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Statewide property tax not just a tax on “mansions”

Sen. Martin Looney, D-New Haven, and supporting Democrats have labeled a proposed statewide property tax a “mansion tax” that would largely affect high-wealth towns like Greenwich and Westport.

However, it is also a tax on every commercial property in the state and that could leave cities paying a price as well.

Although the bill is only in concept form, residential properties valued at over $430,000 would receive a one mill state property tax because the bill exempts the first $300,000 of a residential property’s assessed value.

According to the Hartford Courant, this means towns like Greenwich and Westport would be paying the bulk of the new tax.

But the same exemption does not apply to commercial properties which are generally valued higher than residential properties and, in the case of Hartford, have a tax assessment double that of residential properties.

Looney says revenue generated by the state property tax would be funneled to cities to make up for property tax money lost on government buildings and nonprofits. State government has siphoned away payments in lieu of taxes from municipalities over years of budget deficits.

However, according to the state’s data website, cities like Stamford, Norwalk, New Haven, Danbury, Waterbury and Hartford have some of the largest commercial property grand lists in the state.

Combined, those six cities have commercial grand lists totaling $10.7 billion, and while that may pale in comparison to their residential grand lists, it does mean that significant tax dollars would be raised in some of the same cities the tax would purportedly benefit. 

A rough estimate of 70 percent of the value of those commercial properties times a one mill rate increase means businesses in just those cities alone would see $13.5 million in escalated property tax payments.

Greenwich and Westport also make the list of municipalities with the most commercial property, but they have an advantage over many of the cities – their property taxes are, comparatively, quite low.

Connecticut’s struggling cities – namely Hartford, New Haven, Bridgeport and Waterbury – have some of the highest property tax rates in the state, with Hartford imposing a 74.29 mill rate, New Haven 43.8 mills, Bridgeport 53.9 mills and Waterbury at 60.21 mills.

Comparatively, Greenwich charges 11.5 mills, Westport 16.7 mills, Norwalk 23.9 mills and Danbury 27.6 mills – not including special districts. 

The addition of another mill for a statewide property tax – although small — could make those cities less inviting to businesses in the future, particularly if coupled with concerns of both the city’s property tax and the statewide tax increasing in the future.

New Haven is fourth on the list of municipalities with the most valuable commercial property grand lists behind Stamford, Greenwich and Norwalk, with $1.7 billion in listed commercial properties. 

For a small business such as Pepe’s Pizza, which owns the building in which it’s located and is assessed at $650,510, the owners would pay an additional $650.51 per year toward the state property tax. 

For a large building in the city, such as 555 Long Wharf Drive where AT&T is housed, the increase would be $24,790 per year, according to New Haven’s 2018 assessment.

New Haven currently faces a $41 million projected deficit and Mayor Justin Elicker is looking to Yale University for help, as well as supporting Looney’s statewide property tax proposal.

Hartford, however, has the highest commercial property tax in the state at 74.29 mills, which is already recognized as depressing commercial and business prospects for the city. 

The city’s list of top ten property tax payers – employers like Eversource, Aetna and Travelers – would see a combined increase of roughly $534,982 under the state tax.

Fifty-nine percent of Hartford’s real estate is nontaxable because it is owned by either government or nonprofits, according to the Hartford Courant.

Apartment buildings and multi-family houses with five or more units are also classified as commercial property and would likewise see the one mill increase.

Connecticut has some of the highest property taxes in the country, particularly for businesses, according to the Tax Foundation. The Tax Foundation’s 2020 ranking of states based on effective rates for owner-occupied housing placed Connecticut’s property taxes as sixth highest in the country.

In their 2021 analysis of business taxes, Connecticut ranked third-worst in the country and dead last for property taxes assessed on businesses.

The proposal has already ignited some resistance from other lawmakers, including Gov. Ned Lamont who has thus far said he is opposed to any “broad-based” tax increases, according to the CT Mirror.

Connecticut is currently looking at a budget surplus for the current fiscal year and, despite facing a $2.5 billion deficit in the next biennium, is much better positioned than previous thought at the beginning of the pandemic with more than $3 billion in its reserve fund.

Marc E. Fitch

Marc E. Fitch

Marc E. Fitch is the author of several books and novels including Shmexperts: How Power Politics and Ideology are Disguised as Science and Paranormal Nation: Why America Needs Ghosts, UFOs and Bigfoot. Marc was a 2014 Robert Novak Journalism Fellow and his work has appeared in The Federalist, American Thinker, The Skeptical Inquirer, World Net Daily and Real Clear Policy. Marc has a Master of Fine Arts degree from Western Connecticut State University. Marc can be reached at Marc@YankeeInstitute.org

4 Comments

  1. Avatar Thad M Stewart
    January 31, 2021 @ 7:12 am

    In this case just like many others, money is solving only one thing, our political leaders isatiable appetite for lining their own pockets at the middle class taxpayers expense.

    Reply

  2. Avatar michael gregorio
    January 31, 2021 @ 6:21 pm

    It would be interesting to know in exact detail the non-taxable properties in hartford (as but one example) – federal state, local properties, non-profits such as schools, churches and medical facilities, museums, etc. Then determine which of these could be conveyed to tax-paying entities that might also be job producers. the beginning of positive change can only come about when the staus quo is examined and challenged. if, as is often asserted, ct is such a great place to live and work, these cities should be made available.

    Reply

  3. Avatar Michael Calise
    February 4, 2021 @ 10:17 am

    Here again the notice that we need a structural change in state government. get rd of unnecessary departments. slim down ovrlapping departments sell buildings get them back on the tax rolls, give free enterprise a chance

    Reply

  4. Avatar John C Miller Jr
    March 10, 2021 @ 4:05 pm

    isn’t this just another move by hartford to raid it’s faviorite piggy bank: fairfield county? norwalk is in fairfield county and can hardly be classified as a wealthy city. according to the u.s. census bureau, the median value of a home in norwalk is $435,800 which would make the median value home in norwalk subject to mr. Looney’s “mansion Tax” in addition to the substantial property taxes that we already pay. as john mC enroe might say, “you cannot be serious.” how about reigning in some of the wasteful spending for a change?

    Reply

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