New York Governor Andrew Cuomo recently announced a misguided compromise with conservatives in the state legislature to place a hard cap on the annual growth of property tax revenues. The cap would limit revenue growth to the lesser of a 2% annual increase or the rate of inflation. The only exception would require a restrictive super-majority vote of 60% in municipalities where the residents wish to opt out of the program. If passed into law, this proposal will lead to a drastic reduction in essential services for hardworking New York families and place an additional burden on middle class communities which have already been battered by the economic downturn.
As states struggle to close budget gaps, it's worth highlighting that
due to tax changes at the federal level, most middle income families are
paying a far smaller percentage of their income in federal taxes than
they did a few years ago. So while states should concentrate revenue
increases on those who can most afford it, there is greater capacity
among middle income families to absorb some tax increases due to the
lower federal tax burden.
With the housing market meltdown, we are seeing more
proposals for across-the-board caps on property tax rates -- a bad idea that
delivers most of the tax benefits to wealthier property owners. Instead,
a better approach are Property
Tax Circuit Breakers, which limit property taxes to a percentage of a
taxpayer's income, while fully taxing the property of wealthy homeowners.
variation on the circuit breaker idea are programs that defer payment of property tax increases
for certain homeowners until the property is sold, allowing owners to wait
until the profits from selling the land make paying the taxes less of a
burden. As well, a key strategy for progressives should be to expand homestead exemptions and other
tax relief programs to include more working families,