New York City businesses are reportedly angry, according to the New York Post, over Gov. Kathy Hochul’s plan to increase payroll taxes to pay for the New York Metropolitan Transportation Authority’s $68 billion capital plan.
The Post reported that the tax hike could cause big companies to leave the state.
Owner of the Gristedes and D’Agostino’s grocery chains, John Catsimatidis, told the paper, “The exit from New York state will be greater. It will lead to fewer investments from business people in New York. Things will be run tighter, possibly with fewer raises,” he said, adding, “Will there be fewer hires? Absolutely!”
On Monday, Hochul and New York lawmakers announced a payroll tax increase from 0.6 percent to 0.895 percent for New York City companies holding a payroll budget of $10 million or more. For companies on Long Island, Westchester, Dutchess, Orange, Putnam, Rockland and Westchester counties, the tax increase will go from 0.34 percent to 0.635 percent. But companies with payrolls under $1.75 million will have their payroll tax rate cut in half.
A source told the Post that the increase could affect 5,000-10,000 New York companies. And Catsimatidis said he doubted the tax hike would feed the MTA’s “bottomless pit.”
The tax hike will cover most, but not all, of the MTA’s long-term budget plan for big-ticket infrastructure projects. Altogether, the taxes would be expected to generate $65 billion, falling short $3 billion of the MTA’s initial ask.
Hochul maintained that “[t]he MTA itself will find savings for the final $3 billion of this plan.” But according to New York state Senate Majority Leader Andrea Stewart-Cousins, D-Westchester, the MTA would instead slim down its capital plan.
“Everyone has to give in order to get the premier kind of system that we want,” she said.
Nonetheless, Heather Mulligan, the president and CEO of The Business Council of New York State, Inc., argued that businesses could no longer shoulder the hikes. Mulligan then suggested that subway riders cover the funding shortfall.
“The MTA and the state,” she said, “need to consider a fairer approach to funding, one that raises revenues more broadly, including from those who regularly utilize the system.”
Still, not all business leaders or reps were opposed to the tax hike.
“This budget agreement reduces the payroll tax on smaller companies by 50 percent and requires that the state, city and MTA all contribute,” CEO of Partnership for New York City Kathryn Wylde said.
“There is also additional funding that the state is redirecting to deal with fare evasion and subway safety. So, among the options for funding the repair and upgrading of the transit system, this budget is probably the best we could have hoped for.”
Long Island Association president and CEO Matt Cohen expressed his cautious optimism, stating, “Small businesses have absorbed one gut punch after another and will welcome this tax relief, but we’ll have to wait and see how this mixed bag will impact larger companies now facing increased costs.”
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