07/04/08

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Bill would repeal mortgage tax

A freshman Staten Island assemblyman has introduced a bill that would repeal the mortgage recording tax, which the city relies on for more than $1 billion in annual revenue.

Albany budget watchers say the measure had little chance of passing. The tax brought $1.8 billion to New York City coffers in 2007, according to state tax receipts, although revenue is expected to fall as the economy slows this year.

Freshman Assemblyman Lou Tobacco, a Staten Island Republican, introduced the proposal March 19. None of the bill's co-sponsors, two Democrats and eight Republicans, are from New York City. The bill was sent to the Assembly's Committee on Ways and Means, which handles tax policy.

A legislative memorandum explaining the need for the legislation said the tax was especially difficult for young families trying to buy a home.

"This is a burdensome tax on the people living in New York state and creates a disincentive for individuals who wish to purchase a home in the state of New York," the memo said.

James Parrott, deputy director and chief economist for the nonpartisan budget watchdog Fiscal Policy Institute, said any change to the tax would hit New York City hardest.

He said only about $200 million of the $3.4 billion collected by the recording tax in 2007 was used by the state government, and that was to fund the State of New York Mortgage Agency, which helps low- and moderate-income residents get a mortgage.

New York state's counties received $500 million, and regional transportation authorities including the Metropolitan Transportation Authority (MTA) saw $800 million in revenue in 2007, Parrott said.

"I don't know if the sponsor and co-sponsors are aware that the money goes to counties or directly to local government and regional transportation and (the State of New York Mortgage Agency)," he said. "This is not a way to put pressure on state government ... (but) it would provide a tax cut."

Assemblyman Tobacco did not respond to requests for comment.

The MTA reported last week that receipts for the tax in March will be $37.5 million, 19 percent below its forecast in the 2008 budget.

The mortgage recording tax charges a 2.8 percent fee on commercial loans over $500,000. For commercial or home loans less than $500,000, the rate is 2.05 percent, while for home loans greater than $500,000 the rate is 2.175 percent.

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