Property tax cap: Be careful what you wish for

Home | Op-Ed | Property tax cap: Be careful what you wish for

Feb 3, 2011

The last Weekender column advocated something rare these days, rooting for elected officials we dislike because our success depends on theirs. But hoping for and helping our electeds to succeed does not usually mean backing a misguided policy, such as new Gov. Andrew Cuomo’s call for, and prioritization of, a property tax cap.

If narrow short-term benefit predicted who the supporters of a property tax cap would be — weekenders, like myself, would surely rank among the proposal’s biggest champions. Second homeowners have paid rapidly escalating property taxes to support many vital services, foremost schools, which we never use or only modestly utilize. Certainly much less than year rounders. Back in our weekday homes in New York City, our property taxes are low because they are subsidized by the enormous taxes paid by businesses. But any such attitude and action in support of a tax cap by weekenders or full-time residents of greater Chatham would be shortsighted and ultimately self-destructive. The state, indeed, the entire nation is comprised of communities and municipalities like Chatham, which to paraphrase Mr. Franklin, must hang together or will undoubtedly hang separately.

The burden imposed by rapidly escalating property taxes, the greatest portion of which fund public schools, is well known. House-rich people with low or fixed incomes struggle to pay their property taxes and sometimes must even sell their homes to escape these untenable positions. This has led to an increasing number of programs like “Star,” which rebate and abate some of their property taxes and thereby necessarily result in even higher property and school taxes paid, without any relief, by people ineligible for these tax-relief programs. So why not begin to stop these problems and inequities by capping property taxes?

There are several reasons. One is that a hard and fast tax cap suffers from the same defect that all such automatic “never” or “always” measures suffer from — their terminal inflexibility. Such provisions implicitly say two things: “we the people don’t trust you to govern” and “we the electeds don’t trust ourselves.” When we deprive the people we elect of the ability and flexibility to use all available tools to solve a problem or meet a need, such as adequately funding public schools, we make it difficult, if not impossible, for these officials to do their jobs. We also inevitably place an unhealthy strain on any remaining tools at their disposal. One of the reasons that property taxes have escalated is the shortfall in school aid coming from state and federal sources, which in turn results from a de facto cap on taxes at those higher levels of government. When presidents and governors foolishly pledge “never ever” to raise taxes, as has become commonplace, a sequence of events and consequences is set in motion where the ultimate burden must be borne by local property taxes.

Before the recent deep recession took hold of the entire nation, and most of the world, California was already suffering from a massive budget deficit of $23 billion. That unprecedented deficit was the result of a statewide property tax cap embodied in California’s infamous “Prop 13” and the mandate of “Prop 98” eliminating all flexibility in how that state configured its schools and funded them.

In fact, that is why it was so “odd” for Governor Spitzer to propose a property tax cap in his Jan. 9, 2008 State of the State speech. Eliot knew better, especially with fresh California blood gushing at the other end of the continent. When I pointed out the fallacy and the danger of an inflexible cap to then Nassau County Executive Tom Suozzi, who was heading Eliot’s silly tax cap commission, in what I thought was a private conversation — it was reported the next day in the Long Island daily Newsday by a reporter who had overheard the conversation. Also reported was my proposal to really lower property taxes and properly fund the states public schools. That rational alternative, which does not depend on a feel good, but inflexible measure which prevents the government from rationally governing, will be the subject of a future Weekender column.



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