Exposed: The MTA’s $900 Million Congestion Pricing Hoax

Understanding Congestion Pricing in New York City

New York City’s congestion pricing program, implemented in January 2025, charges vehicles $9 to enter Manhattan below 60th Street on weekdays between 5 a.m. and 9 p.m., with lower rates during off-peak hours. Higher rates apply to trucks, with small trucks paying $14.40 and large trucks paying $21.60. Motorcycles are charged $4.50. Taxis face a $0.75 surcharge per ride, while for-hire vehicles like Uber and Lyft are subject to a $1.50 surcharge per ride. Emergency vehicles are exempt, and low-income drivers may receive a 50% discount after their first ten trips in a calendar month.

After multiple delays since its initial approval in 2019, this first-in-the-nation urban congestion charge aims to reduce traffic congestion by approximately 10% while generating around $15 billion over time for MTA capital improvements. The program affects millions of commuters and thousands of businesses, receiving both praise for its environmental goals and criticism for its economic impact on outer borough residents and businesses.

The Numbers Don’t Add Up: What Tax Records Reveal

According to New York State Department of Taxation and Finance data, citywide sales tax collections for January 2025 were $908.1 million, compared to $872.7 million in January 2024—just a 4.1% increase that barely keeps pace with inflation (4.0%). In other words, when adjusted for inflation, the city actually experienced just 0.1% real economic growth—a far cry from the economic boom that MTA Chairman Lieber has claimed and Governor Hochul has repeatedly endorsed in public statements.

According to latest available Census figures, Manhattan retail sales were $87.6 billion and citywide sales were $169.2 billion in 2022, meaning Manhattan accounts for 51.8% of the city’s total retail activity.

Understanding the Taxable Ratio: Not all retail sales are subject to sales tax in New York. We determined that roughly 63.7% of retail sales are taxable by using the latest available comparable numbers from 2022—total retail sales figures from the Census Bureau and taxable retail sales calculated from tax collections data from the New York State Comptroller. The remaining 36.3% represents exempt categories like groceries and certain clothing purchases under $110, prescription drugs, and various services.

This “taxable ratio” is crucial for our analysis because tax collection data only shows us the taxable portion of retail sales. To calculate total retail activity (both taxable and non-taxable), we must divide the taxable sales figures by this ratio. For example, if taxable sales were $637 million, total retail sales would be approximately $1 billion ($637M ÷ 63.7%). We also provide calculations using a more conservative 50% taxable ratio to demonstrate that our conclusions hold even under different assumptions.

Understanding this distribution is crucial for analyzing the MTA’s claims.

This modest growth across the entire city makes the MTA’s claimed $900 million retail surge in just the congestion zone mathematically impossible. Here’s our step-by-step analysis:

1. Calculate the increase in citywide sales tax collections:
   • January 2025 sales tax collections: $908.1 million
   • January 2024 sales tax collections: $872.7 million
   • Year-over-year increase: $908.1M – $872.7M = $35.4 million
2. Convert tax collections to taxable sales:
   • NYC sales tax rate: 8.875%
   • Taxable sales increase: $35.4M ÷ 8.875% = $399 million
3. Convert taxable sales to total retail sales:
   • Using our 63.7% taxable ratio: $399M ÷ 63.7% = $626 million in total citywide retail growth
   • Using a more conservative 50% taxable ratio: $399M ÷ 50% = $798 million in total citywide growth
4. Calculate what the rest of the city experienced if the MTA’s $900M claim is true:
   • Using 63.7% taxable ratio: $626M citywide growth – $900M congestion zone growth = -$274 million (rest of city would have had to decline)
   • Using 50% taxable ratio: $798M citywide growth – $900M congestion zone growth = -$102 million (rest of city would have had to decline)

This creates a fundamental contradiction: if the MTA’s claim about $900 million growth in the congestion zone is accurate, congestion pricing didn’t create new economic activity—it merely shifted spending from outer boroughs and uptown Manhattan into the congestion zone, resulting in a net loss for businesses outside the zone. This damaging economic outcome is something both Chairman Lieber and Governor Hochul have conspicuously failed to address in their public promotion of these inflated figures.

Forensic Accounting: Tracing the True Numbers

According to retail employment data from the Office of the New York State Comptroller, Manhattan accounted for approximately 46% of all retail employment in NYC prior to the pandemic. Within Manhattan, the Chelsea/Clinton/Midtown Manhattan Business District and the Battery Park City/Greenwich Village/Soho neighborhood—areas within the congestion zone—collectively comprised nearly 30% of the city’s total retail employment. This indicates these neighborhoods account for about 65% of Manhattan’s retail employment (calculated as 30% ÷ 46% = 65%).

Given that the congestion zone contains most of Manhattan’s commercial districts, major tourist attractions, luxury shopping, and corporate headquarters, we estimate that between 65-80% of Manhattan’s retail activity occurs within the congestion zone. The 65% estimate is based directly on the retail employment data from the Office of the New York State Comptroller, while the 80% estimate accounts for potentially higher revenue-per-employee in the luxury shopping districts of the congestion zone and the concentration of high-end retail establishments in this area.

Working from the January 2025 tax data, we calculated the realistic maximum growth in the congestion zone using the following step-by-step process:

1. Calculate Manhattan’s share of new taxable sales: We know citywide taxable sales increased by $399 million. Since Manhattan represents 51.8% of city retail (per Census data), Manhattan’s portion would be: $399 million × 51.8% = $206.7 million in additional taxable sales
2. Calculate the congestion zone’s share of Manhattan’s growth:
   • Using our conservative estimate that the congestion zone represents 65% of Manhattan retail: $206.7 million × 65% = $134.4 million in additional taxable sales
   • Using our upper estimate that the congestion zone represents 80% of Manhattan retail: $206.7 million × 80% = $165.4 million in additional taxable sales
3. Convert from taxable sales to total retail sales: We now need to account for non-taxable sales, using our established 63.7% taxable ratio.
   • At 65% of Manhattan retail: $134.4 million ÷ 63.7% = $211 million in total retail growth
   • At 80% of Manhattan retail: $165.4 million ÷ 63.7% = $259.7 million in total retail growth
4. Alternative calculation with more conservative taxable ratio: If we use a more conservative estimate that only 50% of sales are taxable:
   • At 65% of Manhattan retail: $134.4 million ÷ 50% = $268.8 million in total retail growth
   • At 80% of Manhattan retail: $165.4 million ÷ 50% = $330.8 million in total retail growth

This reveals that the MTA’s claim of $900 million growth—a figure that both Chairman Lieber and Governor Hochul continue to promote despite its mathematical impossibility—is 2.7-4.3 times higher than what tax data supports. Even the highest estimate ($330.8 million) represents just 8.7-10.0% of the estimated $3.3-3.8 billion in monthly sales, which after adjusting for 4.0% inflation indicates minimal real growth of 4.7-6.0% at best in the congestion zone. Meanwhile, citywide sales barely kept pace with inflation, resulting in essentially flat real growth overall. This paints a picture far from the economic miracle being claimed by the MTA and Governor Hochul’s administration.

The 25% Miracle: A Growth Rate Beyond Belief

The Secret Data: An Unverifiable Black Box

The source of the MTA’s $900 million congestion zone claim—Affinity, a private credit card processor—raises critical questions about transparency and methodology:

• How does Affinity distinguish between online and in-store purchases within the congestion zone?
• Do they count a Manhattan resident’s Amazon purchase as “local retail” if the resident lives in the congestion zone?
• How precisely do they determine if a transaction occurred in the congestion zone versus elsewhere in the city?
• What adjustments do they make for seasonal factors specific to the congestion zone?
• Why use private credit card data instead of official tax data when making claims about economic impact?
• Does Affinity’s data incorrectly attribute online sales to congestion zone ‘retail activity’? This could include customers outside the zone placing online orders with businesses inside the zone – transactions that have absolutely no connection to congestion pricing, foot traffic, or physical store visits.

Without transparency on these methodological questions, the public is expected to trust the MTA’s interpretation of private data that no independent analyst can verify. This lack of transparency, enabled by both the MTA leadership and Governor Hochul’s administration, represents a troubling approach to public policy evaluation where officials can make extraordinary economic claims without providing the underlying data for independent verification.

Neither Chairman Lieber nor Governor Hochul have clarified how much of the reported $900 million sales surge in the congestion zone came from online transactions versus in-person shopping—a distinction that completely undermines their narrative about congestion pricing’s benefits for street-level retail.