Exempts self-employed persons, localities, school districts, for-profit corporations and not-for-profit corporations from the MTA mobility tax; repealer

BILL NUMBER:S4716A

Title of bill

An act to amend the tax law, in relation to exempting earnings from self-employment, for-profit corporations, not-for-profit corporations, political subdivisions of the state and school districts from the metro- politan commuter transportation mobility tax; and to repeal certain provisions of such law relating thereto

Purpose

To exempt self-employed persons, localities, school districts and not- for-profit corporations from the MTA mobility tax.

Summary of provisions

Section One: Subsection (b) of section 800 of the tax law, as added by section 1 of part C of Chapter 25 of the Laws of 2009, is amended to add any not-for-profit corporation, any political subdivision of the state or any municipality, every agency and instrumentality thereof and school districts to those entities that are not subject to the MTA mobility tax.

Section Two: Subsection (e) of section 800 of the tax law is REPEALED.

Section Three: Section 801 of the tax law, as added by section 1 of part C of Chapter 25 of the Laws of 2009, is amended to remove self-employed individuals.

Section Four: Subsection (b) of section 804 of the tax law is REPEALED.

Section Five: Sets forth the effective date.

Justification

Chapter 29 of the Laws of 2009 imposed within the Metropolitan Commuter Transportation District a tax of 34 cents per every $100 of payroll on nearly every employer and on the net earnings of the self-employed that exceeds $10,000 annually.

Small business is the backbone of the New York State economy and the self-employed are a significant component of this vital economic engine. The self-employed can be a plumber, electrician, a day care provider; small farmer, fisherman, or the local handyman. They work long hours to make a living for themselves and their families. They are often trusted mainstays in their community and relied upon by their neighbors to provide vital services at an affordable cost. These people epitomize the entrepreneurial spirit yet have much less of a recession proof cush- ion than larger business enterprises.

Not-for-profit corporations often operate on a shoe string and have limited resources. In addition, many of the grant opportunities that have assisted them financially over the years have dried up due to the

economic downturn. Having to try to budget for this payroll tax has been a crippling burden which needs to be lifted.

In terms of local governments, municipalities and school districts, a good portion of the aid from the State and federal governments has been cut. Additionally, revenues coming into these authorities from other areas have diminished. Taxpayers are already carrying enough of the economic responsibility to keep these important entities and their vital services functioning. As layoffs are being considered all around the State in schools and government, it is time to reduce their financial burdens by repealing the onerous 2009 MTA payroll tax.

While it would be ideal to repeal the entire MTA mobility tax across the board for every business and entity affected, the 1.4 billion dollar hole that would be created during a time when the State is already in a fiscal crisis is problematic. This legislation begins the process of repealing the tax by starting with those most crippled by its original enactment and the domino effect that could affect hard-working New York State taxpayers.

Legislative history

This is a new bill.

Fiscal implications

To be determined.

Effective date

This act shall take effect on the first day of January next succeeding the date on which it shall have become a law.