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Paterson: MTA payroll tax unfair to suburban businesses

ALBANY - Businesses on Long Island and in other suburbs should have been consulted before the MTA payroll tax was approved last year, Gov. David A. Paterson said Thursday.

In setting tax rates, he said, state officials failed to adequately assess the greater benefits of mass transit to New York City firms compared with those in suburbs, such as the North Fork, which receives minimal LIRR service. He has proposed a remedy that would shift more of the tax burden to the city and exclude most small businesses.

However, State Senate Republicans and some business groups want the payroll tax repealed. It was adopted last May to help close a budget deficit at the Metropolitan Transportation Authority, operator of the Long Island Rail Road, New York City subway and Long Island Bus.

Paterson's comments occured during a round of media appearances where he attempted to squelch rumors of a New York Times article about allegations of personal misconduct during his tenure.

Last night he went so far as to blame predecessor Eliot Spitzer's downfall in a prostitution scandal for creating an environment where falsehoods about leaders are believed. "I think that has actually victimized me," he said, on CNN's "Larry King Live" program.

Thursday on WOR radio, Paterson debated the MTA payroll tax, saying "most of the discussions about the increase in the mobility tax were with New York City businesses" last year. "The problem was all the businesses in the outlying areas . . . in Suffolk County, where the train isn't even remotely close to where these businesses are, [and] they had the same rate."

He would replace the universal tax rate of 34 cents per $100 of payroll with different rates for suburban and city employers. The proposal must be approved by the legislature.

The Long Island Association, the region's largest business group, said it had provided input to the state commission that originally proposed the tax. President Matthew Crosson said small employers support Paterson's fix, though they would prefer to see the tax scrapped.

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