Dan's Papers -November 6, 2009 - Givin' You The Business

The recently enacted (Sept. 1, 2009) MTA Payroll Tax is a smack in the face to all Suffolk County businesses that now must pay $34 in tax for every $1,000 in payroll. The only exemptions are businesses with yearly payrolls totaling less than $2,500. Every business, as well as Suffolk County towns, must pay this tax on all their employees including teachers (which will cause an increase in school tax), lifeguards and policemen (which will cause an increase in town and village taxes), and hospital workers. The same is true for all other Suffolk County employees. Not even non-profit organizations like churches, Goodwill and the Salvation Army are exempt. In fact even independent contractors-meaning the 1099 form people-will have to pay this tax.

New York State Assemblyman Fred Thiele spoke of all the horrors of this tax, which he vehemently opposed. He called it "geographical politics at their worst," explaining how New York City representation tailored this law to bail out the Metropolitan Transit Authority's $1.2 billion deficit on the back of 12 counties that MTA trains pass through, regardless of volume (Montauk sees three trains a day). He stressed that there is no "sunset" clause to this tax, which opens the door for future increases-a very ugly thought for struggling East End businesses that are also watching mandated health care coverage cost increases head their way. Thiele acknowledged this was done by city politicians to prevent increasing tolls on East River bridges and transit fares in NYC, at this sensitive time when important state and local elections loom. Thiele stated that Suffolk County State Senator Brian Foley of Brookhaven betrayed Suffolk County businesses by voting for this $1.5 billion tax that will injure every business and town in the county.

The ramifications are mind-boggling. Thiele said he could not see the wisdom of raising taxes on already-struggling businesses, and boldly predicted that New York could be the last state "out of the recession due to the way the state has chosen to deal with the its budget deficit, and the passing of this MTA payroll tax." When asked why he didn't filibuster the bill, Thiele said, "I would of if I could, but in New York State there is a limit to the time of debate for each representative."

Other local political leaders have suggested that the new tax is so unfair that Suffolk County business as a whole will be paying the MTA $3,000-$4,000 in tax for each commuter that uses the Long Island Railroad. All East End towns will be supporting the NYC subways and their high-salaried employees-not to mention a myriad of overpaid MTA executives. An employee of one of Montauk's largest employers, which has more than 100 employees in the off-season, said the tax will cost the business an extra $1,500-$1,700 per week, and over $100,000 a year.

The Southampton Business Alliance is up in arms about the tax and plans meetings to see what they can do, but Thiele explained that NYC has the representation in Albany to keep this abusive tax on the books.

But the truth is that too many political leaders are losing touch with the realities of the cumulative effect of their actions. This action has only added to the burdens of small and large business. Through legislative restrictions and taxes, new fees, ever increasing taxes (both personal and real estate), escalating health care cost, unstable but extremely high energy cost, and gun-to-the-head rent increases, it's a tough environment. This MTA tax is another larger stone weighing down the independent business trying to stay afloat in these troubling times. The ramifications of this new tax have yet to truly surface. The anger will be pointed at Albany in the next governor election. But the plain truth is that this tax is here to stay. It is paying for a bankrupt, over-staffed MTA transit system, and only enables the system to become more inefficient and costly.

This is more than what Thiele called "geographical politics at their worst.'' The MTA payroll tax is another call to overburdened, independent businesses to fix the ills of bad government, made by political figures who don't care who suffers along the way as long as they win elections.