New York Governor Hochul's Proposal of Payroll Tax Hike Sparks Outrage

 June 6, 2024

New Yorkers react angrily as Governor Kathy Hochul proposes a payroll mobility tax hike instead of implementing a planned congestion toll.

New York Governor Kathy Hochul has rolled back the establishment of a $15 congestion pricing toll planned for Midtown Manhattan, proposing a payroll mobility tax hike to generate necessary funds for the Metropolitan Transportation Authority (MTA), New York Post reported.

The congestion toll was initially proposed to generate a significant yearly sum of about $1 billion for the MTA, helping fund essential transit projects by charging various fees to vehicles entering Manhattan's central business district. The extensive proposal included a $15 fee for passenger vehicles, a $7.50 toll for motorcycles, and increased rates for trucks and commercial rideshares. Large trucks would have faced the highest charge of $35.

Governor's Decision Draws Mixed Reactions

The decision by Hochul not only indefinitely postponed these plans but also left stakeholders needing a clear alternative funding strategy, leading to widespread frustration.

The cancellation was mainly celebrated by some grassroots organizations who saw the tolls as a potential financial strain on working-class citizens commuting into Manhattan.

Assemblyman Matt Slater voiced his concerns, stressing the impact on the affordability for average New Yorkers. "Proposing another tax is an insulting joke that will only exacerbate the affordability crisis that Gov. Hochul pointed to as her reason for killing congestion pricing," he stated.

A Closer Look at Payroll Mobility Tax

Instead of the congestion charges, Hochul proposed increasing the already existing payroll mobility tax, which brought in $1.1 billion last year.

This tax impacts businesses and self-employed individuals in New York City and its surrounding regions. Critics argue that this shift could dampen business activity in a high-taxed environment.

In addition, Ken Girardin from the Empire Center for Public Policy pointed out the existing tax burdens, saying, "The combination of corporate income, payroll, and other taxes on New York City businesses already has them paying some of the highest effective rates in the nation."

Funding Crisis and Stakeholder Frustration

MTA's funding substantially depends on diverse sources: 44% comes from business and real estate taxes, 27% from rider fares, and 13% from vehicle tolls. The loss of the anticipated congestion pricing revenue has put the MTA in a precarious position, risking the long-term sustainability of transit infrastructure projects.

Moreover, Janno Lieber, MTA Chair and CEO, along with board appointees by Hochul, expressed their exasperation, pushing back on the decision to abandon a ready source of revenue. Their threat to resign underscores the gravity of the funding dilemma faced by the MTA.

Furthermore, Staten Island Borough President Vito Fossella also criticized the added tax burden on businesses, emphasizing a misunderstanding in the approach taken by the state leadership. "Raising taxes will just hurt businesses more. I don't understand it," he remarked.

In conclusion, Governor Hochul's route to mitigate the budget gaps within the MTA through a payroll mobility tax hike rather than congestion pricing has incited significant backlash from various sectors, illustrating the broader tensions around governance, taxation, and public infrastructure funding in New York. As the legislative session approaches its close, the urgency to secure reliable funding for MTA projects remains a high-stakes issue, leaving stakeholders and policymakers at a critical juncture.

About Victor Winston

Victor is a freelance writer and researcher who focuses on national politics, geopolitics, and economics.

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