Press Release: New Report: New York’s Unfair Property Tax System on its 50th Birthday

Press Release

New Report: New York's Unfair Property Tax System on its 50th Birthday

The Community Service Society and the Progress and Poverty Institute Unveil Landmark Study on a half-century of Tax Inequities

The Community Service Society of New York (CSS) and the Progress and Poverty Institute (PPI) have released a report, "Footing the Bill: Fifty Years of NYC Overtaxing Tenants, Towers, and Low-Income Communities of Color." Marking the 50th anniversary of the Hellerstein v. Town of Islip decision, which forced a restructuring of NYC's property tax code, the report exposes how the system has since evolved into a regressive and inequitable framework that disproportionately burdens renters, communities of color, and large multifamily buildings.

The report is the first to use publicly available data to estimate effective tax rates (ETR), including both abatements and exemptions, for every individual property in NYC. In addition to providing a real understanding of what proportion of a property's value was paid in taxes across various demographics, the report includes an analysis of how each property's final (2022) tax bill was calculated at each step of the incredibly complicated process.

This highlighted four major pathways through which inequities arise in the system:

1. Assessment Methods - different properties are valued with different methods
2. Fractional Assessments - market values are reduced to an 'assessed value' by different percentages (six percent for low-density homes compared to 45 percent for apartments)
3. Growth Caps on Assessed Values - growth caps are used to slow how quickly taxable values can rise; and
4. Class Shares - different property classes must pay a fairly consistent share of overall property taxes over time, even if market values are rising by wildly different amounts.

These flaws in the system lead to unfairness that create biases that make our city less fair, efficient, and productive. Key findings of the analysis include:

• Multifamily and Commercial Properties Are Over-Taxed: Apartment buildings with more than 10 units face an effective tax rate (ETR) of 3.6 percent, while single-family homes pay an average ETR of only 0.7 percent.
• Renters Shoulder a Greater Tax Burden than Homeowners: Despite two-thirds of NYC households being renters, the tax system disproportionately benefits owner-occupied properties. The average ETR for rental properties is 4.3 percent, compared to 3.0 percent for homeowners.
• Tax System Penalizes Low-Income Communities and Upholds Racial Disparities: Properties worth under $300,000 per unit face an ETR three times higher than those worth over $1 million. Predominantly Black neighborhoods in NYC pay higher property tax rates than wealthier, whiter areas like Park Slope and the East Village.
• Speculators Are Rewarded, While Productive Land Use is Penalized: NYC's tax system allows vacant lots to accrue value without penalty, while fully occupied apartment buildings contribute disproportionately to city revenue.
• Assessment Methods Favor Luxury Condos and Co-ops: NYC's Department of Finance undervalues high-end properties, forcing middle- and low-income owners to shoulder an excessive tax burden.

"For many years, journalists, researchers, and policymakers have remarked on the various inconsistencies with how NYC collects property taxes," said David R. Jones, CEO and President of the Community Service Society (CSS). "This report brings them together with unrivaled clarity and speaks to the broad coalition necessary to finally make reforms a reality."

"New York City's property tax system is notoriously opaque and inequitable," said Iziah Thompson, Senior Policy Analyst at Community Service Society (CSS) and co-author of the report. "Our research shows how systemic tax policies have placed an undue financial burden on working-class renters and neighborhoods with predominantly Black and Hispanic residents, while wealthy homeowners and real estate speculators receive preferential treatment."

"We all know the old rule: 'if you tax something, you get less of it.' So it makes zero sense for the greatest city in the world to charge the highest tax rates to large apartment buildings" said Stephen Hoskins, the report's co-author and Director of Community Research & Engagement at the Progress & Poverty Institute (PPI). "Meanwhile, underutilized and vacant parcels enjoy cheap tax rates, rewarding speculators and worsening the housing crisis. Our report explains how to give NYC the tax system it deserves, one which is equitable, progressive and which rewards those who help build the city's future."

The report comes at a critical time as a significant legal challenge to NYC's property tax system advanced by the housing justice coalition Tax Equity Now New York (TENNY) moves through the court system. Now is the time for a monumental shift in our property tax policy, and CSS and PPI propose a set of immediate short-term solutions that can be adopted this year to dramatically reduce the regressivity of the NYC property tax system; along with a set of more long-term permanent solutions which would comprehensively reform the system once and for all.

Recommendations
Inequalities and distortions in NYC's property taxes can be rapidly improved with a series of short-term solutions, and fixed for good with the long-term changes summarized below:

Short-term

• Single 'Low Density' Property Class: Combine all properties with fewer than 10 units into a single tax class, all assessed using sales comparables.
• Fair Valuation for Class 2 & 4: Capitalization rates used to assess commercial & large residential properties should be adjusted towards the mean at the top & bottom of the distribution, to mitigate assessment regressivity.
• End Fractional Assessments: Tax all properties on the basis of their actual assessed value, with a single nominal tax rate.
• Equalize Growth Caps: Use the same mechanism for all types of property when smoothing taxable values over time.
• Abolish Class Shares: Tax bills for any given class of property should closely match its share of total assessed value.
• Tax Vacant Land Fairly: Pass the Repairs to Apartments Act (AB 9565) with creates a tax on vacant/underutilized properties and targets the revenues towards rent-stabilized property renovations.

Long-term

• Remove the Condo/Coop Abatement: With the distortions created by the existing rules and classes gone, the condo/coop abatement would no longer be necessary.
• Abolish the 485-X Tax Credit: With a land value tax in place, and the city no longer privileging vacancy over development, there is no longer a need for a policy to induce it. These tax revenues can instead go towards building and preserving affordable units.
• Remove Ownership Bias with Renter's Tax Credits: Renters pay landlord tax bills and are just of worthy of relief as homeowners.
• Transition Towards a Land Value Tax (LVT): Pass AB 9673 to begin the process of shifting more of the tax burden to land and off building improvements.
• Build Social Housing: Pass S8494 and establish the NY State Social Housing Development Authority to build and preserve thousands of publicly controlled and financed homes with Union Labor. Social housing development and land value taxation go hand and hand as the keys to supercharging housing affordability and availability.

The Community Service Society of New York (CSS) has worked with and for New Yorkers since 1843 to promote economic opportunity and champion an equitable city and state. We power change through a strategic combination of research, services, and advocacy to make New York more livable for people facing economic insecurity. By expanding access to health care, affordable housing, employment opportunities, debt assistance, and more, we make a tangible difference in the lives of millions. Join us at www.cssny.org.

The Progress & Poverty Institute (PPI) is a private operating foundation driven by a mission to enhance liberty and equality of opportunity for all people through research, outreach, and community-level interventions that integrate concerns for economic, social, and environmental justice; poverty; and government granted privileges. Find out more at progressandpovertyinstitute.org.

Issues Covered

Latest News

New Report: New York's Unfair Property Tax System on its 50th Birthday

Albany can stand up to Trump by defending and funding the MTA

First RGB Report of 2025 Shows Landlords' Incomes Rise While Tenants Struggle

More News