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OPINION: Hey, Albany and MTA: Don't tread on me

William Schoolman is president of Hampton Luxury Liner and Classic Coach. A copy of his lawsuit is available at


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.


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