MTA Payroll Tax Ruled Unconstitutional

In a move that will likely come as a relief to many local small business owners — and school districts and municipalities, among others — a judge ruled New York State's MTA Payroll Tax unconstitutional on Wednesday.

According to Reuters, a State Supreme Court judge in Nassau County said in his ruling that because the law applies to only 12 counties in the state — and neither home rule messages nor two-thirds votes in the State Legislature were obtained — the legislation was passed illegally.

The MTA reportedly plans on appealing the ruling.

The ruling will reportedly put the MTA out about $1.5 billion per year, while that cash will remain in the pockets of businesses, municipalities, and taxing districts, many of which called the tax unnecessary.

"This decision threatens the foundation of the state's economy. Public transportation is critical to the New York City metropolitan area--an area which provides 45 percent of the state's tax revenue, paying for countless public services from Niagara Falls to Montauk," said Paul Steely White, executive director of Transportation Alternatives.

"We hope Governor Cuomo resolves this crisis, and that the appeals court will consider the substantial state interest when reviewing this ruling."

When adopted in 2009, the tax imposed a 34-cent tax for every $100 of payroll.

After considerable outrage throughout the first couple of years of the tax, the MTA rolled it back at the end of 2011, eliminating it entirely for businesses with an annual payroll under $1.25 million. The , though the measure never got the required support from the Assembly.