A committee convened by former New York Governor Spitzer is looking at the Property Tax in NYS with an eye to capping it or providing so-called circuit breakers, in the form of a rebate from the state for any 70% of the residential (owner-occupied, first home) property tax that exceeds a certain percentage of a household's Adjusted Gross Income.
The horizon percentage of AGI varies according to both location (NYC metro counties versus all others) and by income level (three brackets, different between NYC metro and the remaining counties). It provides for a "personal income tax credit" for a 70% of the amount of one's property taxes over 6%, 7% or 8% of AGI, depending on one's location and income level. As the bill is currently written, it applies only to those who have lived in their homes for 5 or more years.
Here is the "Justification" for A1575A:
With the increased reliance on the real property tax for local government revenue, some homeowners are facing sky-rocking real property tax bills as a result they are often faced with the serious threat of defaulting on their property taxes and/or seriously consider selling their homes. This legislation seeks to establish a cap on the maximum real property tax paid for New Yorkers who have a household adjusted gross income of $250,000 or less. This proposal is a viable alternative response to the serious problem of high real property taxes.
I came across an interesting bit of data at http://www.taxfoundation.org/publications/show/22607.html. It is a table of the 783 counties with population over 65,000 as of 7/1/2006. It lists median property taxes paid on owner-occupied homes, median home value, taxes as a percent of home value, median income for home owners, and taxes as percent of income, and ranks some of those those fields. I put the data into a spreadsheet, calculated a few more fields, and then sorted the data 6 different ways.
Here are a couple of observations from the tables, with respect to NYS counties:
Median property taxes paid on homes ranged from a low of $1423 in St. Lawrence County, $1,551 in Jefferson County, $1844 in Clinton County, $2,064 (Bronx County -- but keep in mind that homeownership is VERY low in the Bronx) to a high of $7,700 in Nassau County, $7,600 in Westchester County, $7,041 in Rockland County, about $6400 in Suffolk and Putnam Counties, about $4800 in Orange County, $4200 in Dutchess County. All the other listed counties have median PT's under $4,000 per year (about $11 per day).
Median Taxes as Percent of Median Income for Home Owners range from a low of 2.8% in New York County to a high of 8.1% in Nassau County, 7.5% in Rockland and Suffolk, 7.3% in Westchester, 6.1% in Orange County, 5.8% in Ulster, 5.6% in Monroe, 5.3% in Sullivan, 5.2% in Dutchess and Schenectady, 5.1% in Wayne. The medians for the rest of the counties with population 65,000+ are below 5.0%.
A few counties have median homeowner incomes over $90,000: New York County at $128,600 (but the single-family homeownership rate is minuscule); $103,800 in Westchester, $95,400 in Nassau, $93,500 in Rockland, $92,200 in Putnam.
So it appears that much of the benefit of this "circuit breaker" bill is going to go to 4 counties:
- Westchester County (median homeowner income of $103,800, median PT as percent of median income, 7.3%);
- Nassau County (median homeowner income of $95,430; median PT as percent of median income, 8.1%)
- Rockland County (median homeowner income of $93,527; median PT as percent of median income 7.5%)
- Putnam County (median homeowner income of $91,203; median PT as percent of median income 7.1%)
If I had to guess, I'd say that these four counties send a higher percentage of their children to college than any of the other counties in New York State.
I wonder what other taxes the Legislature will raise in order to subsidize a significant portion of the homeowners in these four wealthy and prosperous counties. Undoubtedly they will be taxes which deaden the economy -- not what any wise place needs today. And those taxes will do more harm upstate, where many of the older cities are already struggling.
Let's go back to the "Justification:"
With the increased reliance on the real property tax for local government revenue, some homeowners are facing sky-rocking real property tax bills as a result they are often faced with the serious threat of defaulting on their property taxes and/or seriously consider selling their homes.
The places where property taxes are high are the prosperous places. They are the places with a wide range of jobs. They are the places that send large shares of their children to college, and often to the best colleges in the US. They are the places where buyers pay sellers a lot of money for the privilege of living there.
If there are people who can't afford their property taxes, we should offer them the option to defer, with interest, some portion of their property tax bill, as a lien against their property, to be satisfied when the property is sold or transferred. But don't burden the renters, the upstate people with no access to the high-wage job markets to subsidize them
For more on this, see Bill Batt's papers, featured on the front page of http://www.wealthandwant.com/ -- in particular the one entitled
Property Tax Relief Measures: Answers to the "Poor Widow " Argument and also Can a [Property Tax] Circuit Breaker Ever Really Work? The answer is pretty much "No."
I hope the Suozzi Commission will consider this, and recommend to the legislature that the Property Tax not be capped, and that lower income people not be forced to subsidize a selected portion of those who live four of New York's most prosperous counties, particularly if doing so requires increasing sales or income taxes. New York's economy doesn't need any more deadweight loss.
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