The Real Deal New York

Garodnick wants to kill commercial rent tax

Business leaders say the tax is unfair and harmful

July 08, 2015 10:30AM

Daniel Garodnick

Daniel Garodnick

Council member Daniel Garodnick introduced a bill in the spring that would adjust the threshold for the city’s commercial rent tax, and now he is taking his rhetoric a step further — saying that eliminating the tax altogether would make sense.

Garodnick’s bill, proposed in May, would increase the threshold for businesses subject to the tax to those paying $500,000 or more per year in rent, from the current $250,000, Crain’s reported.

However, Garodnick told the Crain’s staff recently that he would be in favor of nixing the tax altogether. “The idea of getting rid of that tax altogether would make sense,” he said.

Business leaders oppose the tax, which applies to commercial tenants south of 96th Street. They say that no other tax like it exists outside of Florida, and that tenants are being taxed twice in some cases, because they are taxed on all payments that they make to landlords, including those meant to cover property tax.

However, changing the law would be complicated, as the city collects a massive $770 million per year from the tax, a full 1 percent of its budget. Garodnick has proposed offsetting the loss by increasing taxes on businesses paying more than $3 million a year in rent.

Another possible way to offset the expense would with a mansion tax or pied-a-terre tax on high-income apartment owners. [Crain’s] — Tess Hofmann