For decades, New York City has had a tax system that is both illogical and inequitable. A multitude of rules governing rates, exemptions and valuations have spawned a structure where the wealthiest owners often pay the least.
As Greg B. Smith observed this weekend in the Daily News, that means a longtime resident in a modest house in a working-class neighborhood can pay the same amount of property tax as someone who has just bought a multimillion-dollar brownstone in an upscale neighborhood like Brooklyn Heights.
But the inequities go well beyond a discrepancy between homeowners in different neighborhoods. For instance, a condo in Manhattan might be assessed the same property tax as one that was sold for dozens of times more at the exact same time. Sites owned by utilities are taxed a very high rate, which gets passed on to everyone who pays an electric or water bill. Modest, rent-stabilized apartment buildings constructed 80 years ago can pay so much in property taxes that maintenance and upkeep suffer, while apartment buildings built 10 years ago generally pay next to nothing.
All these discrepancies stem from an underlying problem: The basic structure of the system is broken. That’s why RPA plans to develop a framework for a fair and fiscally responsible property tax system for New York City. This is a complex problem to address, and we’ll be doing in-depth research that is needed to recommend a system that makes sense. We’ll be saying more about this initiative in the coming weeks.
Any new system will need to stop favoring one type of homeowner over another and find a way to make sure that tax relief finds its way to the people who most need a break. Equally important, the transition to a new system would need to be managed in a way that doesn’t destabilize properties or overtax those unable to afford it.
New York City isn’t the only municipality in the metropolitan region to be grappling with an inequitable property tax system. All three states struggle with systems that are unfair to one degree or another. New Jersey’s property tax rates are the highest in the nation, and Connecticut’s aren’t far behind. Rebate systems are developed where underlying reform should be undertaken instead. And because property taxes are the only source of revenue municipalities can control directly, budgets are often left at the mercy of the real estate market.
In A Region Transformed, RPA’s comprehensive vision for the metropolitan region coming this fall, we intend to propose a series of reforms that will help make our taxes fairer across the region.