Crains New York - December 3, 2012 - (Page 11)

DIVERSIFY YOUR HOLDINGS at America’s First Boat Show t LAWRENCE ROSANO AND ROBERT KELLY A How to rebuild in Sandy’s wake s the city finishes cleaning up from the impact of Superstorm Sandy, it is time to think about how it can foster rebuilding and rehabilitation. As the leaders of building associations covering Staten Island and Queens, the counties most devastated by Sandy, we feel it is incumbent upon our city and state leaders to move swiftly and boldly and allow the private sector to help in the reconstruction. The first step the city and state can take is to avoid adding insult to injury and give a tax break to owners of dwellings damaged and swept away by the surge of Sandy. The city’s tax year is July through June, and a property’s tax is determined by its status the prior January. So for homes swept away or damaged beyond repair, the January tax bill will treat them as if they were still fully functional. It would be cruel to send a tax bill to these former homeowners as if that were the case. Instead, the city and state should ensure that no taxes are paid on such properties. The mayor’s offer last week to push back due dates for taxes on storm-damaged homes and to propose partial reimbursement is not enough for those rendered uninhabitable. Next, the city needs to think about how we will rebuild our shorelines. There are already codes in place to protect shoreline homes, but many of the lost homes predate such codes. Thus, in rebuilding there will be additional costs to the renovation or construction of the home. To assist the homeowner with these additional costs, we propose reinstituting the old 421-b program that provided a tax break on the building portion of the tax bill, but not the land. But the old 421-b program will not be enough, as it started phasing out its benefit after two years. Instead, the new program should provide that benefits start phasing out after 10 years, with a six-year phaseout to cover the additional costs. Moreover, homeowners who seek to move farther inland should not be penalized for making an understandable lifestyle change.The 421-b program should be reinstated for inland properties as well, but under the old benefit formula. This will not only help former shoreline owners who seek to move inland, it will also assist the small building industry, which has been devastated by the recession. Such a program should have a 12-year life span before sunsetting. It has been 11 years since the attacks on the World Trade Center,and that area is still rebuilding. We should expect a similar time span for our two boroughs. Action is needed now, before the new year begins and owners get a tax bill that only promises to inflict more pain upon their already difficult lives. Lawrence Rosano is president of the Queens & Bronx Building Association, and Robert Kelly is president of the Building Industry Association of New York City. It’s time to review your portfolio and invest in yourself. Come see what’s new for 2013! Find the best in boats and marine gear, engines and electronics at the world’s ﬁrst and longest-running boat show. Pre-shop, tickets & details at NYBoatShow.com A Which path to take on tax policy? s the Democratic mayoral candidates bemoaned the impact that the so-called fiscal cliff will have on New York City at last week’s Crain’s Future of New York conference, I turned to a leading business executive and asked,“Do you really care if you pay higher taxes because they take away your deductions or because they raise the rates?” No, he replied:“It’s the same amount of money. And we should be paying higher taxes.’’ Here is a primer on how the discussions in Washington, D.C., over raising taxes will affect the city— and whether parochial interests should outweigh good public policy. It begins with Washington’s either-or choice. The simple approach is to raise income-tax rates, essentially keeping the current system intact. However, there is also wide support for the alternative of achieving the same amount of revenue by limiting deductions for the wealthy. There are two main reasons for choosing the latter path. The tax code is so complicated that it hurts economic growth. And the system is unfair because people with similar incomes pay very different amounts of tax. If you live in New York or Connecticut or New Jersey or California, the high state and local tax burdens and high housing costs are GREG DAVID partially offset by deductions that help produce a lower federal tax bill. So, up to now, wealthy people who live in those four states have been given a tax advantage over wealthy people who live in, say, Texas or Florida, which have no income tax and enjoy lower overall costs. Eliminating the federal deductions would reduce that subsidy. Those who defend the current system often say that it should be kept in place because New York sends more money to Washington than it gets back. This is true, but not because we don’t get money for social needs like programs for the poor. (We get more federal Medicaid money than anyone else—and by a lot.) It is true in part because we don’t have many military bases or defense contractors. More important, we pay more because we are so wealthy. In a progressive tax system, rich places pay more than poor ones. Isn’t that the way it should be? One big question is whether limiting deductions for the rich will really make the city less attractive.The other important consideration is whether anyone should care if it does. Here’s my bottom line: Taxes do matter to businesses and individuals when they decide where to locate. Limiting deductions for high-income individuals will make New York City a costlier place to live compared with Texas and Florida. At some point, the city could become too expensive, and businesses and people will leave. Unfortunately, the overriding need is for a fair and equitable federal tax system on moral and economic grounds. National interest trumps local concerns. The solution is not to screw up the country for the city’s advantage. It’s to make sure that city policies keep New York from reaching the cost-consciousness tipping point. December 3, 2012 | Crain’s New York Business | 11 http://www.NYBoatShow.com http://www.NYBoatShow.com http://www.crainsnewyork.com http://www.crainsnewyork.com/40under40 http://www.crainsnewyork.com/40under40

Table of Contents for the Digital Edition of Crains New York - December 3, 2012

Crains New York - December 3, 2012
In the Boroughs
In the Markets
The Insider
Business People
Opinion
Greg David
Report: Best Places to Work
Classifieds
For the Record
Small Business
Real Estate Deals
New York, New York
Source Lunch
Out and About
Snaps

Crains New York - December 3, 2012