New York’s businesses are in uproar as Governor Hochul’s $68 billion MTA funding plan threatens to drive major employers out of the state with hefty payroll tax increases.
At a Glance
- Governor Kathy Hochul’s plan increases payroll taxes on large NYC businesses from 0.6% to 0.895% to fund the MTA’s $68 billion capital plan
- The tax hike will affect 5,000-10,000 companies, with business leaders warning of a potential mass exodus from New York
- While larger companies face tax increases, the plan reduces payroll taxes for businesses with payrolls under $1.75 million
- Critics question the MTA’s management, noting the plan still leaves a $3 billion funding gap with no specified solution
- The budget deal includes additional funding for fare evasion prevention and subway safety improvements
Business Leaders Forecast Corporate Exodus
New York business leaders are sounding alarm bells over Governor Kathy Hochul’s plan to increase payroll taxes on larger companies to fund the Metropolitan Transportation Authority’s ambitious $68 billion capital plan. The tax hike, part of a recent state budget agreement, is expected to significantly impact between 5,000 and 10,000 businesses across the state. For companies in New York City with payrolls exceeding $10 million, the rate will jump from 0.6% to 0.895%, while businesses in surrounding counties will see their rates nearly double from 0.34% to 0.635%.
Billionaire businessman John Catsimatidis didn’t mince words about the potential consequences of the tax increase. “The exit from New York state will be greater. It will lead to fewer investments from business people in New York,” he warned, highlighting concerns shared by many in the business community about the policy’s impact on the state’s economic competitiveness.
Fuming NYC businesses warn of exodus over Hochul’s plan to hike payroll taxes to pay for MTA’s massive $68B capital plan https://t.co/HroWecgxti pic.twitter.com/7hFKZyZi9f
— New York Post Metro (@nypmetro) April 29, 2025
Critics Question MTA Management
The payroll tax increase comes amid growing criticism of the MTA’s fiscal management and operational effectiveness. Many business leaders and lawmakers argue that throwing more money at the transit authority won’t solve its fundamental problems. Former U.S. Senator Al D’Amato expressed his frustration in blunt terms, calling those behind the plan “ridiculous” and “stupid jackasses,” reflecting the anger many feel about being asked to fund an organization they believe is poorly managed.
“The MTA is the worst-run public authority in the nation and can’t even keep commuters safe, with felony assaults rising 9% this year,” said Rep. Mike Lawler
Adding to the skepticism, the MTA’s funding plan still leaves a $3 billion gap, and officials have not specified where these additional savings will come from. This lack of transparency has further eroded confidence in the authority’s fiscal responsibility. Critics also point out that service quality doesn’t match the increasing financial burden being placed on businesses, with some suggesting that regular transit users should bear more of the cost through fare increases.
Transit is ALWAYS a bottomless pit for taxpayer money. There is NEVER ENOUGH! https://t.co/TZHzvHWojq
— Nashville Tea Party (@NashvilleTea) April 30, 2025
Relief for Small Businesses Amid Corporate Pain
Not all businesses will face higher taxes under the new plan. The budget deal includes provisions to reduce payroll taxes for smaller enterprises with payrolls under $1.75 million, a move designed to protect small business owners while placing the burden on larger corporations. This two-tiered approach has garnered some support, even as larger businesses prepare for the financial impact or consider relocating operations outside New York.
The Long Island Association has expressed cautious optimism about the tax relief for small businesses but remains concerned about the broader economic impact of higher taxes on major employers. Some supporters of the plan, including Kathryn Wylde of the Partnership for the City of New York, point to its balanced approach and additional funding for fare evasion prevention and subway safety as positive aspects of the package.
Uncertain Future for New York’s Business Climate
As businesses digest the implications of the tax increase, many are already considering their options. The competitive disadvantage created by higher operating costs in New York compared to neighboring states or other business centers could accelerate corporate departures. This would potentially reduce the tax base further and create a negative spiral for both the state’s finances and its transit system. With implementation looming, business leaders are weighing strategic responses while continuing to voice opposition to what they see as an unfair burden.
The debate highlights the challenging balance facing New York policymakers: how to fund essential infrastructure improvements while maintaining a business-friendly environment that preserves jobs and economic vitality. With billions still needed and businesses threatening to leave, the success of the MTA’s revitalization plan—and perhaps the future of New York’s economy—hangs in the balance.
