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Nassau slams court decision to uphold MTA payroll tax

A Metropolitan Transportation Authority payroll tax imposed in 2009 will remain in effect despite Nassau County's opposition.
TimesLedger Newspapers

A state appeals court has upheld the payroll tax enacted at a time of extreme financial peril for the MTA, but Nassau County said it planned to challenge the ruling.

The Payroll Mobility Tax was imposed in 2009 when the MTA faced a $2 billion budget gap. The tax is effective in the 12 New York counties where the MTA operates and authorizes taxation on large employers of 34 cents for every $100 of payroll. The tax is lower for small business owners.

“The MTA is pleased that the Appellate Division has upheld the Payroll Mobility Tax, which provides more than $1.2 billion per year to fund the region’s railroads, subways and buses — the backbone of the region’s economy,” said Aaron Donovan, a spokesman for the Metropolitan Transportation Authority. “Removal of the tax’s revenue would have had a catastrophic impact on the region’s daily transit riders.”

In 2010, Nassau County filed suit against the MTA, maintaining that the tax was in violation of the state constitution and not benefiting all New York state.

State Supreme Court Justice Bruce Cozzens Jr. agreed with Nassau County that the tax was illegal.

The appeals court decision overrules Cozzens on the grounds that the revenue from the tax generates a funding source for the improvement and operation of essential public transportation.

“The tax is over-burdensome, unfair and we will be appealing the ruling,” Nassau County Executive Edward Mangano said.

The MTA said removal of the tax would have deprived the MTA of a resource that is 15 times greater than the savings generated in 2010 when the MTA carried out the most substantial service cuts in a generation.

The MTA said it was doing its part to rectify its finances by committing to the most aggressive cost cutting in its history.

“We have generated annual recurring savings that totaled more than $800 million in 2013 alone and are expected to grow to $1.2 billion by 2016,” Donovan said.

Reach contributing writer Philip Newman by e-mail at timesledgernews@cnglocal.com or phone at 718-260-4536.

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