421-a at 50: Rising Cost, Diminishing Returns

Report | Feb. 2022

421-a at 50: Rising Cost, Diminishing Returns

Samuel Stein, Debipriya Chatterjee

Summary:

In 2021, New York’s biggest real estate tax break, 421-a, marked its 50th anniversary. On June 15th, 2022, the program is set to expire.

This report argues that the program is an expensive anachronism – a tremendously costly legacy of a very different time for New York City’s housing and real estate markets – which the legislature should leave behind. We trace the program’s history and current design in order to explain why three previous rounds of reform have failed to deliver either shrinking costs or meaningful affordability. Ultimately, we argue that the fatal flaw is in the program’s initial inception: it was designed in 1971 for a real estate market that looks nothing like the city today. No matter how many amendments the legislature makes to the program, it remains primarily a tax break for the wealthy, not a driver of housing affordability.

Issues: Affordable Housing

Download PDF