A tax commission appointed by Gov. Andrew Cuomo today called for tax relief for homeowners if local governments and schools stay within the state’s property-tax cap, part of a $2 billion package of property-and business-tax cuts.
The move puts added pressure on municipalities and schools to stay with the property-tax cap, which was implemented in 2011 and limits increases to about 2 percent a year.
If schools and governments stay within the cap over the next two years, homeowners would see a tax credit equal to the growth in property taxes. It would mean that homeowners would see no tax increases over two years, the panel said.
“This is probably the most difficult issue for the state,” Cuomo said of the state’s property taxes—which are the highest in the nation.
The commission also recommended tying property taxes to household income, called a circuit breaker. The proposal has been sought by unions and progressive groups for years, saying it would be a more equitable way for homeowners to pay for property taxes.
“With a circuit breaker, the devil is in the details,” said Ron Deutsch, executive director for New Yorkers for Fiscal Fairness. “Will it be meaningful where you are really overburdened, you will get relief?”
The commission, co-chaired by former Gov. George Pataki, is one of two Cuomo has set up to consider ways to lower the state’s high-tax burden.
The proposal includes $1 billion in property-tax relief and $1 billion in business tax cuts.
The commission proposed a two-year property tax rebate for homeowners—if your local governments and schools stay within the property-tax cap. And in year two, the rebate would be available if the governments show movement toward consolidation.
Cuomo is likely to include the recommendations in his State of the State address Jan. 8 and his state budget proposal on Jan. 21.
“We have to do something about the cost of local government,” Cuomo said. “It will reduce the pressure on the homeowner for two years”
The commission reported that there would be a reduction in the corporate franchise tax, down to 6.5 percent from 7.2 percent.
Like the report issued by the first commission last month, this one called for a more immediate phase out of an 18a-energy assessment on businesses, as well as an increase in the estate tax.
The energy tax hits businesses with a 2 percent assessment on electric, gas, water and steam usage. It is set to expire in 2018.
The estate tax would see an exemption threshold increase from $1 million to $5.2 million.