Equity and the Property Tax
December 6th, 2006
Fairness, it seems, is in the eyes of the beholder. An Independent Budget Office report (in pdf format) has found that the citys property tax the source of 40 percent of its revenue gives a break to homeowners at the expense of owners of commercial property and rental buildings. Some experts have proposed rewriting the tax formula to spread the load more eventy.
Not so fast, says the New York Post. Begging the question of whether the city could actually use more revenues to improve services, the paper argues that hard-pressed middle class New Yorkers “have used their property-tax savings to pay parochial- and private-school tuition – and thus avoid the city’s decrepit, dysfunctional public schools. Do away with the break and homeowners will promptly join another exodus to the suburbs.” Instead, the paper advises reducing city spending. Then, it concludes, “Taxes will take care of themselves.”
By Gail Robinson on December 6, 2006, 9:13 amIn category: Gotham City, Housing, Public Finance | 2 Comments »


December 6th, 2006 at 10:45 am
Each side is half right. Here are some additional factors not included in the report.
The report focused on property taxes only. With the local income tax, NYC homeowners end up paying about the same as in the suburbs, except for seniors who pay less, but with less good schools. If property taxes were to rise, this would push the value of the houses down, meaning the increase would be less than it might appear. (This would be a good thing for home buyers).
What this means, however, is that the fact that city taxes are higher as a share of income than surburban taxes is disguised from homeowners, because the entire excess burden is shifted to others. Similarly, Bloomberg’s check disguises the 18% tax increases from homeowners.
Moreover, in the absence of rent regulation, the value of many rental properties would be higher. Low rents for SOME tenants offset, in part, high property tax rates on the (diminished) value of the buildings. So not all renters are losers in this scheme, if the effect of rent regulation is considered.
Finally, large powerful businesses have their property taxes eliminated and pay lower “payments in lieu of taxes” instead. These do not increase as the City Council and state laws shift the burden. That entire burden is borne by less politically influential businesses without tax breaks, including new companies.
The perfect winner is a senior citizen paying low taxes for a big, vaulable house (and not downsizing to a condo because the taxes would be higher!) or in a really cheap rent regulated apartment.
The perfect loser is a young renter in a market-rate building who is self employed and thus pays two local income taxes, including the UBT.
February 15th, 2012 at 7:31 am
My father dosent make mistakes he dates them