Queens and Brooklyn Homeowners Shoulder Heavier Property Tax Burden as Reform Talk Grows

Persistent quirks in New York’s property tax regime penalise the less affluent and reward the fortunate, aggravating inequality in the city’s most critical wealth-building sector.

A stately brick house in Laurelton, Queens—median home price just above $800,000—commands an annual property-tax bill of over $7,200. A few subway stops away in Bedford-Stuyvesant, Brooklyn, a brownstone listed for $2.7m pays less than half that sum in taxes. If this seems perverse, that is because it is: the world’s wealthiest city sustains a property-tax apparatus so convoluted and opaque that even seasoned bureaucrats admit confusion.

Every year, about one-third of New York City’s revenue—over $30bn—derives from property taxes levied by the city’s Department of Finance. This vast and essential stream funds the public schools, firehouses, libraries, and literal infrastructure upon which the metropolis runs. Yet the formula for apportioning the burden stems not from transparent principles, but from a labyrinthine code adopted in the fiscal crisis of the late 1970s, then patched and “reformed” in the 1980s. Today’s result: widespread inequity sewn into the fabric of municipal finance.

For Pierry Benjamin, who bought and rehabilitated a single-family home in Laurelton last year, little of this history offers solace. Instead, he finds himself beset by rising taxes and unclear logic. His home, like many in middle- and working-class Queens and Brooklyn, faces a tax bill startlingly larger than those attached to much pricier properties scattered across Manhattan and sections of Brooklyn. “We have to be really creative so homeowners aren’t constantly exploited to pay for the debts of the city,” says Mr Benjamin, reflecting a prevailing sentiment.

The technical villain is a series of caps and class distinctions within the tax code. Assessment increases for one-, two-, and three-family homes are capped at 6% per year—or 20% over five. While this protects some from sticker shock as neighborhood fortunes soar, it also ensures persistent under-taxation in rapidly appreciating areas. Meanwhile, in parts of the city where home values limp along, assessments “catch up” precisely when homeowners can least afford it.

Class stratification extends further. Condos and co-ops—about half the city’s housing—are taxed not at straightforward market value but as if they were rental buildings, using sometimes-comical comparisons to nearby blocks. A $1.5m apartment on the Upper East Side, for example, may be taxed as though it were a run-of-the-mill rental next door, resulting in tax bills that boggle the outsider’s mind.

All these quirks were initially conceived as workarounds in a city desperate to stabilise itself after property values had plummeted and white flight was rampant. They did, in fact, secure revenue and blunt sudden spikes. But the unintended legacy is a system whose structural inequity has amplified, not diminished, over decades. As the city’s property fortunes have diverged, so too has the fairness of its taxation, all while the system becomes ever more impenetrable to those on the receiving end.

First-order implications for New Yorkers range from the frustrating to the existential. For many in Laurelton, Hollis, and their ilk—neighborhoods with stable working- and middle-class populations—property taxes now represent an outsized share of household income, sometimes doubling over a decade. Conversely, long-standing residents of certain brownstone-lined stretches of Brooklyn receive a windfall from the city treasury, often without ever realising it.

Calls for reform, slow to action

The second-order consequences are broader still. Skewed taxation distorts the city’s housing market and discourages both neighbourhood investment and social mobility. Marginalised areas, already ailing from historical neglect, see higher barriers to property ownership. Meanwhile, the whimsical treatment of condos and co-ops renders the market even more opaque, increasing uncertainty for would-be buyers and contributing to the city’s notorious affordability crunch.

Politically, the problem has proven intractable. Bill de Blasio empanelled a reform commission—helmed by Marc Shaw and others—with the modest objective of flattening gross inequities, but little actual overhaul followed. Legal challenges proliferate, including threats that the system as it stands “can barely stand up in court,” in the words of Mayor Zohran Mamdani. Yet for all the reformist posturing, each tweak risks inciting a homeowner revolt and exposing a city budget already under stress.

National comparisons only sharpen the contrast. Boston, Washington, DC, and San Francisco all manage with far less complex systems and fewer embedded disparities; most simply levy a percentage of market value, subject to only modest exemption schemes. New York’s peculiar lodging of market value, assessment caps, and property class stratification is, if not unique, then at least idiosyncratic—and especially damaging in a city where housing is both the primary store of private wealth and the site of much grievance.

The trouble, in essence, is that inertia favours those whom the system coddles. Existing homeowners in highly appreciated neighbourhoods—many of whom wield political sway—stand to lose, at least in the short term, from any rationalisation of rates. Reform proposals almost invariably founder on the shoals of transition: how to correct injustices without unintentionally impoverishing the less-taxed and derailing housing budgets still labouring under post-pandemic deficits.

If the city chose to bite the bullet, equity could be bolstered without bankrupting anyone. Phased-in changes, means-tested rebates, and a recalibration of market-valuation practices would bring Manhattan and the outer boroughs closer to parity. Transparent formulas, however, are an anathema to the foggy politics of property: sunlight, here, remains in short supply.

Some observers reckon change is inevitable—if only as lawsuits, budget shortfalls, and political pressure mount. Yet the prospect of wholesale reform is oft postponed: the spectre of “doing a tax” has become, in local parlance, a quicker way to lose an election than to win one. Meanwhile, working-class homeowners like Mr Benjamin await not just fairness, but intelligibility.

India, Singapore, and even London offer counter-examples—their relatively straightforward property-tax regimes facilitate urban planning, homeownership, and municipal buy-in. That New York, the self-declared capital of modern commerce and innovation, should lag behind these exemplars portends more than mere administrative myopia; it signals an unwillingness to treat fairness as a lodestar in what is, for most, the most consequential bill of the year.

For a city long priding itself on self-reinvention, correcting the baroque miseries of its tax code is a project both overdue and pressing. When the city’s own officials admit they do not comprehend the rulebook, the time for incrementalism is past. To do otherwise is to let a gnarled relic of the 1980s dictate the present pace of progress—leaving New York’s future, and its homeowners, to pay dearly. ■