Sunday, July 17, 2011

New York City Losing $13.5 Billion In Property Tax Revenues Due To Exemptions And Tax Breaks

The New York Post provides some staggering statistics on the magnitude of property in New York City that is either exempt from taxation or the beneficiary of a property tax break. While the City's annual property tax revenues generate $17.6 billion in annual revenues, it is losing $13.5 billion because of tax breaks.

It might just be the ultimate act of forgiveness.
A new analysis of the city's property-tax rolls found that religious institutions, wealthy private colleges, hospitals and other nonprofits -- and even Madison Square Garden -- are exempt from an astonishing $13.5 billion in property taxes.
The Independent Budget Office, which released the review yesterday, reported that, just in the last two years, an extra $1 billion in potential property taxes were placed off limits to city tax collectors.
"Some of the breaks are permanent, and may actually be more than estimated," the IBO said, noting that the city's tax assessors don't have much reason to boost values on buildings they know to exempt.
The lengthy list of those living the zero-tax life ranged from nonprofit institutions ($2 billion in exemptions) to the MTA ($751 million) to Madison Square Garden, still enjoying the fruits of a sweet deal reached during the Koch administration that's now worth $15 million a year . . .

The story indicates Indianapolis' former Mayor Steve Goldsmith, now NYC's Deputy Mayor, is looking to move city-owned property back to the tax rolls, which owns more than 7,500 properties that could generate $5 billion in property taxes. Ironically, Goldsmith deserves a lot of the blame for tax shifting that has reached mega proportions here in Indianapolis.

Property taxes have become completely unfair, if not unconstitutional, in my judgment over time because of the number of exemptions and tax breaks afforded to some taxpayers at the expense of others. Many organizations claiming tax exemptions as nonprofits are nonprofits in name only. In reality, they operate as corporate giants with high-paid executives who run their organizations as business enterprises. Businesses with the right political connections are handed out property tax abatements and special tax incentives like candy. The creation of TIF districts allow them to command use of what property taxes they do pay to the exclusion of other taxing districts for development uses that benefit only their interests. Even more alarming, publicly-owned property is increasingly being used for private commercial benefit free of taxation. Look at Lucas Oil Stadium, Conseco Fieldhouse, Indianapolis' public golf courses or the Indianapolis International Airport, for examples of this.

Essentially, we have created a system of taxation in this country at all levels of government where the people who have enough political pull within the system can get the decision-makers to enact, interpret, apply and enforce the tax laws to curry favor with them in consideration of their political support, while shifting the tax burden to the people who lack clout to fund the costs of government. Equal protection under the law when it comes to taxation has simply become a figment of our imaginations.

1 comment:

Marycatherine Barton said...

I completely agree with your last two paragraphs. Thank you so much for these hard truths, AI.