Like economists always say: If you want less of something, tax the hell out of it. Just ask a $13 pack of cigarettes.
From the way New York City taxes its nearly 1.3 million units for rent in buildings of four apartments or more — many of them lifelines for working-class and poor New Yorkers — you’d think someone had a plan to make them as expensive and scarce as they are.
No big city in America piles property taxes as high on apartments. New York’s rate reaches nearly five times greater than homeowners’ compared with the real estate’s market value.
Put another way: Apartment rentals account for about 9% of all the city’s property wealth — and nearly 16% of the property taxes collected.
So excessive are the taxes — costing more than utilities, labor and fuel combined — that the state and city dole out decades-long abatements to developers just to entice new construction, letting developers dodge $1.4 billion this year, while landlords of most older buildings pay full freight.
This toxic state of affairs has been years in the making, resting in part — but only in part — with a 1981 state law that sticks apartments with a designated share of the city property tax burden. But the City Council and mayors have exacerbated the extremes, by tilting assessment formulas in favor of homeowners, who vote in large numbers, while passing the buck to landlords.
Anyone who thinks tenants aren’t feeling the pain just because Mayor de Blasio pushed two rent freezes is kidding themselves. Until a decade ago, taxes accounted for about 24% on average of rent-stabilized landlords’ operating costs. It’s now 30%, pushing up the cost of operating the average apartment to nearly $1,000 a month. During that same time, landlords removed nearly 87,000 units from regulation, and used another loophole to sharply increase rents on some existing tenants.
The mayor can hire all the lawyers he wants to fight evictions: piling on tax burdens puts low-income tenants at increased risk of losing their homes.
The jig is up. Decades of dumping on tenants must end.
