New York City Property Tax Reform
This week, the New York City Advisory Commission on Property Tax Reform will begin holding a series of public hearings on the current property tax system in New York City. Convened by Mayor Bill de Blasio and Speaker Corey Johnson in May, the commission is charged with developing proposals to make the system simpler, clearer, and fairer, while also ensuring no reduction in city revenues. Numerous public officials, advocates, and academics have called for property tax reform in order to address inequities within the current four-class property tax system. Currently, litigation is pending against the city in which a coalition of real estate developers and civil rights advocates assert that the property tax system is inequitable and discriminates on the basis of race.
The commission is co-chaired by Vicki Been, Faculty Director at the NYU Furman Center, and Marc Shaw, Interim Chief Operating Officer for CUNY. Been is serving on the commission in her personal capacity, and not on behalf of the NYU Furman Center.
In light of these developments, we have updated and are re-releasing this Policy Minute on New York City’s property taxes (originally published in February 2016). Vicki Been was not involved in the development of this Policy Minute.
- Property taxes are New York City’s largest source of revenue. In FY 2018, the city collected over $25 billion from property owners, representing 30% of all city revenues.
- While properties in Class 1 (1-3 residential units) have an estimated market value (calculated by the city’s Department of Finance) that is double that of properties in Class 2 (4+ residential units), they pay a smaller share of the overall tax levy. Read policy brief >>
NYU Furman Center Research
- The undervaluation of co-ops and condos has significant consequences for the distribution of tax burdens in New York City. A policy brief by NYU Furman Center, Shifting the Burden: Examining the Undertaxation of Some of the Most Valuable Properties in New York City, outlines how some of New York City’s most valuable properties in its highest-cost neighborhoods are significantly and persistently undervalued and discusses the consequences. The report identifies 50 individual co-ops in 46 buildings that were sold in 2012 for more than DOF’s estimate of the market value of the entire building. Read policy brief>>
- New York City’s property tax system favors homeowners. A report by the NYU Furman Center, Distribution of the Burden of New York City’s Property Tax, which appeared in the State of New York City’s Housing and Neighborhoods in 2011 report, finds that all property is not created equally when it comes to New York City’s property tax. The city’s tax system “provides for radically different tax treatment of equally valuable properties, depending on the use of the property and the form in which it is owned.” Read report>>
- A historical perspective on New York City’s property tax. On the 25th anniversary of the legislation that created New York City’s modern property tax structure, the Independent Budget Office of the City of New York published an in-depth report that cataloged the system’s history and how it has shifted tax burdens over time. Read: Twenty-five Years After S7000A: How Property Tax Burdens Have Shifted in New York City
- Exploring the limits of property taxes. Citing evidence from New York City, NYU Furman Center Research Affiliate Andrew Hayashi finds that assessment caps in New York City “are regressive and tend to benefit new homebuyers and sellers rather than current homeowners on fixed incomes.” Read: Property Taxes and Their Limits: Evidence from New York City
- Tax burden among New York City small homeowners. The Citizens Budget Commission recently analyzed the extent of disparities in tax burdens among one-, two, and three-family homes in New York City and recommend that inequities in the Class 1 property tax be addressed by restricting or eliminating caps on assessment growth. Read: New York City Homeowners: Who’s Got the Unfairest Tax Burden of Them All?
- Impact of rising property taxes on low-income households. New York City Comptroller Scott Stringer published a report showing that households making less than $100,000 have seen their property tax burden nearly double between 2005 and 2016. Read: Growing Unfairness: The Rising Burden of Property Taxes on Low-Income Households
- Two scenarios to address unequal tax burdens among small homeowners. Additional research by the Independent Budget Office of New York City on two revenue-neutral property tax reform scenarios. Read: Addressing the Disparities: Winners & Losers in Two Property Tax Reform Scenarios
- Three options to increase New York City’s property tax revenues. In the wake of Mayor de Blasio’s 2012 election, the Citizens Budget Commission published a report offering three options for increasing the city’s property tax revenues. One option “maintains status quo inequities; in contrast, the other two address some major problems with fairness and efficiency that characterize current policy.” Read: Options for Property Tax Reform: Equitable Revenue Raising Reforms for New York City’s Property Tax
Property Taxes Beyond NYC
- MAP: Property taxes: How does your county compare? (CNN Money) View map>>
- READ: Comparing property tax systems in New York City and London (The Economist) Read full article >>
- READ: 50-State Property Tax Comparison Study for Taxes Paid in 2017 (Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence) Read full study >>
More Viewpoints From NYC
- WATCH: The New York City Property Tax: Problems, Inequities, and Potential Reforms (September 13, 2018)
- READ: Bronx councilman announces plans for property tax-transparency bill (New York Post, September 10, 2018)
- READ:One massive bill: Property-tax panel had better act fast (Shelley Cohen, Crain’s, August 8, 2018)
- READ: A Tax Rx for New York City: Make Property Taxes Fair for All (James Parrott PhD, Center for New York City Affairs, September 13, 2017)