Galef, Little Bill Would Tie Property Taxes to Income

Legislation gains support of tax groups, Fiscal Policy Institute
February 4, 2008
Assemblywoman Sandy Galef and Senator Betty Little said support is growing for legislation they have sponsored that would limit the amount of residential property taxes an individual pays based on their annual income. The Fiscal Policy Institute and property tax reform advocacy groups joined the lawmakers at an Albany news conference today to advocate for the bill.

“Property taxes have been skyrocketing at alarming rates over the past few years,” said Galef. “This circuit breaker program correlates your income to your tax burden, instead of only reflecting your income like the current middle income rebate program does. The circuit breaker will help our residents meet their tax obligations and will establish greater equity for all taxpayers. This will help to keep New Yorkers in our state and attract new residents to New York”

“It is wrong that residents should be taxed out of their homes because their income has not kept pace with their property taxes,” said Little. “Our legislation would create a fairer system, providing immediate help targeted to those having the greatest difficulty paying their tax bills while work continues to find a long-term solution to the property tax problem.”

The legislation, A.1575A /S.1053A, would establish a cap on the maximum real property tax paid by New Yorkers who have a household adjusted gross income of $250,000 or less. Homeowners would receive an income tax credit equal to 70 percent of the taxes paid over an allowed percentage cap.

The property tax percentage cap would adjust from 6 to 8 percent, according to income. Those not filing a tax return or not owing income taxes would receive a rebate check.

To qualify, the taxpayer must have resided in the home for not less than five years. Taxpayers would continue to receive the Basic STAR exemption or the Enhanced STAR exemption for senior citizens.

Frank Mauro, Executive Director of the Fiscal Policy Institute said: “The Middle Class STAR rebate program is better targeted than the original STAR exemption program in that it takes income into consideration. But it is still not adequately targeted to be an effective and efficient property tax relief mechanism since it does not take the size of a homeowner’s property tax bill into consideration and it is still based on county and school district averages of important variables. A circuit breaker like the one proposed by Assemblywoman Sandy Galef and Senator Elizabeth Little (A.1575A/S.1053A) would address both of these shortcomings.”

According to the Fiscal Policy Institute, the mean benefit for upstate and downstate homeowners would be $1,135 and $2,397, respectively. Income qualification, as currently defined through the Middle-Income STAR Rebate program would be: (1) Upstate less than $90,000 at 6 percent cap; $90,000 to $150,000 at 7 percent cap and $150,000 to $250,000 at 8 percent cap; (2) Downstate suburbs and New York City: less than $120,000 at 6 percent cap, $120,000 to $175,000 at 7 percent cap and $175,000 to $250,000 at 8 percent cap. Downstate suburbs include Nassau, Suffolk, Rockland, Westchester, Putnam, Orange and Dutchess Counties.

John Whiteley, longtime property tax reform advocate from Ticonderoga and Legislative Liaison for the New York State Property Tax Reform Coalition, commented: "This bill is urgently needed to save thousands of lower and middle income New Yorkers from being forced from their homes. Shockingly, there are tens of thousands of New Yorkers who are paying from 6 percent to 20 percent and more of their household income in property tax just to stay in their homes.

"This bill will help them keep their homes and should be enacted immediately. We must then move on to fundamental change in the school funding system. New Yorkers should not have to choose between keeping their homes and providing quality education.

"We commend the bi-partisan cooperation involved in developing this outstanding bill."