Overburdened by Taxes
September 11, 2013

Studley 2013 Effective Rent Index

No city in America can match New York’s broad array of taxes—more typical of a state than of a municipal government. Most New York City residents and businesses are subject to combined state and local tax rates far exceeding national norms. Such high taxes are a headwind against economic growth: they add to overhead, cut into profits, and make it costlier to employ people.

Since Bloomberg’s hike, the disparities among the tax classes have only gotten worse. Average property taxes on single-family homes remain low by both regional and national standards. But the effective tax rate (that is, as a share of market value rather than assessed value) on a 20-unit apartment complex in New York is double the national urban average, according to a study issued by the Lincoln Institute of Land Policy and the Minnesota Taxpayers Association. The same study finds that New York’s effective tax rate on commercial buildings is at least 76 percent above the national urban average. Of the 50 largest cities covered in the study, only Philadelphia and Detroit impose higher commercial property taxes. In midtown Manhattan’s prime office space, the average commercial property tax in 2011 was more than triple the average for all major cities, according to the Studley Effective Rent Index.

Overburdened by Taxes

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