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Yes, a property tax cap, with conditions

May 28, 2011
Editorial by the Adirondack Daily Enterprise: Publisher Catherine Moore, Managing Editor Peter Crowley

The state doesn't collect or use property taxes - local governments do - so any action by the state to cap property tax increases is essentially protecting local governments from themselves.

A certain amount of that is needed these days in New York, for the sake of the state's overall health. It has long been said that cumulative taxation is driving people out of state, and that's not just political hot air. A Marist Poll announced May 12 showed that 26 percent of New York adults polled plan to move somewhere else in the next five years - 36 percent of those under 30 years old. It also showed that 77 percent of New York adults see this state as an expensive place for the average family to live, and 69 percent of registered voters favored a 2 percent annual cap in property tax levy increases, which is being plugged by Gov. Andrew Cuomo and the state Legislature Republicans.

The Enterprise would support such a cap, but on three conditions:

1. It must ensure local control by allowing local residents to overrule it in the voting booth, perhaps by a 60 percent majority. If people want to pay more to fund their own government functions, it would be undemocratic for Albany to stop them.

2. With the tax cap bill should be a measure to loosen the Legislature's stranglehold on counties raising their own sales taxes. For example, Essex County has done a particularly good job over the years at holding the line on property taxes, but recently, under the same economic pressure being felt everywhere, its supervisors have felt the need to raise the sales tax from 7.75 to 8 percent (4 percent of which goes to the state) - but Albany won't let it. Of New York's 61 counties, only five have lower sales tax than Essex. New York City has the highest at 8.875 percent, followed by Erie and Oneida counties at 8.75 percent, and Long Island's Nassau and Suffolk counties at 8.625 percent. The Capitol should simply cap sales taxes (perhaps at 8.9 percent) and leave the rest up to the counties.

3. The governor and Legislature must make a commitment to follow the cap with steps to make the state to pay for whatever mandates it places on local governments. We admit it would be tricky to ensure such a promise is binding, but without it, the state would potentially bankrupt some of its counties, towns, cities, villages, school districts, etc. by making them pay for decisions made in the Capitol. Nothing would say, "Put your money where your mouth is," like getting rid of unfunded mandates.

But there's a chicken-and-egg problem here. Which comes first: funding state mandates or capping property taxes?

We are willing to agree with the governor and statewide business booster groups who say a tax cap should come first, and that it would force mandate reform. It had better. Another pro is that a tax cap would pressure our multitudinous local governments to take steps toward consolidation and sharing with their neighbors.

The main reason we support the property tax cap boils down to this: Taxing property is inherently less fair than taxing income or sales, because it isn't as connected to the taxpayer's ability to pay. One can inherit valuable property but not have the income to afford the taxes, or else the whims of the real estate market can suddenly make someone's property skyrocket in value, thereby making the taxes unaffordable. That isn't as fair as taxing someone based on how much they make, or how much they spend.

We've said this before, but we like Massachusetts' 2.5 percent property tax cap, which local voters can override. A 2 percent cap probably wouldn't solve all New York's economic problems, but it'd be a good start.



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