There IS a Better Way; New Yorkers Need Real Property Tax Relief Now

Why the Cuomo Tax Cap Won't Help and What Will by Bill Samuels

NEW YORK, NY (05/16/2011)(readMedia)-- As a businessman I am keenly aware of the importance of keeping spending in line with revenue, so I understand that New York State's deepening budget crisis requires swift and decisive action from Albany. But as a New Yorker, I want solutions that do not unfairly place the burden of Albany's mess on local communities and families.

One of the most immediate and pressing challenges Governor Cuomo faces is curbing New York's skyrocketing local property taxes, which have grown so unmanageable it is forcing families from their homes and businesses to shutter or relocate out of state.

Governor Cuomo, anticipating statewide budget shortfalls, wants to put a 2% property tax cap into effect to curb spending at the local level and keep property taxes stable.

A tax cap provides a great political sound bite and appeals to all taxpayers, but the truth is that those who need genuine tax relief are guaranteed no break at all under a tax cap.

There must be a better way.

We all want to help fund our local schools and government to make our communities the best possible place to live and work. Unfortunately, the problem of unsustainably high and oppressive property taxes is not a local one. It is largely a consequence of the enormous amount of mandated spending that is imposed on local communities in New York at the state level.

Local communities cannot run in deficit, which means that any cuts that have to be made to their budgets must be taken from non-mandated spending - such as schools, community centers, road maintenance, fire safety, and the police.

Richard Iannuzzi, President of the New York State United Teachers, publicly announced that his organization had determined that a 2% tax cap would result in an estimated $815 million deficit in the school system.

So if a tax cap won't provide real property tax relief or help solve our budget problems, what will?

One idea I support, which is backed by a large and growing coalition of organizations including Property Tax Reform groups, affordable housing advocates, fiscal watchdogs like New Yorkers for Fiscal Fairness, and the BALCONY , the Business and Labor Coalition of New York is to provide real and immediate personal property tax relief by making property taxes proportional to household income. The concept is known as a property tax circuit breaker.

The property tax circuit breaker is designed to interrupt ballooning property taxes before they overload our communities by changing the way household property taxes are calculated and collected.

The most important function of the circuit breaker is to prevent rising property taxes from overloading any individual household by setting a maximum percentage of total household income that is subject to property taxes. Like the STAR program, a circuit breaker would be targeted to those whose taxes exceed a fair proportion of their income. This would provide immediate property tax relief to working families allowing them to stay in their homes or avoid moving out of state.

A property tax circuit breaker ensures that whatever a household owes in property tax, that amount is manageable and directly proportional to a household's income.

A property tax circuit breaker is not about handing out charity or punishing wealth, it is simply a matter of sound fiscal policy. The idea enjoys support from a number of leaders from around New York's business community.

According to Bruce Ventimiglia, President and CEO of Saratoga Capital Management and Business Co-Chair of the Business and Labor Coalition of New York, "Many businesses in New York that rely upon our State's services, such as higher education, which provides a quality work force, stand ready to share the responsibility for keeping our State solvent."

The meaning of 'fair share' in the case of the property tax circuit breaker is clear: every taxpayer's burden should be proportional to their capacity to pay. This would not only eliminate the unfair burden on the working and middle class but provide a roadmap to significant sustainable income tax reform in the future.

The simplest solution to a problem is not always the most effective, and no decision can be made without sacrifice, but in the case of property tax relief, the answer is simple, effective, and just plain common sense.

Overburdened taxpayers with limited incomes need personal property tax relief now. And woe to the politician who supports this rhetorically popular but ill-conceived tax cap when their constituents open their next tax bill and find no relief.

Bill Samuels is Chairman of the Carlyle Capital Group LLC and a member of BALCONY, The Business and Labor Coalition of New York.