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LIA, tax study

Long Island Association's tax study

Commack, Long Island, NY
January 23, 2003
CONTACT: Gary W. Wojtas 631-493-3020
Kristen D'Andrea 631-493-3021

The Long Island Association today released the results of an analysis conducted
by its Chief Economist, Dr. Pearl Kamer, showing that middle class households
in comparable economic circumstances in New York City and Nassau County
carry significantly different tax burdens. A family in Brooklyn with a household
income of approximately $36,000 will pay 43 percent less in combined real
property and local income taxes this year than a similarly situated family in
Hempstead will pay in real property taxes alone. A Franklin Square family with
a household income of about $60,000 will pay 46 percent more taxes this year
than a similar family in Brooklyn.

LIA President Matthew T. Crosson said, ?The argument in favor of a commuter
tax assumes that suburban commuters can afford an additional tax burden,
whereas City residents are now taxed to their limit. That is not accurate. A
majority of commuters are middle class, and those on Long Island already bear
a much heavier tax burden than their New York City counterparts. That is true
even when the recent increase in New York City?s property tax rates and New
York City?s income tax are taken in to account.?

Mr. Crosson continued, ?The suburbs do benefit from the city and its services;
but city residents also benefit from the suburbs. Right now, suburban residents
pay a much heavier tax burden for services in the suburbs than city residents
pay for city services. The city?s recent tax increase was significant in relation to
the city?s pre-existing tax rates, but in relation to the tax burden of the suburbs
it was not as significant. If the city needs additional resources it should look
first to its own tax base, and not seek to impose additional tax burdens on
suburban residents. The commuter tax is simply unfair.?

Dr. Kamer compared households in specific census tracks having similar
median household income levels. Her study took into account recent changes
in tax rates for both New York City and Nassau County, where most commuters
live. Two levels of income were chosen as representative of middle class
families in the New York City and Nassau County, $36,000 and $60,000. (2000
Census data shows that the median household income for Brooklyn is $32,135
and for Nassau it is $72,030.)

Dr. Kamer used as a measurement ?effective tax rates?, which is defined as the
nominal property tax rate per $1,000 of assessed value in each jurisdiction
multiplied by the ratio of assessed to market value. Effective real property tax
rates are a means for a homeowner to compare actual tax burdens among
many communities. The figures came from a recent study by the New York
University Graduate School of Public Service entitled ?New York Metropolitan
Area Effective Real Property Tax Rates (1997-2000)? authored by Dr. Dick
Netzer and Dr. Thomas Conoscenti, who performed calculations for each town
and city in Nassau-Suffolk and for New York City as a whole. (The complete
figures are available upon request.)

In Dr. Kamer?s study the nominal tax rates per $1,000 of assessed value for
each jurisdiction were obtained from the New York State Comptroller?s report:
?Overlapping Real Property Taxes, Taxes Levy and Tax Rate Statistics, New
York State Local Governments, Fiscal Years ending in 1997, 1998, 1999, 2000.?
Assessed market value ratios for residential property were obtained from ?The
New York State Office of Real Property Services, 1997, 1998, 1999 and 2000
Statistical Summary File?. The two census tract comparisons are as follows:

Table 1 -Comparison of
Census Tract 4072.01 in Hempstead and
Census Tract 1182.02 in Brooklyn Census

Tract 4053.01 656
Location Franklin Square Brooklyn
Median 1999 Household Income $60,075 $60,098
Median Value of Owner-Occupied Housing $224,900 $184,700
Effective Residential Property Tax Rate, 2000 21.64 8.29
Residential Property Tax Before 1/1/03 Tax Increase $4,867 $1,531 1/1/03
Residential Property Tax Rate Increase 19% 18.5%
Residential Property Tax After 1/1/03
Tax Increase $5,792 $1,814
Current Resident Income Tax Rate 0 3.591%
Current Resident Income Tax 0 $2,158
Total Tax $5,792 $3,972

Source: New York University Graduate School of Public Service, U.S. Census Bureau, Long Island Association

Table 2 - Comparison of Census Tract 4053.01 in Franklin Square and Census Tract 656 in Brooklyn

Source: New York University Graduate School of Public Service, U.S. Census Bureau, Long Island Association

Census Tract 4072.01 1182.02
Location Hempstead Village Brooklyn Median 1999 Household Income $36,215 $36,179
Median Value of Owner-Occupied Housing $165,900 $171,600
Effective Residential Property Tax Rate, 2000 21.64 8.29
Residential Property Tax Before 1/1/03 Tax Increase $3,590 $1,423 1/1/03
Residential Property Tax Rate Increase 19% 18.5%
Residential Property Tax After 1/1/03
Tax Increase $4,272 $1,686
Current Resident Income Tax Rate 0 3.591%
Current Resident Income Tax 0 $1,299
Total Tax $4,272 $2,985

Mr. Crosson concluded, ?These are difficult times financially for New York City,
but they also are difficult for the suburbs and the people who live here. The
State Legislature must not solve the City?s financial problems on the backs of
suburban middle class taxpayers, who already bear a disproportionate tax
burden and who represent the majority of commuters.?

Original report.

Posted by dc at May 13, 2003 10:22 PM