There are one million wealthy people in New York City—more than any other city in the world, according to a study released earlier this year—but there are also nearly one million low-income households, and a vital subway system that needs repairs and funding.
A new report by financial services company Moody’s found that income inequality in New York City will challenge the MTA’s ability to capture revenue through fare hikes in the long term, although those wealthier households could potentially be tapped as a funding source.
All urban areas—and thus, their transit systems—have growing income inequality issues, but the gap between those with money and those without is highest in New York City, according to the report. New Yorkers spend 1.8 percent of their income on public transportation, while the U.S. average is near 1 percent (also an indicator of how frequently New Yorkers use mass transit, and how vital it is to city residents).
“As a significant portion of the New York City area’s population experiences slow income growth, mass transit becomes less affordable for low-earning residents, which risks curbing ridership and weakening political support for future fare increases,” the report reads.
“In the near term, fare increases included in MTA’s current planning documents are sustainable. In the longer term, however, fare increases that outpace consumer price inflation, along with continued slow income growth among low-earning riders, threaten to make public transportation unaffordable for low-income riders and reduce revenue growth.”
But the wealthier residents in NYC and the state could contribute to the MTA’s investments and operations, the report notes; incomes for the area’s top half have grown almost twice as fast as the bottom half since 2009. Total personal income has grown 4.4 percent per year on average in the New York City metro area.
Mayor Bill de Blasio wanted to tap into that wealth when he proposed a millionaire’s tax—a 0.534 percent increase on income tax rate for individuals who make over $500,000 and couples who make above $1 million—to fund repairs to the subway system and offer half-priced MetroCards to low-income New Yorkers. But Gov. Andrew Cuomo and state legislators, who have the power to impose taxes in the state, haven’t backed that proposal.
Right now, the MTA’s tax-funded subsidies are 0.5 percent of the area’s personal income, but that percentage hasn’t kept up with the region’s economic base and income growth over the past five years—which leaves “potential MTA operating support untapped,” the report says. Tax-funded subsidies constitute 35 percent of the MTA’s total operating revenues.
The report also mentions that though congestion pricing (which will largely affect wealthier New Yorkers) will help fund the MTA’s capital program, it will not address the projected future decrease in revenues to support the agency’s operations.