February 12, 2008
The high cost of property taxes is driven by relatively high (twice-inflation) tax increases – year in and year out, over decades. A one-year increase of, say, 6% rather than 3% doesn’t sound like much to most people – but above-inflation increases in tax levies outside New York City compounded to a total $5.4 billion from 1997 to 2007 (roughly the value of STAR). The Office of the State Comptroller observed that school tax increases accelerated in 2000-2005, compared to the five previous years. A connection to STAR? Some experts think so.
While STAR cushions the cost of tax increases for homeowners, it does not protect businesses. As mentioned earlier, above-inflation tax increases outside New York City totaled some $5.4 billion from 1997 to 2007 – with commercial, industrial and utility properties paying 20% or so, that’s a $1 billion new cost on employers. For comparison: The Article 9-A corporate tax rate has been cut from 9% to 7.1% over the past decade, saving employers roughly $500 million a year – around half the new cost of property taxes.
