Property tax is the type of tax most people associate with local government, especially when it comes to funding education, for better and for worse — mostly for worse. Most cities still rely heavily on property taxes to fund parks, public schools, public safety and other vital functions of local government. Property taxes, while still the largest source of tax revenue for the City of New York, isn’t nearly as large a share of revenue as it once was.
Property taxes made up 94 percent of New York City’s tax revenues in 1929. In 2017, property taxes were a shade under 45 percent of the City of New York’s tax take, replaced by a mix of sales and income taxes.
The history of how New York City’s tax revenues have evolved from 1929-2017 can be seen easily now, thanks to a new tool from the New York City Independent Budget Office, a publicly-funded city agency that provides nonpartisan information about New York City’s budget to the public and their elected officials, such as the federal government’s Congressional Budget Office.
The tool comes with a timeline of key tax-policy changes. For example, in 1935, New York City became the first U.S. municipality to enact a general sales tax. By the 1950s and early 1960s, the sales tax generated around one-fifth of total city tax revenue, with a peak share of 23.9 percent in 1953.
(Credit for all graphics: New York City Independent Budget Office)
In 1979, property taxes dipped below 50 percent of city tax revenues for the first time.
In 2007, property taxes accounted for their lowest-ever share of city tax revenue, while the shares of business income taxes and real estate-related taxes (such as mortgage recording, property transfer and commercial rent taxes) hit all-time highs.
It doesn’t delve into all of the history, however. Among the omissions is the history of how NYC’s most expensive apartments have the lowest tax rates, thanks to a mix of notoriously-abused developer incentives and a property-tax law that hasn’t been updated since 1981. Still, it’s pretty cool tool.
Oscar is Next City's senior economics correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha, and Fast Company.