High Taxes in Upstate New York: a reality check

a commentary by Perette Barella

High taxes are a regular complaint of Americans. It's a national passtime arguing about how inefficient the government is in one way or another, or how it could be better, and how we're being shafted by The Man.

I'm all for making things more efficient, and making better utilization of our tax dollars. I'm even more excited when I see effective discussions, with facts and figures behind the argument rather than ungrounded banter. Unfortunately, such analysis is at times poorly performed, yielding results that distort reality rather than clarify it.

Such a distortion has long been going on regarding property taxes paid in Upstate— especially Syracuse, Rochester, and Buffalo. Paychex founder Thomas Golisano's political organization, Responsible New York provides an exemplary sample of this distortion in their Unfair Taxation campaign.

The flaw nature in the campaign is the argument that equal valuation will result in very different local property taxes; in short, they are pointing out a higher mill rate (taxes as a fraction of valuation). This is perfectly true.

What is neglected entirely in their campaign is the valuation of property: while you may pay much more taxes on a $50,000 piece of property here, you can buy much more with $50,000 here than downstate where property valuations are much higher.

The taxes levied to operate a given size city in two different regions will be similar— there are streets to be paved, traffic lights to maintain, teachers to pay, administrations to run. While there will be certainly be some variation of wages, density of structures, and infrastructure maintenance costs in different regions, on the whole these costs are similar. We can expect costs to float within, say, 20-30%.

Property valuation in different regions do not maintain this consistency. My simple city house with $73,000 value would be easily worth several hundreds of thousands were it in the Hamptons, some of the most expensive property in the state1 . Land alone in that area would be worth that I paid for my lot with house and garage on it. Since property values are lower in upstate, the mill rate must be higher to levy similar amounts given operations costs which are similar despite differences in property valuation. Thus, attempting to compare the mill rate between areas with disparate property values is is like comparing apples and oranges, and attempting to sell the comparison is deceptive.

If we reanalyze the data Responsible New York provided regarding taxation, we can begin to see a different perspective on the situation:

City Average Value2  Taxes/
$100 0003  Average Taxes4 
Rochester 69 100 3986 2 754.33
Buffalo 60 700 3096 1 879.27
Jamestown 113 881 4677 5 326.21
Syracuse 81 300 3594 2 921.92
Utica 130 333 4646 6 055.27
Binghamton 87 181 5416 4 721.72
Albany 175 800 3322 5 840.08
Schenectady 117 507 4887 5 742.57
New Hempstead 343 898 1580 5 433.59
Scarsdale 386 378 1869 7 221.40
Yonkers 445 700 1236 5 508.85
Mineola 555 252 2106 11 693.61
Great Neck 95 534 1449 1 384.29
South Hampton (Southampton) 782 524 435 3 403.98
East Hampton 1 333 763 614 8 189.30

When we look at the tax paid per property, homeowners in the upstate cities of Syracuse, Rochester, and Buffalo are paying the lowest levies among those on Responsible New York's list with the exception of Great Neck.

I agree in spirit with Responsible New York— there are problems within New York, especially at a state level, that need to be addressed. We need to work together to make New York government more effective, and the first step in solving the problem is to correctly understand it. Their Unfair Taxation campaign, however, is a red herring that suggests a terrible problem with our county and local government— a problem that disappears on further analysis.