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N.Y. Loses Commuter Tax Case

April 4, 2000

ALBANY, N.Y. (AP) _ A New York City commuter tax cannot be imposed on residents of other states if the tax doesn’t also apply to New York commuters, the state’s highest court ruled Tuesday.

``The language of the statute plainly and frankly discriminates against nonresidents,″ Judge Richard Wesley wrote.

The ruling by the state Court of Appeals will cost the city $360 million a year. About 500,000 people live in New York state, outside the city, and commute to jobs in the city and about 300,000 people commute to the city from other states.

The Legislature rescinded the tax on New Yorkers last year.

Lawyers for Connecticut and New Jersey residents and for the state of Connecticut argued that since the tax was being eliminated for New York state residents, it violated the federal Constitution to impose it on residents of other states who work in New York City.

Lawyers for New York City also challenged the Legislature’s action, on other grounds. They had argued that under ``home rule″ provisions, the Legislature and governor could not rescind the tax on New York residents without a request by the New York City Council.

In its ruling, the Court of Appeals unanimously said that no such request was necessary.

It was no surprise to legislators that the out-of-state portion of the law was declared unconstitutional. When lawmakers rescinded the tax for New York State residents, they included a ``poison pill″ provision that said that if part of the law was found unconstitutional, the repeal of the commuter tax would apply to everyone.

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