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New York Doesn’t Need an “Amazon” Tax

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New York Doesn’t Need an “Amazon” Tax

The MTA can be saved without making life in the city even more costly. January 6, 2021
New York
Economy, finance, and budgets

The $900 billion Covid-19 relief bill reluctantly signed by President Trump offers no direct funding for profligate city and state governments, but it does provide emergency funds for their public transit systems. That includes $4 billion for New York City, the nation’s largest transit system.

Some critics will see this aid as an unjustified bailout. It’s true that the Metropolitan Transit Authority pays union-bloated wages and benefits and has resisted steps to economize. Yet the MTA’s need for emergency funding is not overstated. Ridership during the pandemic is down 80 percent.

Moreover, the relief bill’s billions represent some compensation for years of federal subsidies for the nation’s least efficient bus and transit systems—those in small towns and rural areas. Big cities have long been precluded from receiving federal operating assistance, while highly inefficient suburban and rural systems get lots of help. Westchester County’s Bee Line, for example, with buses half-empty, at best, gets 9 percent of its operating budget from Washington, while the MTA gets zero. Westchester’s operating expenses per passenger trip are $5.95. The comparable figure for New York City transit is just $2.54. In upstate Oneida, public transit’s operating expenses amount to $17.97 per passenger trip.

There may once have been good reason to support rural mass transit for those otherwise stranded without cars, but times have changed. Uber and other on-demand services for rural areas could be subsidized, if necessary, at far less cost. And cities, the dynamos of the U.S. economy, need the help now. That’s not to say that the assistance should come with no strings attached. The MTA’s rich labor deals—for no-cost health insurance and rich guaranteed pensions—deserve tough scrutiny. MTA management desperately needs to develop flexibility in staffing and scheduling.

Still, $4 billion in federal aid is a better option than another MTA funding proposal recently floated in Albany: a $3 “Amazon” tax on every package delivered to a New York City resident. The proposal, advanced by Park Slope assemblyman Robert Carroll, has the same seductive appeal as a millionaire’s tax: the illusion of a free lunch. Here’s the math: 1.5 million packages delivered daily in the five boroughs, multiplied by $3 a package. Just like that, the same Jeff Bezos whom Alexandria Ocasio-Cortez chased out of Queens will supposedly have to pay up.

Except that it wouldn’t be Bezos paying—it would be city residents. An Amazon tax would make life in the city even more costly. Amazon customers would foot the bill for what amounts to another sales tax on top of the 4.5 percent tax city residents already pay. It would be one more hike in the city’s cost of living—and one more incentive for residents to flee to the suburbs. And all for a tax that would yield less than half the offered federal subsidy of $4 billion. (It would bring in about $1.6 billion per year.)

Does Carroll think that Amazon customers don’t ride the subways? They support the MTA every time they swipe their MetroCards. Nor would the $3 surtax respect the circumstances of those placing delivery orders. Does Carroll believe that all Amazon customers are wealthy?

The right approach to keeping the trains running is not a new tax on riders at a time when businesses are closing and unemployment is high. A fairer deal from Washington, coupled with reforms to MTA employees’ rich pension and health-insurance deals, is a much better way to go.

Photo by Spencer Platt/Getty Images

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