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Is your property tax bill racist? Lawsuit says yes

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Is New York City's property tax system disporportionately harming black and Hispanic renters? That's the claim of a class action lawsuit launched yesterday, The Wall Street Journal reports

Here's the basis of the suit: homeowners tend to pay less in property taxes than their renter counterparts because of the way the city calculates tax rates. The system discriminates against black and Hispanic New Yorkers, the suit claims, because they make up more than half of all renters and a small minority of homeowners. 

Indeed, only 20% of condos, 27% of co-ops and 32% of single-family homes are occupied by black or Hispanic residents, according to the complaint, cited by the Journal.

Property taxes for co-ops, condos and single-family homes are based on the estimated value of the home if it were to be rented out, rather than what the owner paid for the home, which would usually be higher. Plus, a slew of abatements and tax breaks lower property taxes even further. Rental buildings don't get the same kind of treatment, so landlords pass on those extra costs to tenants, effectively making them pay more for property taxes, the suit claims.

Interestingly, as the Journal points out, if successful, the suit could benefit the city’s wealthiest landlords by lowering taxes on lucrative rental properties.  Also, the paper notes, blacks and Hispanics make up a significant number of homeowners in Brooklyn and Queens, in neighborhoods with some of the lowest tax rates.

Lawyers for the city and state declined to comment to the Journal.

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