Tax Watch

The Metropolitan Transportation Authority plans to “vigorously appeal” a state Supreme Court ruling today that the payroll tax is unconstitutional, according to a statement released this evening.

“We believe this opinion will be overturned, since four prior challenges to the constitutionality of the law making the same argument have been dismissed,” the statement said.

Meanwhile, Westchester County Executive Robert Astorino said the ruling is a victory for Westchester and its municipalities. Westchester and Putnam counties joined Nassau County’s lawsuit against the tax.

“The MTA payroll tax is essentially an unfunded mandate from Albany.  In this case, we were allowed to challenge it. We did.  And  now we’ve won an important victory with the court’s decision that this unfair burden on taxpayers was unconstitutional.”

The Metropolitan Commuter Transportation Mobility Tax took effect in 2009 for the counties served by the MTA—the five counties that make up New York City, and Putnam, Rockland, Westchester, Nassau, Suffolk, Orange and Dutchess counties. The tax of 34 cents per $100 of payroll put in place to help reduce a projected budget shortfall for the MTA. It was amended this year to increase the thresholds for the tax to apply to businesses and self-employed individuals.

The tax current applies only to businesses that make more than $312,500 per quarter (up from $2,500 per quarter) and self-employed individuals who make more than $50,000 in a tax year (up from $10,000).

These are the rates:
—11 cents per $100 of payroll for businesses that make  $312,501-$375,000 per quarter;
—23 cents per $100 of payroll for businesses that make $375,001 to $437,500 per quarter;
—34 cents per $100 of payroll for businesses that make more than $437,500 per quarter.