MTA Payroll Tax Still Looms for Employers

If you take the Long Island Railroad from the Baylon train station, the closest to West Islip, a round-trip ticket to Penn Station in Manhattan costs $25 during peak times. A daily commuter from the Babylon station currently pays $274 a month to get into Manhattan with a monthly ticket. One may think that that fares would be enough to support the Metropolitan Transit Authority (MTA). However, the MTA is also supported by a payroll tax imposed on all businesses to support the fiscally troubled agency.

The payroll tax, also known as the mobility tax, amounts to .34 percent or .0034 of a business' payroll expenses. It even applies to schools districts and municipalities, which tend to have rather large payrolls. The next due date is July 31, which covers the quarter from April 1 to June 30.

The payroll tax was passed by the state legislature as a measure to bailout the MTA, which found itself facing massive budget deficits. The bailout received critical support from two Long Island senators, Brian Foley of Blue Point and Craig Johnson of Port Washington. It is opposed locally by both Assemblyman Phil Boyle and Senator Owen Johnson, who both represent West Islip. However, both are in the minority of their respective houses is the state legislature.

Said Boyle, "New York State continues to drive businesses away from Long Island by creating this unfair mobility payroll tax on employers and self-employed individuals. How can we expect our state to ever thrive again as an economic powerhouse if we cannot figure out that taxed are not the way to financial recovery?"

One business owner is fighting back. Hampton Luxury Liner and Classic Coach owner William Schoolman filed a lawsuit in Suffolk County Supreme Court claiming the payroll tax law is unconstitutional. 

Despite talk of the Town of Islip being part of a consortium of town suing over the payroll tax, the town has yet to officially sign on to a lawsuit. The Town of Islip Attorney's Office issued the following statement: "We are continuing to research the litany of issues and complexities involved in this lawsuit and we are in close consultation with the Town of Brookhaven and others as we consider our options.  We are also closely monitoring the initial lawsuit filed against the MTA's payroll tax by William Schoolman."

Town of Islip Supervisor Phil Nolan applauds those who are standing up against the payroll tax. "This tax not only places a strain on our Town's already thin budget, but forces small businesses and schools to shoulder the MTA's fiscal problems. We are sick of paying for this entity's financial mismanagement," he said.

Click here to see William Schoolman's complaint.