Taxes and Tolls Sought in Plan to Save M.T.A. - NYTimes.com

Taxes and Tolls Sought in Plan to Save M.T.A. - NYTimes.com.

The tax on payrolls, expected to be less than one half of 1 percent, would apply to businesses in the 12-county area served by the authority. It would be paid by businesses, not employees. The tax would be designed to raise $1 billion a year or more.

It would be coupled with the new bridge tolls, which would generate about $600 million a year, after the cost of maintaining the bridges and collecting the tolls is accounted for. Drivers would pay a higher rate on the East River bridges than on the Harlem River bridges under the plan.

There would be no toll plazas: Most tolls would be collected through a system of E-ZPass readers. Drivers without E-ZPass would be identified and could be billed using digital cameras that snap a picture of each vehicle’s license plate.

Control of those bridges, which are owned by the city, would be transferred to the authority under the plan, although it was not clear how that would be achieved.

The third main element of the proposal is a more modest increase for next year in fares and existing tolls on the bridges and tunnels already controlled by the authority.

That increase would allow Mr. Ravitch and his supporters to argue that the cost of running the system was being shared by all those who benefit from it.

So we've got a proposal that the way to pay for the shortfalls in providing the public transportation on which the NYC economy is vitally dependent is from taxing employers, imposing tolls on previously free bridges into Manhattan, and raising existing bridge tolls (which fall on those who don't use public transportation [except perhaps bus commuters?]

Most interesting is the final sentence quoted above:

That increase would allow Mr. Ravitch and his supporters to argue that the cost of running the system was being shared by all those who benefit from it.

Ah, but he has omitted from his analysis something vitally important: paying in proportion to the benefit received. One of the biggest -- huge!! -- beneficiaries would pay next to nothing!  To whom am I referring? The landlords of New York. 

• The purest case would be those who own the land and don't own the building that sits on the land.  Their land is valuable largely because of the existence and service of the MTA (as well as NYC's other taxpayer-funded amenities -- schools, emergency services, courts, jails, public health, parks, etc.), but by this scheme, the landlords aren't asked to pay a penny!  (One example would be the owners of the land under the Empire State Building, but there are many others.)    Their payroll consists of a tax accountant or two.
• The next purest case would be the landlords who own both land and building. They receive awesome rents on their buildings, and while they do have a building to maintain and most also provide services to tenants, and therefore have a payroll, most of what they collect in monthly rent is for the value of the location, not for even the fanciest building and its internal amenities, no matter how much granite the building has.   Taxing their payroll would capture only a tiny fraction of the value that the presence and reliability of the MTA creates.
• And then there are the properties where the owner of both the land and the building conducts business on that site and occupies it, without having any other tenants.  One such property comes to mind ... a hotel within a few blocks of Grand Central Terminal, said to be worth $400 million to $1.2 billion as a teardown, and making an annual profit of about $14 million, according to one report.  Certainly they have a payroll, but mainly the owners are waiting for someone to meet their asking price.   

Do you have any doubt that the MTA's existence makes a difference, both in terms of making the sites it serves, particularly in midtown Manhattan, accessible to employees and also in terms of giving the site the value which permits a landlord or, for that matter, a hotelier, to charge more than he might charge for a similar suite of rooms 10 miles west or 10 miles east?  

The tax on payrolls, expected to be less than one half of 1 percent, would apply to businesses in the 12-county area served by the authority. It would be paid by businesses, not employees. The tax would be designed to raise $1 billion a year or more.

So every business within a 12-county area would pay a percentage on its payroll, in the interest of being able to claim fairness?? 12 counties would include the 5 boroughs, Westchester, Suffolk and Nassau Counties in NYS, several NJ counties, and perhaps a few upstate counties in NYS and Fairfield County, Connecticut.   Does it really make sense to charge every employer, in proportion to his payroll, without regard to whether he is close to several MTA stops or many miles from the nearest access to the system?

Why raise the cost of doing business?  Why not raise the cost of being lord of the land, instead, in proportion to the size and quality of the location one claims?

Wouldn't a tax on land value match the benefits to the costs far better?  

Ah, but you must remember what Leona Helmsley taught us: it is the little people who pay taxes.  What she didn't say -- didn't have to say -- was that it is the landholders who are the beneficiaries.  They get a free lunch, financed by those who work.

You might take a look at Fred Harrison's excellent 8-minute YouTube video, entitled "Ricardo's Law ~ The Great Tax Clawback Scam," at 
http://www.youtube.com/watch?v=6ZkfmY1PMng

And you might also  take a look at an excellent paper entitled Research Note #5a Retrieving Transit's Benefits and Other Advantages of Funding Transit From Land Value by Chuck Metalitz.

There IS a better way.