NYC renters are hit every year with a huge tax they probably don’t even know about. Business Insider reports that homeowners pay a much lower property tax than landlords, making for a “property tax system [that] is a perverse cross-subsidy from relatively poor renters to relatively rich homeowners.” New York’s apartment properties are taxed at double the national average, with only one of the 50 largest US cities (Detroit) having a higher apartment tax rate than NYC. DC, for example, taxes apartments at a rate 80 percent lower than New York City.
In some cities, the landlord would absorb the property tax, but not in NYC, where the cost is passed straight to renters:
The reason that landlords would bear most of the cost of a property tax increase is that apartment demand is more elastic than apartment supply: If property taxes go up and my landlord tries to raise my rent, I can move to the next town but he can’t move his building there. But New York City is a geographically large jurisdiction whose residents have a strong preference for living within its boundaries; renters here are much more captive than those in some specific suburb of Boston. […]
If we just taxed all property at the same rate, apartment building taxes would fall by $1,000 to $1,500 per unit.
All blue cities have hidden taxes and fees that drive up costs and crush economic growth. We needs to do an aggressive study of just how they raise their revenue, and use that data to replace the current convoluted system with one that transparently shows people what they are paying—and what they are getting in return. We suspect that better information would intensify voter pressure for cheaper and more efficient governance—at all levels of government.