Change in New York's property tax could yield US$4b windfall
Watchdog urges mayor to reform property levy, which is skewed in favour of the city's wealthy at the expense of poor and middle-class renters
Mayor Bill de Blasio's vision of raising income taxes to pay for pre-kindergarten and after-school programmes would generate US$530 million a year, but by revamping property taxes and taking on some of New York's richest residents he could raise eight times as much.
De Blasio, a self-described progressive Democrat, was elected on a promise to reduce income inequality in a city where the richest 1 per cent took home almost 40 per cent of all earnings in 2012. New York's property-tax structure does little to reduce that divide and may even widen it.
The real estate levy, the city's biggest revenue source, uses a methodology that undervalues condominiums on Park Avenue, Central Park West and other enclaves of the wealthy; limits tax increases for owners in brownstone neighbourhoods such as Greenwich Village and Park Slope; and shifts the heaviest burden to renters, many of them poor.
While almost half of all city property value belongs to owners of one, two and three-family houses, they pay only 15 per cent of the US$21 billion in annual real-estate taxes, according to the Citizens Budget Commission (CBC), a business-backed watchdog. Making the system fairer could raise more than US$4 billion a year, the New York-based group said.
The city's property tax is complicated and riddled with inequities
"The city's property tax is complicated and riddled with inequities," said Carol Kellermann, president of the CBC, which researches the finances and management of the city and state. "We can generate more revenue from this tax simply by making it more transparent and equitable, without having to raise rates."