New York City

A New Tax Is No Solution to New York's 'Summer of Hell'

New York Mayor Bill de Blasio's proposed tax will not address the root problems of his city's transit crisis.

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Car interior 7 train
Dschwen?/Wikimedia Commons

New York City's subway system is a hot mess right now. Each month some 70,000 trains are delayed, compared to 28,000 per month five years ago. On-time rates for trains have plummeted, from 86 percent in 2012 to 65 percent today.

The city's commuters have also suffered through track fires, train derailments, claustrophobic waits aboard broken trains, and even sewage spewing from station ceilings. No wonder Gov. Andrew Cuomo has dubbed this the "summer of hell."

New York City Mayor Bill De Blasio thinks he has a plan to fix it: a new tax on high income earners. "We are asking the wealthiest in our city to chip in a little extra to help move our transit system into the 21st century," he said Monday.

De Blasio's plan would increase taxes on individuals earning $500,000—and joint filers earning $1 million—from the current 3.88 percent to 4.41 percent. This is projected to bring in $800 million a year for the city's transit system.

Given its performance problems, few would question the idea that the subways—overseen by the state's Metropolitan Transportation Authority—are in desperate need of improvements. But there are a number of reasons to suspect this new tax is not the solution de Blasio claims.

For one thing, about $250 million collected by the new tax—almost a third of projected revenues—would not go even go to repairing the system or expanding capacity. That money would instead be spent reducing subway fares for 800,000 low-income New Yorkers. Given that overcrowding is one of the chief culprits for the system's delays, it seems perverse to try to expand ridership before fixing the other problems.

Another reason to be skeptical of the mayor's plan: In that past, growth in MTA-dedicated tax revenue—which has doubled in real terms since the 1980s—has mostly been eaten up by growing employee benefit costs. In 2005, the MTA was spending 23 percent of its employee costs on health and retirement benefits; in 2017, those benefits made up 30 percent of employment expenses.

A July 2017 report by the conservative Manhattan Institute found that these cost increases were enough to consume the entirety of new revenues from a 2009 state payroll tax passed to shore up the MTA's budget. All told, the agency owes $18.5 billion in future pension liabilities.

What new revenue is not taken up by employee benefits would likely be swallowed by the increasing costs of the MTA's debt. In the 1980s MTA was virtually debt free. Today it has nearly $40 billion in outstanding debt, the interest payments on which cost $2.5 billion a year.

Says the Manhattan Institute: "absent control of costs, particularly employee-benefits costs, history indicates that the MTA will spend much of any new revenues allocated to it on increased operating spending and on servicing debt, not on adequate improvements to subway, bus, and commuter-rail service for New Yorkers."

What exactly an adequate fix would be for the MTA and the deteriorating subway system it oversees is outside the scope of this blog post, but it might start with the constant political burden-shifting that arises when a subway system is owned by the city but managed by the state. Until that's addressed, no new tax haul is likely to be spent well.

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  1. “We are asking the wealthiest in our city to chip in a little extra to help move our transit system into the 21st century,” he said Monday.

    Asking? LOL.

    1. I have heard of the politeness of New York. It isn’t uncommon for someone to stop you on the street and ask you to give them your wallet.

    2. IOW, the people who never use the transit system. Noice.

  2. NYC: The Big…Blue City Failure Model

  3. How about a special tax on politicians, lobbyists, government consultants, campaign flunkies, and assorted boot lickers?

  4. This is projected to bring in $800 million a year for city’s transit system. hot garbage the de Blasio can use to pander to his base.

  5. Is anyone running a hit-und-run fantasy football league this year? I kicked a bunch of y’alls asses for a few years, and then I never got invited back last year, for SOOOME reason.

    Fear is a stinky cologne, fellas.

    1. I play fantasy politics. Early last year I traded Hillary for Donald and a 2018 first round draft pick. Trump has been a mixed bag. I traded the draft pick for Gowdy since Haley is producing as well at the UN.

  6. Prioritizing lowering costs to riders based on class over fixing infrastructure? Check. Paying for costs decreases to lower classes by raising cost of living in the city on the upper income class? Check.

    Course set for Venezuela, Mr. Mayor!

    1. Winner! I was going to go with “How to destroy a mass transit system while getting reelected in Ten easy steps. Step 1 over promise and underpay worker benefit plans. Step 2 Unions bitch Step 3 divert money for infrastructure repair to pension and benefit plans. Step 4 Infrastructure collapses Step 5 citizens complain. Step 6 raise taxes on rich to cover costs to repair infrastructure and make big deal of it. Step 7 Unions see gravy train in new revenues. Step 8 Unions lobby Step 9 Politicians reward union cronies. Step 10 Return to Step 1.

  7. On-time rates for trains have plummeted, from 86 percent in 2012 to 65 percent today.

    I would say that first on-time rate is nothing to be proud of either.

    1. Their standard is 75% LOL. I’ll take it.

  8. We are asking the wealthiest in our city to chip in a little extra

    Proggies are always “asking” when they want to steal your property at gunpoint.

    1. I’m going to have to ask you to follow my orders.

  9. You’re making the mistake of assuming that Deblasio actually has the interests of subway riders in mind. It’s understandable.

  10. As if anybody needed more proof that libertarians are really fascists in disguise after Naomi Klein’s takedown of Milton Friedman in Shock Doctrine, Nancy MacLean’s takedown of James Buchanan in Democracy in Chains, and Jeff Deist’s explicit fascist imagery at a recent libertarian event, Reason Magazine pines for trains running on time.

    Everybody knows that only fascists care about making the trains run on time. This is a great example of those fascist code words that libertarians use among themselves. Fortunately, progressives have cracked the code and are equipped with secret decoder rings.

    1. I had to go look up what Jeff Deist did. Thanks for that.

  11. That money would instead be spent reducing subway fares for 800,000 low-income New Yorkers.

    At the risk of being accused of being a Trumpista by Tony, I might point out that the current fare is already set at poor-people levels, or just north of 50% of covering operating costs. And the truly poor already receive a fuckton of money from the rest of us. The only point of this meaningless gesture is political posturing.

    1. I took a phone poll a couple years ago and they were asking about new lanes and new spurs and whatnot being built. One question asked if I would prefer a tax to pay for it or tolls. Since I’d never use the roads in question, I said no tax only tolls. Then the pollster asked, but what about the poor and less fortunate that need to use the road? Are you shitting me? Then take the fucking bus. How poor are you if you have an insured car that you’re maintaining and driving? You can afford the toll. And are we talking about a $10 toll or a $1 toll? What about the “poor” that have to drive in the new commuter lanes? Yeah, what about them? Good god, people.

      1. Q: “But what about the poor and less fortunate that need to use the road?”

        A: Pedestrians wouldn’t have to pay the toll.

    2. Has de Blasio ever actually seen a low-income New Yorker? I mean one of the “low-income” New Yorkers who qualifies for food stamps, Section 8, rent control, welfare, free school lunches for their kids, Medicaid, etc.?

      Ride the 5 Train sometime, Bill. Observe as your beloved “low-income” residents board wearing $200 sneakers and $500 puffy anoraks, with $200 weaves and $80 nails.

      1. Used to point the same thing out in the projects in DC. Amazing how many section 8 houses had one if not two satellite dishes.

  12. The Kingston Trio’s “MTA” is just begging for a rewrite here.

    1. I’m thinking a mashup of The Kingston Trio with The Crazy World Of Arthur Brown is in order.

      I AM THE GOD OF HELL FIRE AND I BRING YOU…. THE MTA

  13. Democrats always see every problem as a lack of revenue.

    1. Hey, to be fair if we all had infinite resources we could be super shitty with it and still have enough.

  14. Question: if the MTA which ones are subways is a state agency, then why on earth is the city raising taxes to improve subway services?

    1. The MTA is an “authority” independent of any political jurisdiction, or reponsibility. The money just winds up in a giant swimming pool to roll around in, I don’t think they care where it comes from.

  15. NYC free since 2013!

  16. I don’t know why, but here in Mexico City the subway system is great and super cheap and seems to be on time always. It cuts down drastically on car traffic.

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