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The unequal burdens of a broken tax system

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The Town of Hempstead, commonly called America’s largest township, recently voted to impose a historic tax levy on its nearly 800,000 residents.

Town Supervisor Donald Clavin says the 12.1 percent levy is a necessary and “fiscally responsible” decision to help maintain the cost of administrative services such as health insurance, pensions and garbage removal.

Under the town’s proposed budget, residents of incorporated villages such as Freeport, Garden City and Rockville Centre would pay an extra $5 per year — while homeowners in unincorporated communities like Baldwin, Roosevelt and Uniondale would have to pay $65 extra annually.

Such a stark contrast raises the question, why are some homeowners paying more taxes than others? Is everyone paying their fair share, or are there disparate tax burdens from one homeowner to the next? How can the town justify a mind-boggling 1,200 percent difference in tax payments between residents of villages and unincorporated hamlets?

Last month I wrote an op-ed for the Herald that explored the possibility of Baldwin becoming an incorporated village. Among many other responsibilities, village incorporation would give Baldwin the power to regulate its taxes, including generating much-needed revenue through sales and property taxes.

Many Baldwin residents reacted positively and with genuine curiosity to the essay, while others reflexively dismissed the idea for one primary reason — the age-old fear of higher taxes. But if our taxes are already increasing, why not welcome the opportunity to control them on our terms?

The ugly truth is that whether you live in the Town of Hempstead or an unincorporated area of Nassau County, homeowners across Long Island face unequal tax burdens.

Before we go any further into tax disparities, we must note the fundamental difference between taxes and assessments. Taxes are fees outlined in budgets determined by school boards, town boards, county legislatures, village boards and special districts. Property taxes, in particular, have been described as the “lifeblood” of local governments. In Nassau County, roughly 60 percent of property tax revenue is earmarked to fund public schools, with the rest used to finance public services.

Assessments are calculations of properties’ worth based on their market value. Assessment rolls list public information for the county’s residential and commercial properties. In Nassau, property assessments are managed by the Assessment Review Commission, a responsibility that is unique among counties in New York state.

In 2021, the county comptroller’s office published an audit in which it called the county property assessment system fundamentally “broken.” Democratic and Republican lawmakers have sparred for decades over who is to blame and how to fix the problem. But little attention is paid to the disparate fiscal impact and hardship some Long Island property owners face as a result of flawed and failed policies.

Take the property assessment grievance system, for example. Each year, tax grievance firms flood our mailboxes with urgent notices promising to win homeowners big tax refunds. In Nassau County’s property assessment sweepstakes, however, there are clear winners and losers due to a practice known as “tax shifting.”

According to the comptroller’s audit, roughly 70 percent of property assessment grievances — also known as appeals or challenges — were granted reductions. Between 2012 and 2019, grievance firms billed residential property owners over $500 million for their representation in reducing assessed values, the audit found.

But here’s the catch: When a property owner successfully appeals their assessment and gets a refund, the tax burden doesn’t disappear. Tax rates are adjusted, and the cost simply shifts to the next property owner who fails to grieve their assessment.

Nassau is the only county in the state that is both responsible for property assessment review and liable for taxpayer refunds. Whatever property tax revenue the county generates, the gains may likely be offset by grievance settlements. As one elected official previously put it, “A refund gets paid by taxpayers one way or another. The question is merely who pays.”

Historically, county and Town of Hempstead officials have made decisions — for example, to freeze taxes — that have proven more politically convenient than financially prudent.

This is only the tip of the iceberg in highlighting an entrenched, flawed and, yes, broken tax system. To create a fairer and more equitable one, we need more tax literacy and transparency. Elected officials at every level of government must work diligently to revise broken policies that allow disparities to persist.

Karl A. Valere is chief of staff and senior policy adviser to Assemblyman Khaleel M. Anderson. He lives in Baldwin. Contact him at karlcaresnewyork@gmail.com.