Let’s get down to the heart of the matter: How should the government tax property?

A state board has recently ruled in a way that will lower the property tax bill for the Manhattan Home Depot by tens of thousands of dollars. The argument that Home Depot and other big property owners have used is that their property should be assessed as if it were vacant.

Local government officials have gnashed their teeth about that argument for years. There are even bills in the state Legislature designed to essentially outlaw the argument. At stake are millions of dollars in taxes. The government screams that it would mean slashed budgets and/or gigantic tax increases for other citizens.

But is that argument about property, in fact, right? Should property be valued according to the revenue it produces, or should it be valued as if it was sitting vacant, producing nothing? The former approach has been used for many years in establishing the taxable value of commercial property. But the recent ruling appeals to buy the premise of the opposite approach.

As a practical matter, the latter approach could create an enormous lowering of property values. Would your house, or your neighbor’s house, or your entire neighborhood, be worth quite a bit less if it was sitting vacant? Even if you limit the argument to commercial property it would still apply to the thousands of rental units around town. And what about the Manhattan Mercury building? If it was vacant, wouldn’t it be worth a lot less? If so, shouldn’t we get a refund on our property taxes, too? Same with every other business in town.

And maybe that’s really only fair. Perhaps property ought to be worth only what it would fetch on the market as an empty black box. After all, it’s not the property that’s producing the revenue. It’s the business.

A business, now that’s a different issue. A business is worth some sort of multiple of the revenue it generates, as determined by a willing seller and a willing buyer. But the government doesn’t tax businesses that way — or, rather, it taxes corporate income, and it taxes retail sales, and so on, but it doesn’t specifically levy a tax on the market value of the business itself.

It certainly could. It could levy a tax pretty much any way it wants. It’s the government.

My point is that, if we’re going to consider the value of property only what it would be worth if vacant, that’s fine. Perhaps it’s philosophically the cleanest approach.

But rest assured, the government is going to have to get its money. The government needs money to operate, to provide the services it has to provide, and the services that citizens want it to provide. Whether you think there’s waste in government budgets or not, you can recognize that it’s going to have to come up with money to replace what would be lost by a reconsideration of property valuation.

This recent ruling raises the prospect that that is exactly what’s going to happen. Rather than scream and holler about it, maybe we ought to accept it. The government will surely figure out another way to come up with the tax money.

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