Angry New Yorker

Sunday, April 30, 2006
Can we get out of this State in one piece?

We ask ourselves this question with depressing frequency these days, and it makes us very angry. We were born in New York and have lived here all our lives -- through good times and bad. But the thought there is likely no affordable and viable long-term future for our children in this State, the result of a generation of entrenched malefeasance and unbridled union greed, combined with the stranglehood of legislative disfunction and the sense that our politicians ultimately believe -- in action if not in word -- that no level of taxation is too high for New Yorkers, often leaves us wondering why we bother acting some Cassandra and publicizing the obvious facts.

Well, last week New York State Comptroller Alan Hevesi's office released a report (Property Taxes in New York State - Local Government Issues in Focus, Vol. 2, Issue 2, April 2006, available at as an Acrobat PDF) that by all rights should have the streets filled with marchers, no, not illegal aliens clamoring for "rights", but property owners and citizens of New York storming toward their local state politician's office with pitchforks, torches, and some tar and a few feather-filled pillows.

Here's the fact again: New York State is in a slow-motion fiscal implosion, which means two things: (1) there's still time to get beyond the shrapnel's kill radius, and (2) there's still time to limit the damage, but whether its enough to result in the New York ship of state merely brushing the reef as opposed to our current full-speed ahead course toward the coral remains to be seen.

Some highlights from Hevesi's report:

  • New York taxpayers have the highest combined State and local tax burden in the nation, with atotal tax bill of $131 for every $1,000 of personal income in 2002, nearly 26 percent higher thanthe national average.
  • New York’s high tax burden is entirely driven by high local taxes – State taxes are about average, at $64 per $1,000 of personal income, versus $62 for the nation as a whole.
  • Local taxes are the highest in the country, at $67 per $1,000 of personal income, 60 percent higher than the national average of $42. Maine is the next highest state at $55 – nearly 20 percent lower than New York.
  • The property tax is by far the largest tax imposed by local governments in the State, representing 79 percent of all local taxes outside of New York City.
  • Per capita property tax burdens in New York are 49 percent higher than the national average and property taxes measured as a share of personal income are 28percent higher.

  • This disparity is even greater for taxpayers in most of the State, sinceNew York City’s property taxes are relatively low compared with other localgovernments (because it collects revenue from a number of other local taxes,including a personal income tax).

  • Local property tax levies grew by 60 percent from 1995 to 2005, more than twice the rate of infl ation during that period (28 percent). Most of this growth occurred in the last 5 years – when property tax levies increased by 42 percent,compared to infl ation of 13 percent.

  • Levy increases have moderated somewhat in 2006, particularly for counties,which benefited from last year’s Medicaid cap. However, growth rates continue to be substantially above infl ation for most classes of government.

  • Property taxes add to the overall high cost of living in downstate suburbs,where property taxes per $1,000 of personal income average about $65 (comparedto the State median of $53), and are a major contributor to higher housing costs.
The report concludes, with dramatic understatement:
New York’s property tax is large and growing fast, as it tends to do when growth slows in other revenues or costs increase for local governments. The property tax is stable and easy to administer, but it has some serious fl aws, including a weak system for ensuring professional and equitable assessments. STAR and related rebates will not fi x these fl aws, and may indeed magnify them, as they may encourage growth in spending, particularly in higher-wealth, higher-spending areas. A rebate payment or State-funded tax exemption is a transfer of tax burden, not a tax cut, and should be considered in the context of overall tax policy in New York. While short-term property tax relief may be the perceived effect, the long-term outcome may well be an overall increase in State and local taxes. Future research and policy analysis should be directed toward structural changes and systemic reforms for the property tax.
A show of hands. How many people out there believe we can achieve a "systemic reform for the property tax" before this entire house of cards comes crashing down? One, two... three. Yeah, that's pretty much what we thought. See you out West somewhere. We'll send a postcard.

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