Land value tax pilot program proposed to make New York housing affordable
ALBANY, N.Y. (NEXSTAR) — On the eve of Tax Day, Democratic state legislators introduced a bill that would shift property taxes to a land value tax. Sponsors say transforming the current system would blunt the effects of the housing crisis statewide.
Land value taxes levy the value of unimproved land itself, rather than buildings or improvements on it. Taxing the value of the land itself is supposed to discourage property owners from speculation—holding onto vacant or underutilized land while waiting for prices to rise, a major factor driving up unaffordability—while encouraging them to develop the property for housing.
State Senator Rachel May proposed S1131A/A3339A alongside Assemblymembers Tony Simone and Alex Bores. They said that the current system lets landowners pay less than they should for the real value of a property. Plus, it puts an arbitrary or potentially damaging limit on a finite, in-demand public resource.
The proposal would realign tax incentives, reduce wasted urban space, and prioritize long-term, community-oriented goals in New York’s housing market. It would establish a pilot program in as many as five municipalities statewide, wherein the Department of Taxation and Finance would classify real estate in two groups: land only and buildings on land. The program would impose a higher tax rate on land and a lower rate on buildings, spurring construction and lowering housing costs.
“Implementing a land value tax in New York could be a powerful tool to unlock underutilized land, incentivize development, and create a more equitable and efficient housing market,” Simone said.
To apply, local elected bodies would have to pass a law, and local school districts would have to pass a resolution. Municipalities with over 50,000 residents could carve out a particular neighborhood or area to participate in the pilot. The tax department would then notify the municipality’s chief executive and the leaders of the Assembly and State Senate once selected.
This approach and similar reforms spurred economic growth and improved urban spaces in other states, according to experts at the Center for Land Economics and the Community Service Society of New York. The bill would abandon the current "ad valorem"—Latin for "according to value"—system. Land value tax would pressure those who sit on empty land instead of rewarding them with low tax bills to drive up local housing.
The change could increase affordable housing, reduce homelessness, and assess fairer tax bills for people struggling with rising costs of living. "In November, New York's voters spoke loud and clear that cost of living remains a central issue," Bores said.
Bores, Simone, and May circulated a link to a petition that New Yorkers can sign onto in support of their legislation.