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, especially

"I'll bet if I polled my customers I'd be lucky to find one who gets out here using the train," Mike Acebo, the general manager at in Greenport, said at the end of 2011. "I never had anybody explain how that tax helped my business in any way, shape or form."

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.

According to the office of Suffolk County Executive Steve Bellone, the ruling could save taxpayers $3.5 million per year.

Said Bellone in a statement: “This initial ruling is a big victory for Suffolk County taxpayers, many of whom get little to no service from the MTA. Since 2009, Suffolk County has paid an estimated $12.5 million as a result of the MTA payroll tax and local businesses have paid tens of millions more."

Click here to read the Reuters story.