Some local business owners are drawing the line.
The Metropolitan Commuter Transportation Mobility Tax, known as the MTA payroll tax, has become a bone of contention among business owners. The measure, passed in June 2009 but retroactive to March 2009, requires employers and the self-employed to pay a tax of roughly 3.4 percent, or 34 cents per $100, on their company’s payroll. School districts and nonprofit organizations are not exempt from the tax.
“Our money is paying for a system that is out of control,” said Richard Bivone, an East Meadow business owner and the co-president of the Long Island Business Council.
The tax was approved by the state Legislature in 2009 as part of its plan to bail out the financially strapped Metropolitan Transportation Authority, which faces a deficit of about $750 million. The measure passed easily in the Assembly and, after much debate, was approved by majority Senate Democrats in a 32-30 vote.
One Long Island business owner, Bill Schoolman, decided to challenge the tax in court. In December, Schoolman filed a lawsuit against New York state for instituting a tax that he says violates sections of the state constitution. MTA officials have maintained that the tax is not illegal.
The East Meadow Chamber of Commerce invited Schoolman, who owns the Bohemia-based Hampton Luxury Liners, to explain his case to local business owners. He spoke at the Chamber’s July 7 meeting in the East Meadow High School auditorium.
Schoolman said he is tired of paying for more than four decades of what he called “mismanagement” in the MTA. With just under 100 employees in his own transportation business, he pays $20,000 a year for the tax.
“I write a check for $20,000 a year to benefit a government competitor,” Schoolman said. “This is the place to say, ‘Enough is enough.’” He criticized the MTA for catering to special interests, paying high salaries and pensions and making poor business decisions over the years — “A 45-year history of corruption and fiscal irresponsibility,” he said.
The payroll tax is in effect in Nassau, Suffolk, Rockland, Putnam, Dutchess, Westchester and Orange counties as well as New York City’s five boroughs.
In Nassau, the MTA operates Long Island Bus and the Long Island Rail Road. This week, published reports indicated that the MTA is considering more cost-cutting measures, such as imposing fare hikes on LIRR riders and reducing Long Island Bus funding.
One audience member at the Chamber meeting shouted, “We’re paying for something we don’t even use!” Though there are several bus stops in East Meadow, the nearest LIRR stations are in Hicksville, Westbury and Bellmore.
In addition to Schoolman’s suit, the William Floyd School District and the Town of Brookhaven have filed lawsuits of their own.
The East Meadow School District took a hit in 2009, paying about $300,000 for the payroll tax. Though school districts were promised a reimbursement, East Meadow school officials said it was never given. The additional expense necessitated an unexpected increase in the school tax levy.
The Chamber’s president, Rose Fuger, invited Schoolman to meet with members of the local business community. Fuger, who owns A Taste of Home Bakery, Cafe and Sweet Shop and also faces the burden of the payroll tax, touted the importance of business owners working as a team to promote their causes.
“We need to band together sooner or later,” Fuger said, “because mom-and-pop shops as we know it will die in this next generation.”