New York City is considering significant changes to its property tax system, aiming for greater fairness and transparency. However, these reforms could disrupt the local economy and real estate market for years. The proposed changes, outlined in a 2020 advisory commission report and a shelved Assembly bill, would shift the tax burden to middle- and upper-income residents, potentially driving them out of the city. The reforms focus on valuing and taxing approximately 8.6 million residential properties to eliminate discriminatory impacts on low-income individuals and racial minorities. David C. Wilkes, a property tax and valuation strategy partner at Cullen and Dykman, notes that the current system disproportionately favors residential properties, with Class 1 properties making up 48% of total city real estate value but only contributing 15% of taxes paid. The proposed reforms could lead to significant tax increases for commercial property owners, raising concerns about their long-term viability in the city.
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