FPI today released a new report recommending progressive funding strategies for the MTA capital plan.

Key Findings

• State lawmakers must add up to $2 billion in new revenue for the MTA’s five-year capital plan to this year’s budget. They should prioritize progressive revenue sources, in particular:
  • Raising the corporate tax rate or the corporate tax surcharge for the MTA region
  • Taxing “global intangible low-taxed income” (GILTI) which reflects the overseas profit-shifting of multinational corporations ($1-1.5 billion per year)
  • Reducing the rebate of the pass-through entity tax (PTET), which benefits wealthy pass-through business owners ($1.75-2 billion).
• The MTA is already funded through a mix of dedicated taxes, both progressive and regressive. Lawmakers could similarly rely on a combination of taxes.
• Discussions to date have focused on the Payroll Mobility Tax (PMT), an employer-side payroll tax that applies to the downstate MTA region. Because the tax is largely passed on to workers, it is regressive as compared to the options described above. A PMT increase would also likely dwarf the benefit of the tax cuts currently under consideration.
• Lawmakers have considered raising the PMT rate only for New York City, exempting the suburban regions of the MTA network in Long Island and Hudson Valley—but these regional economies depend on the City’s economy and commuters, and they should contribute their fair share of MTA funding.
  • New York City already disproportionately pays the PMT—jobs based in theCity account for 76 percent of metro area wages but pay 85 percent of thetax.
  • Limiting PMT increases to New York City disproportionately shifts the burden onto workers of color, increasing their tax burden by 11 percent.
  • Increasing the PMT solely on New York City could reduce workers’ annual wages by an average of $420 per year.