Property Cap Proposal in New York City
[Letters send by Common Ground NYC chapter to top officials.
GroundSwell, January-February 2011]
Common Ground NYC chapter president Scott Baker reports that at
the chapter's Jan. 23, 2011 meeting each of about 20 people signed a
letter to Andrew Cuomo about the misguided proposed property tax cap
and another letter to Assemblywoman Linda Rosenthal about the LVT.
The letters, with permission, are reprinted below. The chapter hopes
to avoid New York becoming Proposition 13ed.
The Honorable Andrew M. Cuomo
Re: Enacting Property Tax Relief
Governor Cuomo's proposed property tax cap will set the cap at the
rate of inflation or 2%, whichever is less; prohibit any property
tax levy above the cap unless endorsed by both the local governing
board and a 60% electoral majority, and provide 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 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.
Our proposal is to eliminate taxes on all productive activity,
charge 8%/year on assessed values of Land (in NYC) 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 Common Ground NYC, please enact a Land Value Tax, not
a property tax cap.
The Honorable Linda Rosenthal
Dear Assemblywoman Rosenthal:
New York needs your sponsorship right now on the passage of State
Assembly Bill #A05671 (as of in 2010) to provide a fifth property
class for vacant/underutilized sites. As you know, this will allow
for a higher tax on these properties and force developers to develop
vacant and underutilized land, or sell it to someone who will.
Passing this bill will help end urban blight and provide affordable
housing and business opportunities.
This bill, plus bill #6207 (already passed) to omit the huge tax
break on vacant and underutilized sites above 110th street, are only
the beginning of the reform effort needed to shift the tax burden
from buildings to land instead. By taxing land, and not
improvements, we will encourage appropriate development in dense
urban areas like New York City. For more information, see
www.urbantools.org or commongroundnyc.org.
The bill reads, in part:
AN ACT to amend the real property tax law, in relation to the
creation of a vacant land property classification
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND
ASSEMBLY, DO ENACT AS FOLLOWS:
Section 1. Paragraph class four of subdivision 1 of section 1802
of the real property tax law, as separately amended by chapters 123
and 529 of the laws of 1990, is amended and a new paragraph class
five is added to read as follows:
Class four: all other real property which is not designated as
class one, class two, [or] class three OR CLASS FIVE. CLASS FIVE:
REAL PROPERTY WHICH HAS REMAINED VACANT FOR A PERIOD OF NINETY DAYS
OR LONGER DURING A TAX YEAR AND IS NOT UNDER CONSTRUCTION OR
New York would not be the first city or state to look into Land
Value Taxation. Altoona recently went in this direction, finishing a
10-year phase-out this year, by completely eliminating building
taxation. The results in positive Building Permits Issued are
already being felt, compared to comparable cities like Johnstown. In
addition, California is likely to have an initiative on the ballot
taxing 75% of the rental value of land sites: Prosper California Tax
On behalf of Common Ground NYC, please move the Land Value Tax
bill #AO5671 out of committee and onto the floor so it can be
enacted into law.