New York State Floats a Tax Credit for Renters
Last month, a high-profile panel in the state of New York issued a set of recommendations for reining in the state's high property and business taxes. The group, led by former Governor George Pataki, identified some $2 billion worth of proposed tax cuts, half of it earmarked for property-tax relief for homeowners in suburban New York City and more rural upstate New York. The plan offered virtually nothing to New York City itself.
The city doesn't have a property tax cap, making its residents ineligible for a temporary freeze on taxes under the proposal, which was embraced by current Governor Andrew Cuomo. And the majority of New York City residents don't own their own home anyway. Fully 69 percent of households in the city are renters, a rate unmatched by any major city in the country.
The package, not surprisingly, touched off a couple of sensitive rifts: between city and suburbs (and beyond), and between homeowners and renters. In New York in particular, the interests of renters and city-dwellers also happen to broadly coincide. Beyond New York City, the U.S. also has a long tradition of favoring homeowners with the kind of tax breaks that renters never see, a context that's worth bearing in mind here.
This week, Cuomo formally announced the tax-relief blueprint that he'll pursue this year as he prepares for re-election. And, most notably, the package now includes a renter's tax credit that he says would aid 1.7 million people in New York City. The details are sketchy:
There are 3.3 million households across the state that rent their homes. Over 829,000 low-income renter households pay more than 50% of their monthly cash income on housing costs and thousands of moderate-income renters face similar burdens. To provide tax relief for renters, Governor Cuomo proposes providing tax relief for renters with incomes below $100,000 by offering a refundable personal income tax credit that increases with family size. This proposal would provide over $400 million in tax relief for 2.6 million renters.
Whether it would do much to aid struggling renters, the credit at least acknowledges their presence in New York State (and the fact that many of them may be more in need of housing aid than some homeowners). And it's notable why Cuomo came to tack this idea onto the original package. This is what he told Capital New York a few weeks ago when he first floated the renter's credit:
To pass an economic package you need balance. You have a Senate, you have an Assembly. They have different philosophies when it comes to this issue, so you're going to need balance between a tax increase, tax decrease—you need balance between urban and Upstate and suburban—if you expect to actually pass it.
Without making some concession to renters (and New York City residents), Cuomo knew this tax-relief proposal could never pass. And it's rare that renters have such political leverage. Housing policy that balances the needs of homeowners and renters is sorely needed well beyond New York, but renters in the rest of the country can hardly count on a similar political calculus.