Last year, the Albany legislature levied a new tariff on most of the businesses in the New York City region. The “Metropolitan Commuter Transportation Mobility Tax” requires employers to set aside 34 cents for every $100 in payroll costs, and hand the money over to a battered, barely breathing patient on the state’s fiscal operating table: the Metropolitan Transportation Authority.The tax hasn’t worked out so well. So far, its projected revenues are coming in about $400 million below the state’s estimates – which, in part, will mean reduced subway and bus service for New Yorkers starting this summer. It has also prompted a furious backlash from suburban officials who resent bankrolling an agency that, they say, benefits the city at the expense of its surrounding counties.
And then there is William Schoolman, 69, amateur activist, self-described “prototypical entrepreneur,” and current proprietor of the Hampton Luxury Liner bus fleet. In December, he filed a lawsuit [pdf] in state Supreme Court claiming the tax to be unconstitutional and demanding its repeal. The reason?
“Competition,” Mr. Schoolman said in a recent telephone interview, anger rising in his voice. “This is the first time that I ever had to pay a subsidy directly to my competitor. That’s the thing that really bothers me.”
Indeed, Hampton Luxury Liner must compete with the Long Island Rail Road and Metro-North Railroad, both arms of the transportation authority, for customers heading to the East End and the upscale outlet mall at Woodbury Common in Orange County. Of course, as a taxpayer, hasn’t Mr. Schoolman been subsidizing these railroads for years?
“You reach a point in time when enough is enough,” Mr. Schoolman said. “Why should someone support a government–funded corporation that operates as inefficiently as the M.T.A.?”
It’s been 34 years in the transportation business for Mr. Schoolman, a Long Island native who bought two vans in 1976 after being stranded on his way to Kennedy Airport by a local service. His bus network grew to serve Atlantic City and various Long Island schools and locations, thanks in part to 12 mortgages the owner said he took out on his house.
In February 2009, Mr. Schoolman bought the struggling Hampton Luxury Liner and refurbished its fleet with DirecTV and wireless internet. It seemed like a smart bet on the East End market, until, he said, he realized that his payroll taxes would go up.
“Do you know how I feel being asked to subsidize that kind of inefficiency and corruption?” Mr. Schoolman said, citing high salaries, overtime costs, raises for transit workers, and other complaints about poor business practices at the authority. “Boy, it makes me angry to give extra money to the M.T.A.”
His lawsuit says the payroll tax violates home rule laws and other sections of the state constitution and public authority rules. Mr. Schoolman set up a Web site — www.mtataxpayerabuse.com — which he said has received “tons and tons” of response. Its masthead features the Hampton Luxury Liner logo and the “Don’t Tread on Me” snake.
“The stakes are very high for both sides,” Mr. Schoolman said. “Here’s the way I see it: if I win, and the tax is defeated, I believe it’s going to start a tax revolt — I personally do believe that — to straighten out a lot of the fiscal irresponsibility, because taxpayers and businesses just can’t take it anymore. On the other hand, if we lose, I think things are going to get a lot worse.”