New York’s MTA takes the regressive road

To eliminate an expected budget deficit of $1.2B, New York's Metropolitan Transit Authority intends to raise fares and cut services in 2009, the New York Times reports. The Ravitch Commission's MTA rescue plan, announced earlier this month, would also include payroll taxes for those companies located within the MTA's area of operation.

These deficit closing measures, including the payroll tax, would be regressive since their costs fall disproportionately on those who individuals who can least afford to bear the greater costs. The payroll tax would also be regressive because it taxes only payroll, and thus fails to include every form of income. This point is relevant because New York's transportation system is, to put it concisely, a "real world" public good, one which actually benefits everyone living in the MTA service area even if they do not directly consume the good (use public transportation). Thus, everyone living in the area should contribute in equally to the provision of this good.

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