Tax Committee Albany Update
March 6, 2009
Contact: Ken Pokalsky
MTA Mobility Tax Proposal
The Paterson Administration has issued draft legislation to implement the recommendations of the “Ravitch Commission,” including a “mobility tax” in the MTA's twelve-county Metropolitan Commuter Transportation District (MCTD), tolls on East and Harlem River Bridges, and numerous organizational changes within the MTA. A copy of the mobility tax language is available here; the entire bill is available here.
The mobility tax, designed to raise $1.5 billion per year to finance expenses of the MTA, would apply to employers with payroll expenses for “covered employees” in excess of $2,500 in any calendar quarter. “Covered employee” is defined as an employee employed within the MCTD. The tax also applies to the net earnings of self-employed individuals whose earnings attributable to the MCTD exceed $10,000 for a tax year.
The tax rate is 0.34% of the “payroll expenses” of affected employers and self-employed persons. “Payroll expenses” are wages and compensation as defined in Sections 3121 and 3231, respectively, of the Internal Revenue Code. IRC Section 3121 defines “wages” as “all remunerations, including benefits.”
The Business Council has been meeting with legislators in the 12 county MTA region over the past several weeks to express strong opposition to this payroll excise tax. If this proposal is of concern to you, we urge you to contact your local legislators, and legislative leaders, as soon as possible.
The Business Council will be testifying next Thursday, March 12, at a hearing by the Senate Select Committee on Budget and Tax Reform, on the subject of proposals to make the state personal income tax "more progressive." A copy of the hearing notice is here. This hearing is related to the so-called "Fair Tax" legislation, S2021 (Schneiderman), that would impose a top PIT rate of 10.3 percent and raise a, estimated $6 billion per year. A copy of the legislation is available here.
Taxpayer Advisory Committee Update
The Department of Taxation and Finance held the second meeting of its recently re-established Taxpayer Advisory Committee last week. Highlights of the discussion included:
- An overview of revenue and tax enforcement provision in the Executive Budget proposal (which we reported on in previous updates).
- A discussion of current issues regarding DTF audits, and a request to business for input on ways to make the audit process more efficient (feel free to contact me with any comments or concerns regarding audits.)
- A brief discussion of tax reforms included in the “American Recovery and Reinvestment Act.” Importantly, Commissioner Megna reported that it was the Administration's position that it would not propose decoupling from any tax reform provision of the “stimulus act.” A summary of the business tax provisions in the Act is available here.
- The Department's intent to draft legislation integrating Article 9-A (corporate franchise tax) and Article 32 (bank tax) for introduction with next year's Executive Budget. The Department circulated this outline of issues to be addressed.