Will the City's Renters Finally Get a Tax Break?

The Community Service Society applauds City Council Speaker Christine Quinn for proposing a tax credit for the city's renters as well as Assemblyman Keith Wright and State Senator Diane Savino who are sponsoring tax credit bills in the Legislature.

Homeowners have gotten a property tax rebate from the city for the past three years, but renters are left out in the cold even though they pay property taxes through their rents. The Community Service Society has championed a renter tax credit for several years.

When Mayor Bloomberg first took office, he raised the property tax by 18 percent in order to balance the city's budget after the damaging economic affects of 9/11. In addition, the city's torrid real estate market is generating rising property values and taxes that have resulted in increasing housing costs for homeowners and renters alike.

Homeowners' Rebate

In 2004, with the economy on the rise, the city began an annual property tax rebate of $400, but only for homeowners. While homeowners feel the pressure of property tax increases directly, they get relief through federal income tax deductions, plus billions in state and city tax rebates. And they receive this relief regardless of their incomes.

The regressive effect of the rebate is clear: four out of five New Yorkers in the bottom third in household income are renters. They get nothing. The rebate goes to owners, who comprise more than half (52 percent) of the top third in household income.

Since most Black and Latino New Yorkers are renters -- and many live in low-income households -- they are especially hard hit by this double blow: increased rents to cover the rise in property taxes, but no rebate or tax credit from the city or state.

Renters left
out in the cold

Most of the city's low-income, working families rely on the private rental market. According to the 2005 Housing and Vacancy Survey, 43 percent of low-income New Yorkers living in private rentals pay at least half their income for rent -- zero property tax relief for these struggling renters is unfair.

This may seem like only a tax issue, but for many city renters, especially in the Black and Latino neighborhoods, it has become a housing issue. As property taxes increase and rents rise, the city loses its affordable housing. Since 2002, the city has lost about 26 percent of apartments renting for less than $1,000 a month to rent increases.

The shortage of affordable housing and very high rent burdens are huge problems for renters. The latest Community Service Society survey found that among poor New York City households with a full-time worker, 25 percent fell behind in paying the rent within the last year. Among low-income families (below 200 percent of the federal poverty line) with children less than six years old, 36 percent fell behind in rent payments.

A recent Community Service Society report, Making the Rent, 2002-2005: Changing Rent Burdens & Housing Hardships Among Low-Income New Yorkers, confirms that unaffordable rents and high burdens are spreading to a wider cross-section of low-income New Yorkers. With as little cash as $32 a week per family member left after paying rent, many poor families in New York endure a monthly ritual of choosing which basic needs -- food, transportation, medical care -- will go unmet.

Legislative Bills

Council Speaker Quinn's plan is for a $300 tax refund on renters' city personal income tax. Under the Wright/Savino legislation, families of three or more with a household income of less than $75,000 a year, or individuals with incomes of less than $43,000 a year, would be eligible for the credit.

Getting the credit, however, would entail submitting the state/city personal income tax form. This is unlike the homeowners' rebate, where the city mails a check directly to homeowners. Undoubtedly, a certain number of low-income renters would fall through the cracks, especially those who do not have to submit the tax form because their household income is so low. Some of them, unused to filing the tax form, would fail to take advantage of the credit.

Nevertheless, a refundable tax credit would bring some relief to low-income city renters. Mayor Bloomberg has not yet taken a position on the renters' tax credit. Now is the time for the mayor, who created the rebate for the city's homeowners, to get behind the legislative bills providing for the tax credit. Property tax relief should go to renters and homeowners alike.

From the New York Amsterdam News
April 5 - 11, 2007