CIVIC CENTER — The city teacher's union wants Albany to increase real estate taxes on the city's absentee homeowners and use the money to reduce early education class size, but real estate advocates said the proposal would drive tax dollars out of the city.
Absentee owners, who are often foreign and out-of-state investors, benefit from tax breaks and pay “absurdly low real estate taxes,” the United Federation of Teachers announced Tuesday.
“It’s time we put a stop to this free ride,” UFT President Michael Mulgrew said, “a ‘fair-tax’ proposal would raise to benefit all New Yorkers by dramatically lowering public school class size in the early grades.”
UFT estimated that the tax, when fully implemented, would generate revenues of roughly $900 million per year.
But real estate advocates caution the legislation would hurt the city's schools.
"The last thing we want to do is propose a tax that would drive away foreign investors who already overwhelmingly pay a great deal of property taxes and who contribute to the local economy through their purchases, their employment, and other spending across the city that generates tax revenue to fund vital city services including our school system," said Steven Spinola, Real Estate Board of New York president.
The teachers union recommended absentee owners to either pay taxes on the actual market value of their units or to become a New Yorker and be liable for income taxes that other residents pay.
Absentee owners do not pay the city income taxes and benefit from real estate tax loopholes, the union maintains.
There are 90,000 condos or co-ops in the city — primarily in Manhattan — that are vacant most of the year, UFT said, citing numbers from New York City Department of Finance.
Approximately half of the apartments located between 57th and 63rd streets between Fifth and Park avenues (one of the city’s highest-price neighborhoods) are essentially unoccupied, according to the UFT.
UFT urged the city to implement the initiative in 100 schools starting next fall, adding that it would take decades to reduce class sizes significantly in all public schools.
On average, there were more than 24 students in public classes ranging from kindergarten to third grade last year, according to UFT. Tax could reduce that to 15 students per class by generating enough revenue to hire more teachers, the union said.
Lowering this number to 15 students would result in higher scores on standardized tests and would particularly benefit students from low socio-economic status families, UFT said.
Mayor Bill de Blasio said he would review the legislative proposal.