 as an effort to make up a projected $1.8 billion MTA budget shortfall, according to the decision. Axing the tax could cost the MTA $1.6 billion annually, according to the NYBC.

Anderson is president of the New York Building Congress non-profit membership organization that for nearly a century has promoted the growth and success of the construction industry in the greater New York City region.

The organization publicly announced its support yesterday (Tuesday) for the tax and encouraged other organizations to do the same.

Those who have come out against the tax have mostly been representatives from counties in the suburbs, including Long Island, who feel the transit tax should not apply to their area since constituents may not use public transit as much as people in Manhattan or the other four boroughs.

However, Anderson said the tax is important for the healthy functioning of the economy, and the MTA is a vital component of ensuring that.

“We think the payroll mobility tax is extremely important to the financial plan of the MTA, because the funding for the next capital program is very uncertain at this point and the MTA really needs the money,” said Anderson.

“The importance of the MTA to the metro region was shown in the past few weeks.”

Reducing the tax by exempting small businesses and non-profits including the NYBC “makes no sense,” said Anderson.

“The least we can do is voluntarily pay the tax and we’re encouraging others that were exempted to pay the tax as well,” he said.

The NYBC was exempted in April, and the agency estimates that it would have owed $3,025 for the rest of the 2012 tax year.

“Anybody who is an employer in the metropolitan area knows that, without public transportation, our employees can’t get to work, so we really depend on the MTA. Hurricane Sandy demonstrated how important the loss of service is to all organizations,” said Anderson.

Anderson argued that although the amount of money added up is in the billions, the amount required from each individual business is not very significant.

“We’re hoping to make a point to the state legislature that a small tax contribution is not a big burden on small organizations but the amount paid when added up is important to the financial help of the MTA,” said Anderson.

“It’s a difficult economic climate and any tax right now is suspect, so the payroll mobility tax just became an easy target.”

Other organizations supporting the tax include the Regional Planning Association, General Contractors Association, Empire State Transportation Alliance and the American Council of Engineering Companies, said Anderson.

Though NYBC is the first to publicly state it will pay the remaining tax left voluntarily, Anderson said he feels others would “consider paying the tax as well.”

The tax will remain in effect until the appeals process is complete.

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