Governor Cuomo’s property tax cap sets the cap at the rate of inflation or 2%, whichever is less; prohibits any property tax levy above the cap unless endorsed by both by the local governing board and a 60% electoral majority, and provides only limited exceptions such as extraordinary legal or capital expenditures.
Whether it is a tax cap or a circuit-breaker that several “progressive” organizations like the unions are proposing, neither is a sound policy. What makes sense to those who understand land economics is to shift the tax off improvements and onto land. This would tend to lower the tax for most homeowners and shift the burden to underused parcels (e.g., vacant lots, derelict buildings, and land containing unexploited natural resources). For those homeowners who do own property and are hard-pressed to pay, there is another option, called deferral, wherein the Ground Rent (aka: Land Value Tax) would only be collected upon sale of the property.
Arbitrarily capping the property tax will be a disaster equal to that of proposition 13 in California, which single-handedly brought down the most prosperous state, while providing taxless windfalls for large landholders like the oil & gas industry. Furthermore, a cap on taxes forces up prices, and promotes sprawl while taking away funding for education. Ideally, we should only pay a Land Value Tax, and no tax on buildings or other improvements. For more information, please see www.urbantools.org and www.commongroundnyc.org.
Our proposal is to eliminate taxes on all productive activity, charge 8%/year on assessed values of Land instead. Then, the state will free up underused land (22 square miles in NYC alone!) for productive purposes, end the land speculation that is responsible for the current economic crisis, and produce more affordable housing. This revenue-neutral proposal will attract new businesses and prevent flight of existing businesses.
On behalf of all New Yorkers and not just the special Land-holding speculators, please enact a Land Value Tax, and repeal the property tax cap.