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Cut class size by closing tax loopholes

New York Teacher

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Michael Mulgrew
I hope that each and every one of you had a happy and restful holiday break, and I wish you all the best for the new year that is now beginning.

To cement and amplify the gains in student learning that we expect from the new universal pre-K program, New York City needs to dramatically lower class size in kindergarten through 3rd grade.

To pay for this critical initiative we propose a new source of revenue. The absentee owners of luxury apartments, a group of out-of-town and foreign millionaires who buy New York City apartments as investments rather than homes, get enormous and unnecessary tax breaks.

Super-luxury buildings are rising all over midtown, with the most expensive apartments showing asking prices approaching or even exceeding $100 million. But their tax bills are minimal, thanks to a combination of crazy assessment processes and tax breaks for new construction.

Using the standard applied to some apartments at 15 Central Park West, for instance, the owner of the average single-family home in Bellerose, Queens, would be paying less than $300 a year, rather than the nearly $4,000 he now pays. If the owner of an East Flatbush co-op worth $350,000 got an equivalent tax break, she would pay $186 per year in real estate taxes rather than the $3,002 for her current annual tax bill.

What’s more, the city’s Department of Finance says huge numbers of these apartments are essentially vacant, used by out-of-towners — particularly foreigners — to park their cash.

It’s time we put a stop to this free ride for those who need it least and use the money from a “fair-tax” program to lower class size to 15 students in grades K–3, the size most studies describe as optimal (and the average class size for the city’s most expensive private schools).

The estimated $900 million a year that this class-size reduction would eventually cost should come from offering the absentee owners of nearly 90,000 New York City co-ops and condos a simple choice:

  • become New York City residents and pay local income taxes, or
  • pay real estate taxes based on the actual market value of their apartments.

The Tennessee Project STAR is the class-size study most cited by experts for its success. The National Education Policy Center described STAR — where class sizes averaged 15 — as “the best evidence on the impact of reducing class sizes,” and said among its “unequivocal” positive results were higher scores on standardized tests.

In addition, NEPC said, “When the results were disaggregated by race, black students showed greater gains from being assigned to a small class …” and “small-class benefits in STAR were also larger for students from low socio-economic status families.”

We are under no illusions. Thanks to the complications of finding and acquiring suitable buildings and new sites, this is a project that will take years. But we could begin next year with a small pilot in schools with available space and expand in the future.

We also have a model. For years people talked about universal pre-K — and New York City finally overcame the financial and logistical barriers and made this program happen.

People will say that Albany will resist this idea — but in 2013 the Legislature limited one co-op and condo tax advantage to primary residents, just as it has traditionally done for the statewide STAR school-tax rebate program.

Before their advocates start a “pity the poor billionaires” campaign, let’s remember that people who can afford to pay tens of millions for an apartment they rarely use can also afford to pay a fair tax for it.

And let’s also remember that more than one million middle- and working-class families must annually prove their residence in New York City to receive the much more modest benefits of rent stabilization and rent control.

Why shouldn’t out-of-town and foreign millionaires and billionaires be held to the same standard, particularly when a fair tax program would help ensure the future economic and social health of the city in which they have invested?

Once again, I hope you have a healthy and happy New Year.

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