Nearly 40,000 Hudson Valley businesses will no longer pay the MTA payroll tax

David Carlucci

December 13, 2011

The Journal News, December 13th, 2011

By Joseph Spector

ALBANY — About 39,400 businesses in the Hudson Valley will no longer have to pay a payroll tax for being located in the Metropolitan Transportation Authority service region, Gov. Andrew Cuomo announced Monday.

Cuomo was in Long Island on Monday to sign legislation that will eliminate the MTA payroll tax for about 290,000 businesses in the 12-county MTA region. The tax was implemented in 2009 to help the financially struggling MTA but was heavily criticized for penalizing companies in the New York City suburbs.

Cuomo said roughly 410,000 self-employed New Yorkers will also no longer have to pay the tax. The state will fund the $250 million cost of the payroll tax through a $2.6 billion increase in income taxes on the wealthy — part of an agreement approved last week between Cuomo and the Legislature.

"Small businesses are New York's growth engine, and this tax reduction will help create jobs and get our state's economy back on track without jeopardizing funding for the MTA," Cuomo said in a statement.

On Wednesday, the state Legislature passed a bill to eliminate the payroll tax on businesses with an annual payroll between $10,000 and $1.25 million. 

About 6,000 businesses with payrolls between $1.25 million and $1.75 million will see their payroll tax cut by either one-third or two-thirds, Cuomo said.

About 25,000 businesses in Westchester will no longer have to pay the tax, as well as 6,895 in Rockland and 2,167 in Putnam.

The largest number of businesses affected is in New York City. About 171,500 businesses in the five boroughs won't have to pay the tax, Cuomo said. 

Elementary and secondary schools were exempt from the tax, but they had to pay the cost upfront and were reimbursed by the state.

Now schools won't have to pay the cost upfront, roughly $60 million a year.

Also, private schools will be exempt from the tax, as part of the new law.

The law takes effect Jan. 1 for self-employed taxpayers. For entities with a payroll, it starts with the quarter beginning April 1.

Gregg Goldberg, 45, owner of Goldberg Hardware in Tarrytown, said his business was paying about $3,000 a year but didn't use the MTA, which provides transit services in the region.

"I had done so much work trying to cut my expenses down from insurance, to help other things and then I had to deal with (the payroll tax). So everything I saved got sucked away with that," he said.

Sal Altavilla, owner of Advanced Copier Technology in Brewster, has been in business for 31 years. He spent about $500 a month on the tax.

"Anything hurts. And it really hurts. It's a nonsensical tax for the people of Putnam County. We don't make use of the subways. There's absolutely no reason for it whatsoever, so it hurts," he said.

Some lawmakers and businesses want a full repeal of the tax.

In Westchester, 194 businesses will have the MTA payroll tax reduced by 33 percent and another 318 will have it reduced by 67 percent, according to the governor's office.

"If we are serious about keeping small businesses here in the Hudson Valley, we need to enact wholesale change by completely eliminating the MTA payroll tax," said Sen. David Carlucci, D-Clarkstown, in a statement.