News Summary
New York City lawmakers have enacted a significant payroll tax hike as part of the state budget to fund the $68 billion MTA capital plan. This tax increase affects businesses with payrolls exceeding $10 million, raising the payroll mobility tax from 0.6% to 0.895%. Smaller businesses will see a reduction in their PMT rates. While aimed at improving public transport infrastructure, the tax has sparked criticism over its potential impact on local businesses and employment.
New York City – Lawmakers in New York have finalized the most significant payroll tax hike in recent history as part of the approved $254 billion state budget. The increase aims to generate necessary funding for the Metropolitan Transportation Authority’s (MTA) ambitious $68 billion capital plan, designed to modernize and improve the state’s aging transit infrastructure.
The payroll mobility tax (PMT) for businesses within New York City that report yearly payrolls of $10 million or more will see an increase from 0.6% to 0.895%. For payroll businesses situated in Long Island, Westchester, and other suburban counties, the PMT rate will rise from 0.34% to 0.635%. This tax adjustment is projected to have repercussions for up to 10,000 companies operating in New York state.
The MTA intends to utilize the revenue generated from this payroll tax hike, which is expected to total approximately $1.4 billion annually, to fund critical updates and improvements to trains, stations, and overall infrastructure. However, the tax increase has sparked criticism, as Governor Kathy Hochul’s administration argues that it runs counter to her vision of making life more affordable for New Yorkers. Senator James Skoufis has voiced concerns on how this tax increase contrasts with the broader narrative of affordability.
Notably, companies with yearly payrolls under $1.25 million will benefit from a PMT reduction, having their rates cut in half. This adjustment seeks to alleviate the financial strain on smaller businesses amid overall increasing expenses. In addition to the payroll tax hike, the budget introduces the possibility of installing speed cameras in construction zones for MTA-operated bridges and tunnels, including the Verrazzano Bridge. This initiative will require public hearings and votes from the MTA’s board and proposes fines of $50 for the first violation, $75 for the second, and $100 for subsequent violations, aligning with measures to enhance safety and generate additional revenue.
The Dutchess County Regional Chamber of Commerce (DCRCOC) has voiced its opposition against the MTA payroll tax increase, emphasizing that it could place an undue financial burden on local businesses that already feel neglected by the services provided by the MTA despite substantial contributions. In 2023, Dutchess County contributed $9.5 million to the MTA, which included $5 million derived from the Metropolitan Commuter Transportation Mobility Tax (MCTMT). Many residents and businesses in Dutchess County argue that the return on their tax payments is inadequate, considering the significant drop in ridership on the Metro-North Railroad—a decrease of 42% in weekday passenger numbers compared to pre-pandemic levels.
Concerns about local labor markets have also emerged, with critics arguing that the PMT increase could lead to fewer job opportunities and limited wage growth for workers in struggling businesses. In tandem with these challenges, lawmakers have addressed potential federal funding cuts, recognizing the economic difficulties that businesses in New York state are currently facing as they adapt to new or increasing tax burdens.
Looking ahead, lawmakers are eyeing additional revenue-raising mechanisms, such as surcharges on rideshare services and for-hire vehicles, although specific details of these proposals remain under negotiation. This budget marks the fourth instance over the past 15 years in which Albany has initiated new or increased funding sources for the MTA. However, ongoing criticisms regarding the potential negative impacts on economic growth and job creation continue to underscore the complex challenges facing New York’s business landscape.
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Additional Resources
- Mid Hudson News
- Wikipedia: Payroll Tax
- AM New York
- Google Search: MTA capital plan
- New York Post
- Encyclopedia Britannica: Metropolitan Transportation Authority
- Gothamist
- Google News: MTA funding
