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OPINION: Hey, Albany and MTA:
Don't tread on me
January 22, 2010 By WILLIAM SCHOOLMAN
William Schoolman is president of Hampton Luxury Liner and Classic Coach. A copy of his lawsuit is available at www.mtataxpayerabuse.com.
Like many employers, I was angry when I had to write my first check to cover the recent MTA payroll tax, a creature of the New York Legislature that goes solely to bail out the failing Metropolitan Transportation Authority.
My business competes directly with the MTA. We run luxury charter and line-run buses to similar destinations served by the Long Island Rail Road and Metro-North, and we're able to do it at comparable prices offered by the MTA. We're also able to remain profitable, even though our competitor has the advantage of being funded by taxpayer dollars.
The payroll tax is now taking a successful business and forcing it to subsidize a competitor with a failed business model. Using these economic principles, it's no surprise that a recent study found that New York ranks first in business failures and last in start-ups.
Since businesses in the state can't rely on our current elected officials to help us succeed, I decided to file a lawsuit seeking to show how this $1.8-billion payroll tax violates the New York State Constitution and the Public Authorities Law.
The state constitution requires that two-thirds of the legislature pass "special laws," which are defined as those that affect only a portion of the state or that affect the property and affairs of local governments. This tax has only a regional purpose, and it directly affects the property of local governments, which are also required to pay the tax. But it was implemented after receiving only 60 percent of the Assembly vote and 52 percent of the Senate vote - both below the required two-thirds. The legislature also failed to obtain any Home Rule Message - a request for the law from the localities involved - when enacting the tax.
The state constitution further requires that any appropriation proposed by the governor have a sole purpose. But in the case of the payroll tax, numerous provisions and other political carrots were attached to ensure its passage.
The constitution also prohibits New York State from accepting the debt of any public corporation, like the MTA. The legislature must now account for why it passed this constitutionally and legally questionable tax and gave $1.8 billion - which could have been used by businesses for job growth - for the sole purpose of servicing the MTA's debt.
The Public Authorities Law mandates that the MTA be self-sustaining, and prescribes specific ways in which it may raise money and incur its own debts. The law does not permit this tax bailout. Of course, the government has been subsidizing the MTA for years, but no one has made a legal challenge before.
Challenging the payroll tax through the court system is the last way we business owners have to force our current elected officials to confront the irresponsibility of the MTA. With its 45-year history of corruption, inefficiency and fiscal irresponsibility, the MTA has a business model that no bailout can save.
This coming November provides an important opportunity for taxpayers to vote for officials who will stand on the side of business, job growth and opportunity, and to vote against those who have continued to support the state's biggest failure.
comments 1 - 4 of 4
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godfrey129
As the owner of Paradise Trailways I happen to compete with Mr.
Schoolman's Classic Coach operation on daily service to Atlantic City,
Yonkers Raceway and Giants stadium for both the Jets and Giants home
games. We also compete on charters. Both Mr. Schoolman and I struggle
doing business in New York because of the high taxes and tolls which we
have to pay. What's sad is that every trip which we take that crosses an
MTA bridge or tunnel helps subsidize the MTA. I wonder what the Train to
the Game that the LIRR ran against our non-subsidized service cost the
taxpayers? Meanwhile, both Mr. Schoolman's company and mine have
employed many people without taxpayer's subsidy over the past twenty
plus years and unlike the MTA we pay taxes on earnings. What an insult
the MTA Payroll Tax is to us. While I hope the lawsuit works out in our
favor, the only thing that can save New York is to elect "Scott
Brown" types and term limits so that when Mr. Schoolman and I are
in Albany they might listen to us when we say our industry can help
close the deficit through privatization.
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chessvrugby
I have spoken to a many business owners, large and small, and none of
them are happy about this business tax.I find it disturbing that most of
the articles concerning the MTA come down to the fact that they
mismanage the company,get an increase in tax money and reduce the
service. In the private sector, mismanaging a company and reducing
service would be a recipe for a business to close. It is incredible that
some of the ideas recently reported in Newsday that they are looking
into economies of scale when choosing phone systems and repair yards and
facilities just came to light after decades of mismanagement.What took
them so long to realize this? Where were the cost controls that private
companies have to operate under in order to make a profit? I guess when
you can just ask for more money and get it from government by having
them create a new tax it is OK. Albany and the MTA continue the old
"go along ,get along" scenario. Just maybe, they should look
to what recently happened in Massachesetts and realize that the
taxpayers are saying enough is enough.
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farleydavidson
I recently retired after 40 years in the bus transportation business,
and during that period dealt with both the public and private sector.
The level of wastefulness in the public sector was breathtaking. Despite
a bid process, they always seemed to pay more for goods and services
than the private operators, while generally providing an inferior level
of service. Political and union concerns always outweighed any real
attempts at efficiency or passenger service. Private operators like Mr.
Schoolman are subject to regulatory and inspection regimes that are
largely absent for government entities like MTA. Because it's
extraordinarily difficult to discipline employees, safety can be a
concern (look at Boston's recent experiences, because MTA is vulnerable
to the same forces). They are able to get away with all this, because,
until now, they've had the virtually unlimited support of politicians,
who raise and spend huge amounts of money ostensibly in the name of
transporting the "public". They spend it poorly, and Mr.
Schoolman (and his competitors) do a far more efficient and better job
of providing transportation. There is a need for the MTA, but the job
could be done better, for far less.
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arty3636
I must congratulate Mr. Schoolman on his bold attempt to fight what is
becoming an ever increasing tyrannical state government. New York State
was spoiled by its past ability to feast at the table of Wall Street as
it was plunging our nation into this current mess. Now the feast is
over but NY still thinks that all companies can pay taxes as though they
were also receiving bonuses and incomes based on a similar ability to
feast. Schoolman is telling NY that they must find better methods to
operate and not do it by taxing modest companies, who create real and
lasting jobs. That is just plain wrong! Lets hope his lawsuit
prevails!
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