New York City's property tax system is currently not in good shape and is described as "broken." The tax is costing the city millions prompting the officials to agree with tax overhauling.
Despite their deep desire to rescue the current system, Michael Hyman, Deputy Finance Commissioner, admits that doing so is no easy task.
"It's broken, but I don't have a magic wand. There are inequities in the system," said Hyman via New York Post.
According to The Real Deal, NYC values condos and co-ops with similar rental units in the place more than the sale prices, implying that high-end buildings and properties in the city are underrated.
Hyman deemed the implementation of this overhauling will make high-end properties pay lower taxes, and can be problematic. There will be a windfall of cash if the system overhauling is pushed through.
"If these dollars were instead included in the base, the overall tax rate could be reduced, although not without some redistribution of tax burdens," Deputy Director of the New York City Independent Budget Office, George Sweeting, said.
For instance, if the buying price of $100 million will drop into $8.1 million as the new selling price set by the city, this may seriously raise violent reactions from real estate investors.
"It is apparent from the testimony that the entire process is flawed. The poorest of the poor are subsidizing the wealthy," Assemblyman Mark Gjonaj said via New York Post.
Meanwhile, other officials in New York City commented that the proposed overhaul to the city's corporate tax structure is revenue neutral. They even described this new structure "the largest revamp since the 1940s" as related in The Wall Street Journal. NYC officials also revealed there will be an offset of reduced tax revenue in some areas through capturing more taxes.
The Wall Street Journal features what this new tax overhauling covers. As presented by the office of the mayor, the new tax structure will merge bank tax into corporate franchise tax, provide tax relief for small businesses and manufacturers, eliminate special deductions and exemptions, among others.
