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Why Us? How the Commuter Tax Chips Away at the Self-Sufficient Self-Employed

03/18/2010 05:12 am ET | Updated May 25, 2011

Today I wrote a check for $400 to the New York State tax department and I'm not sure why. The form says "Estimated Metropolitan Commuter Transportation Mobility Tax," and it requires me to pay 34 cents on every $100 I earn above $10,000. Ouch!

Apparently the cost of the MTA's malfeasance and mismanagement has fallen upon the shoulders of small employers and the self-employed. The assumption, I guess, is that we use subways, trains and buses far more than anyone else, and we must therefore bear the burden. This must be true; otherwise the extra tax would be random and unfair, right?

Wait a minute, it is random and unfair!

Now I'm all for paying my share of taxes. As high as they are in New York City, and as much as they put the squeeze on entrepreneurs who are trying to build something and be self-sufficient, this is an expensive town to run, and I made the choice to live here. As a non-citizen who lived in New York for seven years on a work visa before getting permanent residence status, I also accepted the hefty taxes I paid to support public schools, even though, if I had children, I wouldn't have been entitled to send them to those same public schools my income supports. This is my home and I, like everyone else, should pay for government-run services. I'm Canadian, I get it.

But this commuter tax makes no sense. It's only requiring freelancers, single proprietors and small business owners to cough up. People who work for large companies, and who often enjoy tax breaks in the form of transit checks, are exempt. As entrepreneurs, we create wealth and jobs. We get no breaks, and we carry all of our own expenses. We don't siphon off the system, and if the work dries up, as it often does, we don't qualify for unemployment benefits. Many of us also work from home and rarely commute. (I bike and walk, and almost never take the subway.) So what makes state legislators -- along with hapless mayoral candidate Bill Thompson -- think we're the perfect source of revenue to close the MTA budget gap?

I'm surprised by the meek protest to this tax. The Freelancer's Union has complained, but they're already worn out by the dozens of other battles they have to fight to protect the rights of their members -- like pushing back the 4% unincorporated business tax levied by the city, even on people who earn less than $100,000 a year.

This latest hit adds up to a few hundred, and in some cases an additional few thousand dollars a year in expenses. For some self-employed people I know, including many struggling photographers, writers, musicians, actors and artists, it's forcing them to make the choice between buying groceries, paying rent or filling up the gas tank.

Last year I became a freelancer. I quit my full-time job as a reporter at Crain's New York Business because I saw a chance to build a business as a ghostwriter and co-writer of books. I was tired of working harder and harder as a business reporter for effectively less pay (our raises were almost always below inflation), and I wanted to take control of my own destiny. I could also see what was happening in the world of print media, and I knew I needed to come up with an alternative plan. I didn't want to be a wage slave living in constant fear of layoffs.

This is the position many of my former colleagues in the media find themselves in now. They're either stressed, overworked and terrified; or stressed, unemployed and terrified. Several downsized journalists are running out of their unemployment and health care benefits, and trying to establish their freelance careers just as magazines are slashing budgets. The same is true for people across all industries. Now, more than ever, the little guy should be encouraged and given incentives (like tax breaks) to start businesses and strike out on their own, not penalized!

I've never collected unemployment and I hope I never will. I pride myself on generating business and contributing to the local economy. I've been especially lucky. I've produced a bestseller and snagged a couple of tidy book deals despite a troubled publishing market. I hope this good fortune continues. But as a newly self-employed person I do notice my expenses run higher. Health care, for example, is a killer. Living and doing business in Manhattan, entertaining clients and promoting my services as a writer, are also costly pastimes. So this commuter tax comes as an insult at a critical time, just as I am getting ahead and establishing my enterprise.

If we all had to pay (at a much lower rate) fair enough. But if the MTA can't afford to operate our decrepit transportation system with fare hikes alone, they should spread the additional cost to everyone living in the metro area. Don't just stick it to small business people, single proprietors and the self-employed.

Targeting this particular subset of earners is a slap at all the dynamic, self-starting people who are the backbone of this economy. It says to me that my government doesn't care if I succeed on my own, and will continue to chip away at everything I've achieved.

And the irony is, one of the big appeals of launching out on my own was the fact that I would no longer be commuting every day. I used to hate that 40-minute ride on the A train. Who knew I'd be paying for it anyway?

Samantha Marshall is a freelancer and co-writer of the New York Times bestseller, "Profits Aren't Everything, They're the Only Thing," by George Cloutier (Harper Business, Sept. 2009). See www.SamanthaMarshallGhostwriter.com for more details.