Gov. Andrew Cuomo , calling high property taxes New York state’s biggest issue, proposed giving tax reductions to more than two million homeowners and renters.
“If you look at the problems that we’re facing, and if you look at the issues that we’re dealing with, they all come back to taxes,” Mr. Cuomo said Wednesday at a news conference at Hofstra University on Long Island. In unveiling his plan, the governor said property taxes were chasing away young people and small businesses.
Residents who earn less than $250,000 and are paying more than 6% of their earnings toward property taxes would receive an income-tax credit of up to $2,000.
The average credit would be $950, state officials said.
Peter Elkowitz, president and chief executive of Long Island Housing Partnership Inc., an organization that aids prospective home buyers find affordable housing, said the $950 credit is “a tremendous amount of money for some of our families here.”
“Any break can be used for other things,” Mr. Elkowitz said of the typical Long Island family budget. “A lot of our families have so many other budget concerns, like rising utility and insurance costs,” he said, adding that superstorm Sandy had markedly increased insurance costs.
Under the proposal, the tax reduction is estimated to cost the state $400 million in the first year, $600 million in the second, $1 billion in the third and $1.66 billion each year thereafter.
Mr. Cuomo’s tax reduction is the first proposal to come from his State of the State and budget address, scheduled for this Wednesday.
State Budget Director Robert Megna said the cuts would benefit more than 1.3 million homeowners and more than 1 million renters.
Homeowners with income of less than $75,000 a year would receive a maximum of $2,000 back. Those who make between $75,000 and $150,000 would get a credit of $1,500 to $2,000. Residents who earn between $150,000 and $250,000 would receive the smallest credit, between $1,000 and $1,500.
Renters who earn up to $150,000 a year can qualify for an income tax credit of up to $750 when the amount attributed to property tax exceeds 6% of their income.
To qualify, residents must live within a local municipality that abides by the governor’s 2% property tax cap, said Mr. Cuomo, a Democrat who was re-elected to a second term in November.
“Our taxes are a real critical issue,” Mr. Elkowitz said. “It’s one of the main factors that our counselors look into when a person comes in for a mortgage.”
Mr. Cuomo noted the effect high taxes have on new homeownership. “I’m old enough to remember when you had to buy a house, the question was, can we afford the mortgage? Now…the question is, can we afford to pay the property taxes? It’s flipped.”
New York is home to some of the highest property taxes in the country. In the suburbs of New York City, they rank among the highest by dollar value. In rural upstate, Mr. Cuomo said, taxes are among the highest as a percentage of a home’s value.
“You have no economic future if you are the tax capital of the nation,” Mr. Cuomo said.
Gina Sapienza, a retired teacher and a Farmingdale homeowner who pays about $12,000 annually in property taxes, will qualify for a credit. But she said the potential savings paled against other household expenses.
“I pay a lot of taxes, but I kind of knew that coming into the situation,” Ms. Sapienza said. “It’s always better to pay $1,000 less, but it’s not going to be life-altering.”
She added: “You pay a lot of money for the luxury of living on Long Island. But the bottom line is, I wouldn’t give it up.”
This article originally appears on WSJ.com