Unfair and unjust property taxes
New York’s no-good, very bad property tax — the city’s single largest source of revenue, accounting for $4 of every $10 local government collects — just failed a test at the state’s highest court. Here’s hoping against hope that the Legislature, which has never met a complex policy challenge it has failed to shirk, finally fixes the unfair, incomprehensible, bureaucratic tangle of statutes before courts order them to.
What is wrong with the way we collect levies on apartments, houses and commercial properties? The better way to ask the question is “what isn’t?”
Effective tax rates tend to be far higher for renters — actually, for landlords of rental buildings, who pass the taxes onto tenants — than for owners, which generally means that the people who can’t save enough to put down a down payment wind up footing a higher relative bill than those who can.
People in lower-income neighborhoods, who tend to be Black and Brown, disproportionately pay higher rates than those in higher income neighborhoods. The biggest bargains go to people in neighborhoods where home values rise the fastest.
Based on rules for assigning comparable properties, condo and co-ops in the most desirable areas, including luxury living quarters, are taxed at obscenely low rates; one Wall Street Journal headline explained “Why New York Values Ken Griffin’s $238 Million Condo at Less Than $10 Million.”
And commercial property owners pay a heftier share than they would if they were located almost anywhere else. While it’s important for big global corporations headquartered here to help lift some of the burden off residents, the gross disparity may become harder to justify in a world reshaped by vacant office space as countless people work from home.
On top of it all, the method for estimating market value is so complicated it would even confuse a Ph.D.
Lin economics. ooking with a clear eye at this piled up garbage masquerading as public policy, the good people at Tax Equity Now New York, which represents renters and homeowners at the short end of the stick, sued. In a 4-3 ruling Tuesday, the Court of Appeals sided with them and against the city, giving the plaintiffs permission to argue that the system violates the federal Fair Housing Act.
Since lower benches had dismissed their claims, we welcome the coalition getting its day in court — and forcing the city to defend the indefensible.
What the judiciary will ultimately say we do not know. As awful as the property tax is, as desperately as it needs repair, the inconsistencies and inequities cut many different ways. Even if its effects are disproportionately discriminatory, that’s not the result of a single law with ill intent, but of years of patchwork exemptions and adjustments to previously identified problems. This is a policy mess that ultimately needs a policy solution.
So, it’s over to Albany to start to wrestle in earnest with this beast. When he had a big foot and a half out the door, a commission tapped by Mayor Bill de Blasio and led by city finance wiz Marc Shaw produced a report that lays the groundwork for a cleaner, fairer system. That can serve as the foundation on which to build something better. No cranes or hardhats required.