2013 contenders mourn the little-noted, long-remembered commuter tax

Stringer, Thompson, de Blasio. (Azi Paybarah)
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Remember the commuter tax?

This morning, during a collegial candidate forum hosted by law firm Stroock & Stroock & Lavan, mayoral aspirants Bill Thompson and Scott Stringer called for its reinstitution by Albany. 

Thompson brought it up in response to a question about how the metropolitan region could better work together.

“Sorry for those of you from Connecticut and New Jersey, but the commuter tax should be brought back and used to fund mass transit, ” said Thompson, to the room full of corporate lawyers.

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(He has made this argument before.)

He was joined soon thereafter by Stringer, the Manhattan borough president, who said, “The tax is just a couple of pennies for people who use our police, our fire, our sanitation.”

Public Advocate Bill de Blasio, the other candidate on the dais, didn’t mention the commuter tax, but he has expressed support for it in the past.

Later, in a reporter’s scrum, Stringer was asked to elaborate on what it would take to get a commuter tax passed in Albany, given Governor Andrew Cuomo's opposition to new taxes, and the aggressively suburban Republicans controlling the State Senate.

"It's going to take a mayor that understands coalition-building,” he said. “It's going to take a mayor that understands Albany.” (Stringer spent a number of years as an assemblyman in Albany.)

“Remember, the commuter tax used to go to our general fund," Stringer said. "But that elimination of the commuter tax was a testosterone battle about a local State Senate seat in Rockland County.”

He was referring to one of Speaker Sheldon Silver's more ill-fated acts of political horse-trading. It was 1999, and there was a special election to replace retiring Republican state senator Joseph Holland. The Republicans hoped to use their push for a repeal of the commuter tax, which dated back to 1966, as a wedge issue. Silver, eager to rack up a chit with his Senate Democratic colleagues (and the suburban members of his own conference), decided he would neutralize the issue by abandoning his party's traditional position and also supporting the repeal of the commuter tax. And so it was repealed.

Unfortunately for Silver, the seat stayed Republican anyway, and the city where his district is located ended up losing $360 million a year.

The likelihood of the state actually passing a commuter tax in the current political climate is essentially nil.

“It’s the first I’ve heard about it in a while,” said James Parrott, deputy director and chief economist at the liberal-leaning Fiscal Policy Institute.

"My real focus is maintaining the revenues from the payroll mobility tax,” said Gene Russianoff, of the Straphangers Campaign, referring to the M.T.A.-dedicated tax whose demise has been a legislative priority of the narrow Republican majority in the Senate.  “I wish them good fortune. It’s a challenge.”

The payroll mobility tax came about as a result of the 2008 Ravitch Commission, and currently represents a revenue stream of $1.4 billion a year. In June, the State Senate voted to phase it out, but the proposal went nowhere in the Democratic-held Assembly. 

The payroll tax differs from the commuter tax in a few substantial ways.

The commuter tax instituted a .45 percent levy on a commuter’s taxable New York income. So if a small-time corporate lawyer from Greenwich or Short Hills earned $100,000 a year, that .45 percent would translate to $450. The resulting revenues went to the New York City, but were not dedicated to mass transit.

By contrast, the payroll mobility tax works by levying $.34 on every $100 of payroll in the five counties of New York City, as well as downstate counties like Nassau, Suffolk, Westchester, Putnam, Rockland, Orange and Dutchess. That revenue goes directly to the M.T.A., which currently has a $9.9 billion funding shortfall.

So in large part because they are busy protecting the payroll mobility tax from suburban legislators, there is no discernible push among transportation advocates for a new commuter tax. Which is not to say they don't still want it back. 

“The argument is certainly sound that commuters derive measurable benefit from the city in the services that support their employment," said Parrott. "We know that generally commuters earn much higher wages than the average New York City resident. Commuters come to New York City because on average they have jobs that pay over $100,000 a year and studies show that they benefit from city services. If you adjusted for rising costs since the studies were done, it’s probably $3,000 to $5,000 a year in city services. So, that would suggest that a modest commuter tax is very logical idea.”