04/29/2008
The Honorable Sheldon Silver
Speaker
New York State Assembly
932 Legislative Office Building
Albany, NY 12248
Dear Mr. Speaker:
It was with great concern and disappointment that I read media accounts suggesting that you were closing the door on the concept of a property tax cap -- before the Commission on Local Government Efficiency and Competitiveness has even completed its work or presented its recommendations.
There is strong support among New York's small business community for a property tax cap -- and for good reason. New Yorkers pay the highest property taxes in the nation. Local property taxes increased 42 percent from 2000 to 2005 -- more than three times the rate of inflation. Property taxes are by far the largest and fastest growing component of most New Yorkers' tax bills, and are the main reason why New Yorkers are saddled with the highest tax burden in the nation.
In our most recent NFIB Member Ballot, we asked small business owners about the property tax cap. An overwhelming 83 percent of them supported it.
Property taxes are a particular problem for small business, already struggling with an adverse economic climate and New York's dubious distinction of having the second highest cost of doing business in the nation. Some 40 percent of the property tax levy is paid by business, totaling more than $14 billion and making it the single largest tax on business in New York. Not only do small business owners bear that burden at their business, but they are whacked by the tax man with sky-high property tax bills on their homes as well.
At the same time, state school aid has increased dramatically, by billions, year after year. Concurrent with these increases, property taxes continue to increase at a rate that business and homeowners simply cannot afford. And what we are getting for all this spending? Despite the fact that New York state ranks third in per capita elementary and secondary school spending, our 2006 graduation rates and SAT scores were 43rd in the nation. That presents to me a fairly compelling argument that, beyond being unable to sustain the kind of spending that has been taking place, we are also not getting a particularly good return on this mammoth investment.
Perhaps we would be better served if instead of simply insisting on spending more year after year, we spent it more wisely and demanded more accountability and results from our public education system. Small business owners want New York to have the best public education system possible. At this point, we are skeptical at best that all this runaway spending is getting us there. That, however, is a topic for another time.
The plain and unavoidable truth is that property taxes are out of control in our state. They are driving people from their homes and businesses. The STAR Program, intended to provide relief, has not done so. In fact, it has likely encouraged school districts, which have treated their ability to levy taxes as a veritable printing press, to further increase taxes. Businesses, ineligible for STAR, have received the full brunt of those increases.
Even more troubling than opposition to a property tax cap is the alternative that has been floated by the anti-economic growth Working Families Party. The notion of increasing income taxes on individuals earning more than $250,000 as part of a "solution" to the fact that New Yorkers are drowning in high taxes is, with all due respect, preposterous. Roughly 75 percent of small business owners report their business income through the personal income tax, meaning thousands of small employers will be hammered with any income tax increase. $250,000 in business income hardly makes one wealthy, particularly as small business owners are being squeezed with rising food, energy and healthcare costs. Raising taxes in any way is simply the wrong policy for New York, and is a sure-fire way to continue to drive people, jobs and opportunity from our state.
It is apparent that some downward pressure on school property tax increases is needed. Massive increases in state aid and the STAR program have failed to stem the overwhelming tide of school property taxes. School districts have demonstrated absolutely no restraint in their willingness to dig deeper into already strapped taxpayers' pockets year after year. This is why the concept of a property tax cap makes sense and has the support of small business. I respectfully request that you and your colleagues give the concept of a property tax cap the serious consideration it warrants. New York's overburdened taxpayers -- small businesses and homeowners alike -- deserve no less.
Sincerely,
Michael J. Elmendorf II
State Director, NFIB/New York
CC: Members of the Legislature
Interested Parties
