Looney Begins Selling Mansion Tax

In New Haven, here’s the pitch: If you own a $500,000 house, you’ll pay an extra $50 a year. In return, New Haven would be on its way to getting tens of millions of dollars more back from the state.

Will it fly?

Martin Looney began making that pitch — and other variants of the pitch for a statewide audience — at a virtual press conference Tuesday.

The State Senate president, who represents the eastern half of New Haven, held the presser to make the case for his proposed new statewide property tax. You can call it a ​“mansion tax.” He said he’s fine with that.

People would pay an extra 1 mill in property taxes each year under the proposal. But only if they own an expensive house: One worth at least $430,000 (in market value, not assessed value, which for some reason in Connecticut reflects 70 percent, not 100 percent, of market value).

So the owner of a $500,000 house would pay an extra $50 a year under Looney’s plan. The owner of a million-dollar home would pay $400.

In return, Looney estimated, the state would bring in an extra $73.5 million. It would spend that money on reimbursing cities and towns more for the money they lose each year on state-mandated property tax exemptions for nonprofits and on undercompensated special-education costs. It would help finance, for instance, a three-tier plan Looney has for reconfiguring the state Payment in Lieu of Taxes (PILOT) program. That reconfiguration would bring New Haven an extra $43.6 million a year in state reimbursements, according to Looney’s office. (Click here to read a previous story outlining that plan. Click here to see a projection of how the plan would impact each community in New Haven)

Anyone proposing a new tax or increasing one levy as part of a broader plan faces a challenge: Opponents quickly gain traction by raising the specter of ​“raising taxes.”

Looney insisted Tuesday that he’s not ​“raising taxes” with this plan. He’s proposing ​“property tax reform.” To make fairer a system that currently favors millionaires in Greenwich over working and middle-class families in most other parts of the state.

Tipping Points?

thinking of starting a GoFundMe to buy this 6‑bedroom house on the most exclusive street in East Rock and converting into affordable housing units https://t.co/K2tEAQT9EW pic.twitter.com/FUiDMAHu6K

— DFA New Haven (@DFANewHaven) January 26, 2021

In New Haven’s Morris Cove neighborhood, which Looney represents, that argument would still be a ​“tough sell,” said Alder Sal DeCola.

Some of the 2,000 retirees in his neighborhood own homes that would cross that $430,000 market-value threshold, he said. And they wouldn’t support paying another $50 a year in taxes.

“It would be a tipping point for some of them. What are they gonna cut back on? Medicine?” DeCola said.

What about the argument that New Haven would be able to lower their local property taxes with this statewide plan, which would bring in far more money from homeowners in Greenwich and Westport and New Canaan?

“You’re assuming that taxes would go down in New Haven. That’s the question mark: There’s no guarantee what the city would do it,” DeCola said. ​“It’s not like [Mayor] Justin [Elicker]’s wasting money. It would be a tough sell here. For my seniors, I couldn’t endorse it.”

East Rock Alder Anna Festa expressed similar concerns: ​“How do I know the money is guaranteed to come to New Haven?” And ​“who’s to say the people in the houses worth $500,000 can afford to pay that?”

Festa also suggested that with revaluation and possible tax hikes looming in New Haven, the timing might not be right.

Prospect Hill/Newhallville Alder Steven Winter had a more positive take on the proposal: ​“No one wants to be paying more in taxes. But the deep inequities in Connecticut mirror those of the nation as a whole and proposals like this and increased taxes on capital gains, can help shift the burden of a regressive tax system that lands heaviest on our state’s poorest residents. Combined with other structural changes like reforms to PILOT, these changes can bring more state support to New Haven, which will aid city finances and hopefully offset some of the impact on those who are being asked to pay more.”

Senate Republicans pounced on Looney’s proposal in a release issued Tuesday evening. ​“they are coming after the middle class family home,” stated Senate Republican leader Kevin Kelly. ​“It’s time to stand up, say ​‘enough,’” seconded the ranking senator on the legislature’s Finance, Revenue and Bonding Committee , Henri Martin.

New Haven Republican Town Chair John Carlson blasted the proposal as well. He argued it would ​“just open the door to taxing the middle class and poor”: $50 today, more down the road.

“As the state continues to run deficits, they will simply adjust the tax, making the exemption lower and lower, and the burden will fall on the poor and middle class.” Carlson argued. ​“Apartment building owners will simply pass the cost on to renters.”

Looney argued that those landlords would be able to lower taxes if his proposal passes, because of the new money to be redistributed to cities like New Haven. (Also many landlords own properties worth less than $500,000.)

Bigger Picture

His proposal fits into a larger ongoing quest by New Haven lawmakers to obtain more state money to make up for the tax revenue the city loses out on hospitals, universities, and state-owned and other nonprofit-owned property. A full 60 percent of New Haven’s grand list is nontaxable because of state exemptions. But the city receives less than 30 percent of the lost revenue back under PILOT.

State Rep. Roland Lemar, who represents East Rock and Wooster Square homeowners who’d be affected, put Looney’s proposal into that larger context of similar ideas like taxing capital gains, clarifying Yale’s tax exemptions, exploring PILOT-style programs with other nonprofits. ​“We’re looking at a lot of this stuff,” Lemar said.

“I support the concept,” Lemar said of Looney’s proposal mansion tax. He suggested a tweak to create a first lower-taxed tier for properties worth between $430,000 and $750,000. And he argued that the proposal needs to be tied directly to lowering local property taxes.

Gov. Ned Lamont has rebuffed efforts by fellow Democrats to increase the proportional tax load on the wealthy, who pay lower total tax rates than middle-and lower-middle-income families in Connecticut. On .(JavaScript must be enabled to view this email address)Looney’s proposal as the kind of ​“new broad-based tax increases” he opposes. Looney responded Tuesday by noting that Lamont had campaigned on ​“property tax reform.” He said he ​“looks forward” to helping Lamont achieve that goal with this proposal.

Looney portrayed his mansion tax plan as one of fairness: Greenwich has a net per capita grand list of $734,000. New Britain’s is just $50,000, New Haven’s, around $78,000. (Click here to look at the most recent comparison of communities statewide.) So Greenwich can raise a lot more money, and simultaneously keep taxes lower, than poorer communities can on the same amount of land or size of home. But when it comes to reimbursing communities, the state uses one formula for all communities: Greenwich gets as much reimbursement for tax revenue lost on Greenwich Hospital as New Haven does for Yale New Haven Hospital and Hartford does for Hartford Hospital.

“People who visit Connecticut are shocked at the disparities” in wealth among cities and towns, Looney said. The pandemic’s economic fallout has only increased incomes in the wealthiest towns while plunging poorer communities into more precarious straits. Looney argued that Connecticut’s regressive statewide property tax-reliant system has ​“held us back in so many ways in terms of economic development.” With the mansion tax and his three-tier PILOT plan, he said, he’s trying to change that.