City Repeals Tax on Freelancers -- But Albany Hits 'Em With Another

Last week the Freelancer's Union sent an email encouraging its 75,000 members to go out and stump for Michael Bloomberg's reelection campaign. "Will you join us?" asked Union president Sara Horowitz, who said she'd be volunteering personally. The group is supporting Bloomberg because earlier this year he delivered on a signature issue -- citing the impact of the recession and freelancers' lack of safety nets, he was able to push through the city council a bill that exempted sole proprietors from a tax on unincorporated businesses that was costing many freelancers thousands of dollars a year.

But as of this coming Monday, much of those hard-won savings are going to be offset by a new tax that hits freelancers and sole proprietors hardest of all...

The revenue from this new tax goes right to the beleaguered MTA, which estimates that it will generate just over $1.5 billion dollars over the next two years. Under the Metropolitan Commuter Transit Tax, freelancers, businesses, and even school districts will have to pay 0.34% of their income ($34 dollars on every $10,000 of income), whether they use the subway or not. For freelancers, unlike people in the other two categories, the tax is retroactive for all of 2009.

With all the freelancers in NYC, one might be surprised to learn the sponsor of this bill is Brooklyn's own Martin Malave Dilan, a Democrat. (The item didn't get much notice when it was slipped into the budget in May.) Dilan and others argued that this tax is necessary to prevent fare hikes for the cash-strapped agency, which got itself into a financial pickle because it borrowed excessively and couldn't pay its creditors.

A clerk in the state's finance department told the Voice that a hotline the agency set up to explain the new tax has been flooded with complaints. Freelancers Union president Horowitz is complaining, too. In a statement to the Voice, she said the tax "definitely adds unnecessary administrative burdens... Since the first payment is due on Monday, we're using our website and networks to get the word out about the tax this week, to make sure our members aren't blindsided with late penalties on top of an unexpected new tax."

You can read more about the new tax here.


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