Eliminate property tax and base school taxes on incomes
It’s time to get rid of property taxes. I know — an unlikely idea. But after all, Albany is now abuzz with talk of tax reform. And it is time to put not just property tax rates (or their administration) under the microscope, but the very concept of taxing land itself.
Earlier this fall, Gov. Cuomo convened two commissions to propose changes for the tax code, one focusing on reform and one on cuts. After all, New York’s taxes are not exactly a model for the nation — not least because much of our code uses a statutory framework from decades past, when the economic situation was far different than it is today.
The tax reform commission has already proposed a variety of options, ranging from cutting unnecessary loopholes and exemptions to expanding the tax base for certain online sales. On property taxes, they have recommended statewide assessment standards and five-year periodic reviews. Naturally, there’s going to be some overlap with the tax cut commission, which has yet to release its recommendations.
Though those are unreleased, rumors already abound. George Pataki, former governor and current co-chair of the tax cut commission, seems to want to sideline the property tax issue in favor of slashing the personal income tax.
Gov. Cuomo says his own office isn’t in favor. Instead, he has said he wants to use the budgetary surplus to provide some property tax relief. He also supports tying homeowners’ yearly incomes to the property tax rates they pay.
Unfortunately, no one is pointing out what should be captivatingly obvious, or at least an attractive thought: Property taxes — a vestige of a bygone era — have to be eliminated and replaced, preferably with an expanded income tax.
Our property tax system in 2011 was rated by the Council on State Taxation as the worst in the country. We don’t have statewide standards for assessment, and the process itself is often arbitrary and complicated.
So what gives? Currently, local property taxes are the foundation of our state’s education system. Many states, in fact, do not have this linkage — all taxes (income, sales, etc.) go into the general state budget, from which education spending is withdrawn. Many states, too, put property taxes into the general fund.
But in New York, local property taxes fund local schools, with often minor and usually fluctuating assistance from Albany. It’s bizarre, and it harks back to the days of the landed gentry, when property was wealth and income taxes were not particularly in vogue.
Now, Gov. Cuomo’s greatest fiscal accomplishment, as he sees it, is his 2 percent property tax cap. I see the cap, and the focus of the commissions thus far, as a missed opportunity to do something bolder: Eliminate the local property tax altogether by drawing from income instead of land, and distributing that as necessary around the state.
By doing this, we could break the cycle of poor communities having poor schools, which keep kids from achieving their potential — thus dooming said communities to an equally bleak future of poverty.
This localized patchwork, woven into the system by years of tradition, encourages a disparity in school districts that’s solely based on income.
Now, I think it’s great that, for example, my community can afford an arts program. But it’s not right that we can do that while a poorer community can’t even afford a set of textbooks, and a rich community can afford top-notch computer systems — and that the only reason for this is that the parents in these three towns make different amounts of money.
But unless you believe kids deserve the responsibility for being rich or poor, Albany must redistribute funding to underdeveloped communities for a basic, common standard of education. It is simply the most practical and the fairest remedy for income inequality.
Giving all kids the chance to climb the rungs of a ladder that, at present, is only available to the privileged is not just right, it’s quintessentially what New York is: a “shining city on a hill” in the land of opportunity.
Of course, richer communities shouldn’t be barred from passing supplemental taxes of their own if they so choose, but the current system stands in the way of basic education for all.
Since Gov. Cuomo thinks property taxes are a problem, this would fix it. And if he’s looking for something to appeal to conservatives and liberals alike — this might be it. What better than being the champion of a big idea that both simplifies the tax code and levels the playing field for kids? The campaign literature almost writes itself.
Yes, it would mean admitting that one of his signature accomplishments was a Band-Aid. But if property taxes are why New Yorkers find it hard to plant roots in the ground, and if the governor is at all concerned about the growth of our state, we need a rethinking of the status quo: Give kids an equal shot at success, and let’s stop using an antiquated system to fund the future.
Steve Keller lives in Averill Park and is a regular contributor to the Sunday Opinion section.