Transient Taxes for Transit

February 29, 2012
By Marc Bussanich, LaborPress City Reporter

The Hudson River Valley business community’s chorus opposed to the MTA Payroll Tax rang all the way down to the southern tip of Manhattan. Governor Andrew Cuomo caved in to the refrains, which will subtract $250 million in dedicated funding to the MTA. But more tax exemptions may be forthcoming, as the Freelancers Union notified its members it’ll be working hard this spring to end the tax on freelancers.

A Freelancers Union spokesperson said two separate bills are waiting for legislative action in Albany. Senators Andrew Lanza and Daniel Squadron introduced Senate Bill 6330 and Assembly Members Michael Cusick and Brian Kavanagh introduced Assembly Bill A9314A, which would exempt freelancers from paying the MTA Payroll Tax earning $50,000 or more annually.

The spokesperson explained that before Cuomo modified the tax in December 2011, freelancers only earning $10,000 or less annually were exempted. The change in December increased the exemption up to $50,000. But the union is pushing for a higher threshold with the new bills because it claims the playing field for the self-employed is not level, especially as businesses earning up to $1.25 million annually are now exempt from paying the tax.

“The union’s initiative is about leveling the playing field. The self-employed are excluded from an employer-based support system and already have to fight for access to affordable health care and ensuring they get paid. The unfair taxation is just another hurdle an entrepreneurial workforce has to clear,” the spokesperson said.

The spokesperson mentioned that freelancers support the preservation and improvements to the public transit system, especially as many of them rely on the service, but she reiterated that the union doesn’t want its members facing higher tax burdens unlike some other entities.

She also noted that the Payroll Tax also represents an “administrative hassle” for freelancers because the schedule freelancers have to adhere to to pay their federal and state taxes doesn’t coincide with the MTA schedule to pay the Payroll Tax, potentially contributing to higher accounting fees for freelance union members.

Veronica Vanterpool, Associate Director for the Tri-State Transportation Campaign, an organization that works towards sustainable transit policy for New York, New Jersey and Connecticut, said the organization’s biggest concern is that Governor Cuomo follows through on his pledge to restore the approximately $250 million annually in lost tax revenue from the changes he announced in December.

She wouldn’t go so far to say that the organization is confident that Cuomo will restore the lost revenue, “given how Albany is very unpredictable,” but she believes that, based on the governor’s draft budget, he’ll restore the monies.

Where will Cuomo find the funds is a burning question. Vanterpool said the only specifics Cuomo has provided thus far is that the monies will be restored from the state’s general fund. The next burning question then is how and from where the comparable amount will enter the fund? Pension savings the Governor is hoping to realize from introducing a Tier 6 pension structure is one possibility.

While the uproar over a perceived unfair tax got a lot of attention, Vanterpool said the revenues derived from the tax are integral to the public transit system we have, but also the system we need to maintain and a system we want to see for the future.

“Absent the revenue restoration, there’s the potential for additional fare hikes and service cuts,” said Vanterpool.  

February 29, 2012

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