Daily Tax Report: State

New York City Property Tax Hikes Outpacing Incomes: Comptroller

Sept. 6, 2018, 5:39 PM

New York City property taxes rose over the last decade at a rate three times faster than income growth, putting the heaviest burdens on households with the lowest incomes, the city’s chief fiscal officer said.

The Sept. 6 analysis by Comptroller Scott M. Stringer (D) called the city’s property tax structure a regressive system that hurts households making less than $100,000 the most, while also hitting better-off taxpayers with hefty increases outpacing their income growth. He recommended expanding tax credits and taking other steps to offset the strain.

Stringer made the recommendations to the NYC Advisory Commission on Property Tax Reform, formed in May by Mayor Bill de Blasio (D) and the City Council to advise on ways to improve the system’s transparency, efficiency, and fairness. The panel’s work is intended to guide officials in developing legislation in 2019, which would be the first in more than 20 years.

“Property taxes are rising too fast and incomes are rising too slowly—and it’s becoming harder than ever for already struggling New Yorkers to get ahead,” Stringer said in a statement. “We must explore common sense solutions and expand tax relief to level the playing field for working families.”

Renewed scrutiny of the city’s property tax comes against the background of a pending lawsuit by a coalition of civil rights groups and real-estate interests challenging the system’s valuation formulas as opaque and unfair to owners of outer-borough residential properties versus Manhattan condos and co-ops.

Property taxes, the city’s largest revenue source, will provide an estimated $26.4 billion in the current fiscal year, or 45 percent of total revenue, according to the city’s Independent Budget Office.

Lower Incomes, Bigger Bite

The comptroller’s analysis found that, from 2005 to 2016, the mismatch between property tax increases and income growth widened the most for the poorest taxpayers.

Households with less than $50,000 in income saw their property taxes increase by 98 percent, Stringer said, as their median incomes fell by almost 1 percent—meaning that their property tax burden nearly doubled to 13 percent of income from 6.6 percent of income.

In the $50,000 to $100,000 income stratum, property taxes grew by 67 percent, as median income rose by just 4.6 percent, pushing the burden from 3.4 percent of income to 5.4 percent.

Property taxes went up by 54 percent for households with incomes between $100,000 and $250,000, as median income increased by 4.9 percent, a shift to 3.7 percent of income from 2.4 percent.

The city should expand its “narrowly funded and restrictive” property tax relief programs for middle-income taxpayers, Stringer said. The programs offer benefits as low as $52 or $300 for households making less than $100,000 a year, to offset average property tax bills of nearly $4,000, he said.

That compares unfavorably with other tax jurisdictions, Stringer said. In Maryland, he said, a household making $33,000 and paying property taxes of $3,800 would receive a tax benefit nearly 20 times as generous as New York City’s.

To contact the reporter on this story: John Herzfeld in New York at jherzfeld@bloomberglaw.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bloombergtax.com

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