My first thought was that there could not possibly be enough money parked in unoccupied extreme high end housing to make a difference. Then the numbers suggested for revenue suggested there really is.
That is eye opening. It means two things to me.
First, it is money laundering, on a massive scale. There was much talk of that in the high end London market as a place for Russian organized crime. It isn't a new thought. But on this scale, it needs a much closer look.
Second, we know the wealthy have been made flush with the zero interest cash rained on them in hopes it will trickle down. It didn't. This shows why. They speculate with it instead. To the extent these can be seen as investments of clean money, then that is the free money that went missing from our recovery.
What mere house is worth $238 million? One you speculate you can sell for a lot more in a money laundering scheme a few years from now. The two issues come together this way.
89
You’re naive if you think this tax is going to generate anywhere near the projected $650 million in annual revenues. Like “millionaire” taxes in Maryland and NJ and “luxury” taxes on yachts, etc. this tax will not generate the anticipated tax revenues but the $’s will be spent anyway thereby continuing the pernicious cycle of deficit spending and debt.
23
The owners of these "second homes" may not live in the City, but they are here some of the time and when they are they tend to spend a lot of money. Just because a very rich condo owner has two, three or four other homes doesn't mean that any of them sit empty all of the time. NYC's economy is better off with these owners than without them.
43
This proposal is a response to the billionaire class that buys expensive homes in multiple locations both as a personal convenience and as a way to stash away their wealth.
Perhaps a more appropriate response would be for a worldwide wealth tax on all billionaires of 1% of their net worth of over one billion dollars, apportioned to the places they were physically located during each year.
38
I’d like to know what percentage of these luxury second homes are owned by foreign owners, e.g. Chinese, Saudis, Russian oligarchs and others, who buy these properties as foreign investments and do not live in them. I bet it’s pretty high, especially in the newer skyscrapers, which are mostly unoccupied. New York is providing a safe haven for these rich people to safely stash their money. Tax them for this service!
211
@Barbara Ann Think of the impact on Trump's cash flow if the ability to launder money with high end condos is curtailed....
28
@Barbara Ann
Investments, and also for some to launder/hide/protect ill-gotten gains.
21
The proposed tax would be helpful to NYC and the billionaire home owners would hardly notice the extra tax. However, for a real boost in revenue NYC and NY state should introduce sports betting like New Jersey. This will generate hundreds of millions of dollars for important social and community programmes.
7
Although it's politically expedient to impose a tax on people who don't vote here, the proposed tax is based on envy, not logic or fairness. The small number of very expensive apartments that this tax would target create construction and other jobs locally and while imposing a relatively small burden on municipal services. If the tax succeeds in chilling the market for these apartments and developers stop building them, the NYC economy will be the loser.
There are better sources of tax revenues, staring with legalizing marijuana and taxing income that would otherwise go to criminal enterprises.
44
Joel, I personally ran a back of the envelope analysis and what I found is astonishing.
Every residential condo development of decent size, 100,000 feet plus, creates tax revenues of approximately 100 M plus for the state and city from the day the land is bought till the unit is sold.
This is literally money created out of thin air.
The tax is a negative tax, a money loser, badly thought out and will cost the city billions not to mention the negative effect it will have on NYCs international standing.
Why kill the golden goose?
We should do what has been done in all other great international cities and raise the one time mansion tax on all luxury buyers, this would raise more money in a tried and tested way without major damage to the NYC economy.
I welcome the NYTs to contact me and I will put you with the correct parties that can easily display all these very real facts that way we can all do something to help the city that we all adore.
Long live NYC!
9
People in the Syracuse suburbs pay five figures in property tax on homes valued at around $250,000. Asking a rich guy who is buying a condo for $238M to pay a proportionate property tax won't hurt him in the slightest. And don't listen to the whiners from the Real Estate Board. Sales for uber luxury homes are down because of market saturation. Bringing prices down out of the stratosphere hurts no one, except maybe high end agent commissions.....
188
@Peter Except that the proposal calls for them to pay a DISPROPORTIONATE tax. That's the whole point.
11
As a farmer in upstate New York, if we buy a piece of farmland, we expect to pay taxes on it. No, we can’t vote for representatives for the towns where we own land but don’t live, but we certainly pay tax! This year our county has reassessed all property, with assessments sharply rising. Higher taxes, but no ‘representation ‘. - that’s just the way it is.
At least in rural upstate New York.
34
While we’re st it, the state should tax all second, third and tenth homes over $5 million. Those outrageous Hamptons homes that keep the public away from beaches. Those vast farms in the Hudson Valley that have been turned into private country estates. Those ski chalets at Lake Placid perched on top of mountains. Any taxes imposed on these luxury dwellings are a rounding error in the maintenance costs anyway.
134
How long before weekend/vacation homes get hit the same way?
9
A drop in construction and prices of luxury homes seems to me to be a good thing.
11
How odd, how bizarre! While Americans in New York are suffering and homeless in the city, a pied-a-terre tax for second homes bought by rich people the world over, is being mulled over by NYC Comptroller Scott Stringer. Inequality is the monstrous byword of Manhattan's soaring residential towers. Yes, send tax bills to foreign owners who don't live, pay taxes or vote in New York City. Will vacant homes in the Hanging Gardens of Babylon (Manahatta to the Lenape Indians who sold their island for 60 Guilders [$1,000.00] to the Dutch West India Company in 1626) provide a revenue stream to shore up the failing infrastructure of the city now? Not bloody likely. Asking the very rich from around the world -- who have bought multi-million dollar 'second' homes in platinum condo buildings in NYC -- to give the city some income from taxes may not be the answer to New York City Comptroller Stringer's wishful pennies from heaven and pie in the sky thinking.
4
The pied-á-tierre tax is a pad-de-tête but common sense "no brainer" ideas are so 18th century passé.
5
This tax is not well thought out at all.
It has never been tried anywhere in the world at these levels. These buyers pay huge tax bills and use little services in the city.
Every time a new decent size condo building goes up it generates at least 100 M in tax revenues to the city through, transfer taxes, mortgage recording taxes, mansion taxes, sales taxes on construction materials, taxes on construction workers salaries, taxes on brokerage salaries etc...
This is found money, risk free revenues created out of literally thin air.
A drop in development of these types of buildings would lose the city billions of dollars and also damage NYC internationally.
I truly can’t understand why anyone would try and kill this amazing revenue stream it’s insanity, the same way chasing Amazon away was so stupid.
How many hits can NY take, I hope that the legislators wake up before it’s too late.
8
The funniest part of this amateurish and confused editorial is the last line: "Asking them to pay more is common sense." No one is "asked" to pay taxes. Taxes are demanded. And those who don't pay are in serious jeopardy with the law.
17
Hey, it’s M-A-NY-A, make NY great again. Restore it to the glory days of the 70’s and 80’s when liberals ruled before Giuliani and Bloomberg.
Worked so well then.
16
Really? $650 million.
So that’ll pay for half of the boondoggle programs DeBlasio and his wife wasted money on.
19
Here is an idea to fix the MTA. Privatize it. Get rid of the corrupt union that controls it with its princely pensions.Every time I’m in the subway and for some miracle someone is cleaning, there is one guy doing the job and two more watching it.
Mansion tax should be adjusted to a progressive amount, instead of a pied a ter-te tax, so everyone pays. If you live in Manhattan you know that $1m is not a mansion. Whomever is buying a $60m apartment should pay a higher percentage than someone buying a $2m apartment.
I think it’s hysterical the people screaming “tax and kill the rich”, for the record they pay transfer and property taxes, the latter should be adjusted. Mind you, the poor living in subsidized housing (paid by the transfer taxes from the “rich”) don’t pay neither. The press is also not honest, bc when they mention the taxes for the Griffin apartment they fail to explain that that amount was calculated pre construction (as they all are) and it will immediately get reaccessed after closing, but that would not get people outraged.
It no one’s god given right to live in Manhattan. That goes for the rich or the poor. Neither should be subsidized by my city taxes.
8
Everyone hates rich people, until they become rich themselves.
12
O.5%?! Are you kidding?
1
This is a great idea. These super wealthy buy these places and expect the suckers in New York to pay for all the improvements to the city so the value of their investment doesn't drop. New Yorkers are paying for the privilege of having this guy live there? Enough of bowing to these people. While we are at it, how about we tax all that wealth from sports stars. I mean, c'mon New Yorkers pay billions for the stadiums and the infrastructure so these athletes have a nice place to play. Then they wrangle contracts worth tens to hundreds of millions of dollars. And for many players earning that amount, they give the fans what, exactly? a .250 batting average, score 15 goals per year, average 10 points a game, or contribute to a team that goes 6-10 on the season. And for the privilege of watching that, in person, the fan gets ripped off for the ticket, parking and concessions. Are these teams wallowing in red ink? How about, for a change, high paid athletes and the teams they play for pay to get the privilege of having the fans come to watch them play. And help improve the city where they are located. Let's face facts: They need New Yorkers far more than New Yorkers need them.
13
First it will be on property above $5 million, then above $4 million, then above $3 million.......
First it will be 0.5% on property above $5 million, then 1%, then 2%.......
No matter how high we are taxed we are always told, "you are not paying your fair share".
26
I already pay almost $200,000 per year in property tax to a local Govt that seems to struggle to even collect trash. This new tax proposal would increase the amount I pay substantially, and does not consider the loss I will suffer by the lowering of prices, and yet I am in New York less than 100 days a year. I am not a billionaire, and with losses like this I never will be. What with a lunatic President, and the scaring fact that almost 50% of the country still supports him and his American dream of guns, nepotism, and white supremacy it might be time to leave the US and move to California.
6
If you have to worry about a surtax on your luxury second home, you can't afford it.
And I haven't done the numbers, but might it become cheaper for a zillionaire with a major NYC presence to remain or become a NYC resident, instead of playing the Florida resident scam?
2
Every time I see the word “fair” in a piece about taxation I cringe. It seems to be defined as “a tax that has no impact on people like me”.
In that spirit, I suggest a surtax on tall people, Republicans, meat eaters, and lovers of polka music.
On a more serious note, how about all those well-off people who live in non-market-rate rentals based on the remnants of various rent control laws?
13
tax abatements on high end buildings seem illogical
5
Hasn’t anyone noted that this tax would be xenophobic and disproportionately fall on people of color (foreign Asians and Latin Americans are heavily represented in this group)?
But by all means, drive rich people away. Those that can are increasingly fleeing NYC—maybe this will accelerated that and surely will discourage rich foreigners from coming here to begin with. And it will hurt the property values of everyone else in NYC—a double win.
But this will help NYC in the race to be the highest taxed city in the US!
15
The NY Times editorial board is too smart for this. Let’s focus on real estate tax reform and NYC government spending. Those are the issues, not Ken Griffin
13
All of this New York City real estate is ripe for money laundering deals and foreign parking of corruption cash.
10
Let's be careful here.
People buying multi-million dollar homes in NYC, spending little time in them, not using the school system, paying perhaps $100,000+ (and in some cases, multiples more!) per year in property tax....visiting and shopping....paying sales tax as they do...
Uhhm....Sounds pretty good for the city.
Win Win, really.
De Blasio LOVES to spend money. Well....this is from where it comes.
FYI.
41
Taxes distort markets ... how much is often not known for years.
I'm fortunate to have more than one property and I have no problem where a given jurisdiction provides a discount to longterm property owners (primary residence) so as to help older residents say in an area with increasing costs.
This is just the reverse.
NYC does not have a revenue problem. It's not a cash strapped city -- It's just spends too much.
13
This tax on these pied-a-terre units will simply NOT happen. I remember when Bloomberg was the mayor. What was his solution for making housing more affordable to people of "lesser means"? Simply make smaller housing units at between 250-350 square feet. Accommodating and caring for less-rich people simply will never happen.
2
since i moved to Manhattan 45 years ago it has always galled me that rarely used apartments, even never used get a free ride.
we provide transportation, police, fire department and more to the freeloaders. as the number of such properties has increased in the last decade the "tax" on city (and state) residents has effectively increased.
a so called pied-a-terre tax is one way to address this unfair and costly subsidy to the non-residents that apparently has worked in other cities.
furthermore these high end, non-taxed properties are driving the soul of our city away as prices rise beyond what even families with good income can afford, and not to mention the lifeblood of the city: young people and, yes, imigrents.
16
@Jon_NY: On the contrary, these people pay property tax and receive little benefit.
21
One argument against this tax is that people who have second homes in New York use the services which are the basis for real estate taxes far less than New Yorkers who claim their homes as their primary residences. I suspect that a number of these so-called vacation homes will become primary residences if the tax is passed.
According to the NYT, a great number of these homes are shell companies. Since the NYC taxing authorities do not even know who owns these homes, how will they determine whether a home is used as a primary home or a second home? They could check utility bills, but I doubt they have the staff to do this. Of course the tax will generate extra revenue to pay for this, but there’s a privacy issue involved.
This tax will be a boon for New York’s legal profession. The people who own these properties are not dumb. Further, some would rather pay huge sums to a tax lawyer than an extra penny on this proposed tax.
I look forward to seeing the consequences of enacting this obvious soak the rich tax.
5
There should be an additional non resident property tax for all non resident owners - Florida has one and it is one of the reasons they don’t have state income tax. We should be taxing all of them.
11
I would emphasize the "little" in making New York "a little fairer. There are 3,469,240 properties in NYC as of 2018. Taxing 5,400 amounts to less than 0.2%.
If pied-à-terre makes you feel better, by all means, go for it. However, those other topic in need of serious political lifting are much more important to New York's overall tax structure.
5
I went to see Hudson Yards
(the richest development where you can find
ten stores selling 10,000 dollar watches). Sadly
the subway escalators on both sides were not
working. Schumer was praising the billionaire
construction. I am sure he didn't take the
subway. Corruption is too light a term.
15
Any Liberal who believes The Despised Wealthy must sit quietly through yet another exercise in tax retribution, needs to take a short trip to Bellevue Ave in Newport Rhode Island. There sit The Breakers, Marble House, Rosecliff—and various other Gilded Age mansions which served as SECOND HOMES of America’s wealthy. Many others were abandoned by their wealthy owners, fell into disrepair, and were demolished. Empty lots are evidence of failed policy.
As magnificent as these residences may have been in their day, for a host of reasons, EVERY SINGLE ONE was given up by the original owners. The main reason was the imposition of new taxes on wealth—mainly the income tax, which started modestly—but much like today, was increased out of endless hunger for revenue, and fueled by envy and hatred.
Those who do not learn history are doomed to repeat it. The Wealthy in NYC, are increasingly existing in enemy territory. Liberals have always considered the allure and culture of NYC as too attractive to turn away from. But those once gleaming mansions on the cliffs of Bellevue Ave are a testament to this erroneous way of thinking. There is a limit to the amount of financial abuse the wealthy will endure. Bezos’ decision to bypass NYC was just the canary in the coal mine.
Once the exodus begins, once the first meaningful Wall Street firm calls it quits, those opulent residences lining Central Park quickly start to resemble Bellevue Ave.
27
Fantastic letter. Great insight. But liberals, socialists and communists won’t listen. Sad. Read sad.
5
Many, many New Yorkers will cheer for this concept, including me. However, be careful using loose terms like "super wealthy". It can be offensive.
@Overlooked
Good, I hope it is offensive.
1
How about sun setting Madison square garden’s tax abatement?
It was instantiated in 1982, supposed to last 10 years...last year it cost the city $40m+. Money that could be better spent on Subways and schools than on James Dolan.
14
Being safely free from the claws of this latest money grab, I suggest that heating rich people is not a good idea or a good policy. These apartments are great for New York: no kids to crowd schools, little use of infrastructure -- they are great and already pay the city's huge, ridiculous taxes.
The problem of "inequality" (note to editorial board: no such thing as income equality exists in even Communist countries) is our underclass of uneducated kids raised in families, often without fathers. It's not as if Ken Griffin got rich stealing from the poor. He got rich taking Hughe risks and being right, for decades. I find his lifestyle to be vulgar and disgusting, but he and others like him will ultimately create museums and hospital wings and endowed chair at our universities.
The 48% of the citizenry who pay no taxes offer no such advantages. What is gained punishing the successful to subsidize the errors of our political class?
24
Income "inequality" may be an issue. It's better solved by generating wealth and prosperity for those at the bottom than punitively taxing those at the top.
19
Please don't insult us and pretend that every tax has a neat and defensible rationale. Any teenager could come up with something to support a tax.
11
@Bryan
Who says all these taxers aren't just overgrown teenagers addicted to spending the money of others?
2
Amazon would have helped more, thanks AOC.
30
NYS and NYC have a problem with taxing rich individuals. They can move out of state and they do. When the billionaires move to Florida, Albany notices.
But their houses stay here to be taxed by the next owner... and the next... and the next...
4
@J Fogarty, Read the article again — if you read it at all. It’s a tax on second homes, generally investment properties bought by rich non-residents that are almost never used.
The only benefit these ludicrously expensive homes have for the city are the limited number of temporary construction jobs they produce and the tax revenues the city receives. If they don’t produce sufficient tax revenue, they shouldn’t exist. Hence, this pied a terre tax makes a lot of sense. No actual resident of the city who has a true first home here will be harmed by it.
15
@JF
Actually, Fogarty is right. These mostly absent owners consume few, if any, of the city’s services but already pay a large tax bill. Mansion tax, heavy property taxes. And of course the jobs and taxes created by the original construction.
But most schemes like this presume a largely captive target, ignoring the longer run implications.
8
We have none of this nonsense in Maryland. Why is the state even involved in NYC property taxes at all? Should be none of their business.
Want a second or third home? Pay for it at the first home rate. Marylanders have no problem with this. Of course, values will go down so more city residents can afford to buy housing.
2
@simjam The states are always involved in city business because the states are sovereign, not municipalities.
1
@simjam...
Which is why all of those representatives and senators in Congress have their fine homes in the Maryland suburbs and haven't set foot in their home states except at election time.
Here in Massachusetts, our junior senator is known, not-so-affectionately, by the title of the distinguished third senator from Maryland.
His wife works for the federal government in a senior position, and he has lived in Chevy Chase for more than three decades.
There's a reason why productive people are leaving New York in droves. People get tired of excessively high taxes, unnecessary government regulation, and bad weather for most of the year. Yes, young people straight out of college still like living the single life in New York City, but that sentiment doesn't last forever.
Time for NYC to get its fiscal house in order (1/8th of the budget goes to pensions) before levying new taxes.
22
@Jon W. All true. New York government knows enough to keep certain types of taxes at rates at but not outrageously over the highest rates but it taxes so many different types of transactions. These endless taxes, many in the form of purposeles regulatory fees, along with outrageous property taxes (not to mention tolls), make this a lousy place to live. Young people cannot get started here. The liberal government's performance has been a disgrace.
4
@Jon W.Exactly, no one at the NYT likes to point out the expense side of the NYC budget, only focusing on revenues to fund an out of control spending budget
3
It is always easy to just tax the rich, great sound bite for politicians and using this technique on non-resident NY home owners is their holy grail. WOW, more revenue with no accountability!!! I'm not part of the ultra wealthy crowd, I pay my taxes and use NYC services every day but enough is enough. These non-residents are not getting any free ride, they pay real estate taxes but do not use any of the services that those real estate taxes are supposed to be used for, such as schools, mass transportation, garbage collection, parks, city hospitals, etc. There are 50 other states that the ultra rich can park money in real estate, if the city continues to find "creative" ways to tax these people then like anything else, they will go elsewhere. Just look at the exodus caused by SALT. Yes, we need them, not a politically correct statement, however, they pay taxes and don't ask for much.
19
Full disclosure: I own a vacation home in a small, western resort town where "non-residents" pay roughly 2x the annual property taxes compared to full time, local residents.
Despite the fact that most people who own $5M dwellings could certainly afford to pay additional taxes/fees on their properties, I still despise the very concept of this tax.
Non-residents already pay high property taxes for local services (sanitation, police, etc.) that they don't use.
Non-residents are not allowed to vote and have a say in "how" their tax dollars are spent.
Non-residents also don't burden the local public school systems with more enrollment.
This is, in effect, a tax based upon the local resentment.
16
@KT
nyc doesn’t really have material levels of property taxes
so non resident people who don’t pay income taxes can, and do, buy and build much of the real estate , which drives up the costs dramatically for the people who live there.
6
"Cities that have adopted such taxes have seen drops in prices and construction of high-end homes"
This sounds like an additional benefit of the tax, not a downside.
14
Yes if you’re goal is to lose billions a year in tax revenues.
10
@Lynn
Exactly. the idea isn’t hating the rich and taxing them, it is that the non resident rich have exploited low property taxes to soak up a high percentage of all the development...space, land, activity, dollars
So having fewer empty buildings that use up the land might just lower costs for people who live and pay taxes in the city
1
@Wake...
Excuse me...But isn't it the wealthy that can AFFORD the expense of development and renovation?
So, is the new progressive slogan "If we can’t fix inequality, soaking the rich is the next best thing"? Seems a bit moral-compromise-ish
12
You and Paul Krugman refuse to bow to reality, and instead soothe your souls with all kinds of sophistry to convince yourselves that taxes don’t change the behavior of the wealthy. Meanwhile, I personally know some very wealthy people who have moved to Florida to avoid NYC/NYS taxes. So have many thousands over the years. There is also the famous yacht tax that had to be quickly rescinded when lo and behold, the wealthy stopped buying yachts and the tax brought in no revenue.
You guys are impossible. They stopped buying yachts. They will stop buying apartments. The government is a bloated mess. Gee- maybe the government should reduce spending instead?
Naah.
35
@Ari Weitzner
these are people who don’t live here. The people who live in the city are being driven out by the rising cost caused by non residents who don’t pay any tax but who drive all developments
they are welcome to either move in and pay income tax like everyone else or sell to someone who lives in the city
14
gee and i know many very moderate income people who "establish" a residence in Florida or elsewhere to avoid NY taxes including automobile insurance premiums.
but they still live in the city. they just call it their secondary residence
5
@Ari Weitzner...
Giving the wife of the mayor three-quarters of a billion to "run" a failing program isn't spending...it's resume enhancement for her run to continue the de Blasio dynasty in New York...
After all, you woudn't want Bill to have to move out of Gracie Mansion now that he has the commute to his Park Slope gym st taxpayer expense down to a science, would you?
3
I have a better idea. Why bother with a small tax. Why not just confiscate all properties over a million dollars. Maybe they could be turned over to homeless people like in the movie Doctor Zhivago. Let's just add this Warren's wealth tax. After all, NYC is such a great place, according to New Yorkers, that the rich will always come back.
19
When you tax someone without warning at rates of 4 percent a year you have confiscated that individuals property.
Forget the fact that it’s illegal, it is immoral and unbecoming to a civilized country.
3
The fact that individuals (the wealthy of course) are buying high end properties for CASH and not being taxed the same as are mortgaged properties is disgraceful. The rich get richer......
9
Why a $5 million threshold? Why not $3 million?
An improvement might be a two-tier tax rate, a lower rate on properties owned by individuals who are citizens of the United States and a higher rate on properties owned by corporations, shell companies or individuals who are not US citizens.
12
Every discussion of this new tax seems to ignore the practical mechanics of how this would be done. How will the city determine the actual value of a property, particularly if it has not sold for years and if it is hard to find comps? Will this tax plan just cause other ways to hide or distort property values? Someone needs to describe how this will be done and what new distortions will result.
4
Politicians just can’t ever look at the spending side of their P&L. Solving deficit problems always is a revenue matter and not one solved by broadly growing the tax base or controlling spending. The rich will continue to weary of the punishment. Some will stay because they’ll lose asset value selling out but you’ll never grow the base of rich taxpayers like this. Your population losses & outflows are self-inflicted and deserved.
9
I own a vacation condo in Florida and pay higher real estate taxes than year-round residents, who get a "homestead exemption." I don't love it, but I can see the fairness of it: so many properties in Florida belong to snowbirds, and someone has to pay for municipal needs - roads, police, water, etc. That policy should apply to non-residents in New York as well.
The phrase "vacant homes" is such a sad oxymoron when so many people don't have homes at all. Dwelling places should be dwelled in, not purchased as investments. Use it or lose it - or at least pay for it.
36
@RJ
These taxes are brought to you by the same inept legislators who drove out Amazon & cost the City $30 Billion in future revenues. Keep it up and NYC will fall to the level of a 3rd World Capitol. Florida has NO income tax, has NO Estate Tax and it’s Property Taxes are a small fraction of what I paid when I lived in the City. I predict you will soon become an official resident of Florida if taxes like these are allowed to take effect.
9
@RJ It already does. They don't get the STAR exemption and other primary residence benefits. This editorial is demanding even HIGHER taxes.
4
@RJ It's worth noting you didn't initially pay higher taxes than a resident buying the same property. The full-time resident over time is shielded from most of the increase in property appreciation though not increases in tax rates. It was created to help makes sure rising property values driven in large part by so many snow birds buying didn't drive long time residents out of their homes. It is an imperfect system and discourages people from moving even when a different home might be more appropriate as the benefits can't be transferred. Also in NYC private homes aren't taxed at close to their fair value either especially town houses in Manhattan due to arcane rules, which clearly favors the wealthy long time residents.
3
Maybe if the ultra wealthy starting emulating Warren Buffet and how he treats people of all income levels , we would all stop thinking about how to get more of their money. The entitlement and arrogance of the ultra wealthy is at an all-time high and heading in the wrong direction. Even mere millionaires feel the the ultra wealthy’s entitlement and arrogance.
11
Oh please! Warren Buffet has $70 billion in the bank so he can afford to lecture everyone else on how much they should pay in taxes. He controls his own salary and taxable income so his trope about he pays a higher rate than his secretary is tiresome. Maybe he should just allow his estate to be taxed at the full federal and state rates upon his death rather than giving it to the Gates Foundation tax free if he’s interested in increasing tax revenues. Or perhaps Berkshire Hathaway could pay a dividend which would unlock billions of taxable revenue for the feds. Buffet is a brilliant investor but he’s a total hypocrite when it comes to tax policy.
4
Although I have no vested interest in this issue, nor am I opposed to this tax, I believe the editorial is being more than a bit intellectually dishonest. The average rich person with a second or third home in New York is already paying far more in taxes than the average New York resident pays, yet is consuming almost none of the services that taxes pay for. For example, the owner of a $10 million apartment would already be paying $80,000 in property taxes each year, yet would not be sending his kids to public schools, would not be using public transportation, would not be using social services, would not be occupying space in public parks very often, etc.
Tax the out of town uber wealthy if you want. But don’t argue that they deserve to be taxed because they benefit so greatly. It’s simply politically expedient to tax non-residents, and non-resident rich people are a target too good to pass up.
44
What ever happened to the commuter tax? As a resident of New Jersey, I didn’t complain about the tax, which I thought was appropriate. I daily used the infrastructure of NYC and felt that I should help pay for its upkeep.
I was confused when the tax ended, which I attributed to typical NY politics.
The commuter tax should bring needed revenue to NYC without adding to the existing New Yorker’s tax burden.
7
@DB
The tax was eliminated when the Speaker of the State Assembly thought by doing so he could insure the election of another D Assemblyman from Westchester County. Look it up.
Not sure if NY is like IL, but at some point you have to ask where the revenue (all, not just additional) is going. Here we throw it down our public pension hole which keeps growing while our roads get worse, our teachers leave for greener pastures, and our property values decline and people leave the state if they can, as more and more taxes are levied. High property taxes, high sales taxes (8+%), high income tax. And thanks to the Republicans, we can't even deduct all of our property taxes anymore.
14
@Karen K That's the crux of it. I won't support any new taxes until entitlement spending is brought under control.
7
New York certainly needs the money.
No matter what kind of new higher taxes you implement, this sentence will always be true.
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Also a proper review of spending is in order as well.
@Lee Irvine
There is a difference between "needing money" and "wanting money".
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This seems at first glance, like the perfect scheme for Liberals to get their hands on more of other people’s money. After all, these folks are wealthy and despised so therefore have no defenders—and since they’re not residents, they can’t vote. To Progressives, this looks like the a sure-fire financial head-lock. Except that it isnt.
The SALT tax situation has already made living in NYC a more expensive proposition. Wealthy New Yorkers are fleeing in droves to low tax states like Florida. If they don’t sell their homes in NYC when they leave, their new home becomes the primary, and the old home becomes subject to this new tax. Expect the market to become flooded with high -priced homes—driving down their (taxable) assessed values. Instead of raising new revenue, the opposite will happen. Real estate values will collapse—causing Liberals to blame who else???...The Wealthy—who are skipping out on their supposed civic duty—to support Progressive tax schemes.
The wealthy have choices. They despise paying taxes just as most of us do—including most Liberals. They’re willing and able to move away to avoid them. Only inmates are compelled to live in NY—but soon, they may be the only ones left.
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I will try once again to comment, a quick calculation by anyone with a financial background will yield the following.
These buildings are cash machines for the city and state. Each decent size building generates 100s if millions of tax dollars for the city and state.
You have a tax when the land is bought, you have a mortgage recording tax, you have taxes on salaries of all workers, you have the mansion tax and another transfer tax, taxes on brokerage commissions and sales taxes on all items purchased.
This doesn’t include the recurring real estate taxes which are so so high already for condos.
100 developed buildings result in over 10 B in tax revenues for the city.
Hate, envy, misinformation are not policy, why would we destroy this revenue stream and how would NYC replace billions in lost revenue.
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@Rafa, you nailed it. Hate and envy drive nearly all Progressive tax policies. Just ask Jeff Bezos why he changed his mind about locating in NY.
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The real issue is any additional tax revenue like this will be wasted and squandered away by the inefficient City government
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Hey New York
Great city, and all that, but as someone who has owned an apartment in NYC, as a second home, and paid ridiculously high property taxes for services I make very little use of I can’t tell you how happy I was when I managed to sell this condo (at a loss).
Who knows what these property taxes were actually funding as your infrastructure is really in a poor state, especially the subways, and I hear your schools aren’t that good either.
There are lots of other great cities in the world and they function a lot better than NYC. So go ahead and make yourselves feel righteous with a poorly designed, counter productive tax.
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@MBS
NYC property taxes are quite low. Are there other cities you are thinking of that are lower? NYC income taxes are high, but you wouldn’t have paid them
9
Didn’t someone once say “No taxation without representation”?
So who would actually pay those taxes?
Foreign billionaires who will have to pay more for having a place in town when anyone in the family comes to do a bit of shopping?
Some.
But most would be the very business elite who have their principal home of record in the Hamptons or Westchester.
Is not paying property tax to two municipalities sufficient?
Why should they be accountable for financing the failures of a City government that they have no input in?
If you want to tax these homeowners more, why not let them have a crack at the books as well? They’re obviously better at fiscal management than the people running the City.
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Mr. Griffin should take a page from the Amazon playbook and sell his place at a major loss, helping to continue the decline in the high-end market. But while you are soaking anyone with means, what about a landing fee at Teeterboro (based on the G-series of course), and an additional tax at every high-end restaurant. Oh, and let’s not forgot sin taxes for front row seats at popular Broadway shows and courtside Knicks seats. One has to admire the gall of one of the highest taxed cities in the nation complaining they just want more without offering anything. Isn’t that what you say the rich folks are guilty of?
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The current Pied-a-Terre tax doesn't go far enough but there is a serious problem of how the money will be spent. We should tax all apartments not just those over 5 million dollars. We should ban non-New York City residents from having Rent Stabilized Apartments or any other form of subsidized apartments. The money should be used to lower other taxes. We should cut the sales tax at brick and mortar stores. The MTA and subways do not need 30 million dollars in investment. The situation is exaggerated to justify giving hugh contracts to politically connected contractors.
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NYC already has the highest taxes in the country and can't pays its bills. But never for a second do its leaders or the NYT editors wonder whether the problem is on the spending side not the revenue side. So they will now risk killing one of the bright spots in their economy, high end real estate. I'm sure a small tax will have a minimal effort but taxes alway go higher especially when they are paid by non voters. Look at the absurd level of the hotel taxes that tourists pay when visiting.
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Yes, yes, yes, I can’t believe we don’t already have this tax in place. New York should also stop allowing anonymous purchases.
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These are hopeless tweaks. All built around the inability to design a top down tax system at every level of government.
The problem here is really inherent in any property tax system. Market values change over time. In some neighborhoods, values go up, and in others they go down. Sometimes the changes can be very rapid, even though they might not seem that rapid as they are occurring. But yes, some property values in the downtown area of New York have multiplied by a factor of 100 over the course of about 40 years. For various reasons — one of which is loud complaints from not-wealthy people hit with massive property tax increases, based on nothing more than having bought property in an area that increased in value over time — it is not possible for assessments to keep up with value changes. That principle applies both to increasing and decreasing property values. Result: in any given snapshot of effective tax rates, it will appear that the most valuable properties are undertaxed, and less valuable properties are overtaxed. If you want to find really high effective tax rates, go to a city like Detroit or Cleveland where property values have declined greatly over time.
Where you "sit" always determines where you stand.
Value added taxes have always been a more reliable way to raise revenue. Yet, even that is replete with issues.
Nothing in life is fair. Why? People behave unfairly.
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Really? Another tax? On top of a separate city income tax that NY already charges? Then there’s the separate MTA tax that only us self-proprietors have to pay since corporations got out of it due to their superior lobbying efforts. Let’s not forget the new Paid Family Leave tax which doubled my workers compensation insurance. Then there’s the DBL policy I have to carry for my employees that no other city or state requires. Soon there’ll be the congestion tax to pay for the subway. Need I go on? And New York wonders why there is an exodus of wealth from the city which is why they need to discuss yet another tax? I give up!
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"Wealthy people from around the world who invest in New York City real estate reap rewards on that investment because of the goods and services the city provides. Asking them to pay more is common sense."
Okay, fine, as long as you're only asking them, I have no issue, because they can politely say no.
Oh wait, when you say "asking them to pay more," you mean "force them to pay more at the point of a gun."
Please be honest with the language you choose to use.
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There is no need to go outside the US to compare property tax rates on personal residences v. second homes. We pay a higher tax rate in a small second home that we own in another state. With homestead exemptions, that is also true for many other jurisdictions.
The luxury market is flat in many US cities because the supply exceeds demand. As there is more profit from luxury residences, builders favored those over more affordable housing. When will builders consider demand before profit?
4
What is being proposed is an excise tax just like for cigarettes and alcohol. Excise taxes are also referred to as sin taxes and what the proposal is saying is that having an expensive pied-a-terre is sinful. New York has revenue problems but this is just the Willie Sutton theory of tax collection ("Why rob banks? Because that's where the money is.") The column points out areas of reform that are worth pursuing first; i.e. the property tax imbalance.
Reform is the place to start. The problem is that some current New Yorkers will come out on the short end making it politically difficult.
Secondly, make it more profitable for developers to build properties that aren't for the super rich. Then maybe there'll be fewer mega-expensive apartments to tax and more places for the non rich to live.
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This is a great idea, but will it get as far as congestion pricing? Is this just talk?
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@et.al.nyc
This is a 'magical' tax unlike the proposed congestion tax. Magical taxes affect everyone else except me and they are the ones most favored by politicians.
See Seattle and their attempt to legislate a 'corporate' tax on just three targeted businesses in the city.
Magical taxes are the future!
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"Cities that have adopted such taxes have seen drops in prices and construction of high-end homes."
That is reason enough to implement the tax. Any additional revenue would be icing on the cake.
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Hmmm. And I always thought real estate taxes were how localities generated revenue from property, vacant or otherwise.
And I love how the article matter-of-factly states that New York needs new revenues, therefore this new tax is required.
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While this sounds attractive to many, it's helpful to compare this to 1989's mansion tax. When initiated, a tax of 1% was added to the sale of all properties in excess of $1 million. Given inflation and the overall appreciation of NYC housing, $1 million doesn't buy what it used to and yet the tax is still imposed at that amount. Give a politician access to your money and you'd have greater success trying to remove food from an anaconda. Finally, can the editorial board of the Times please quantify "fair share".
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taxation without representation? that doesn't always end well.
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@Joe Yoh the wealthy have been getting representation without taxation by donating to politicians for decades. Focus on real problems.
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@Joe Yoh Any person who owns a 2nd property pays taxes without representation (no vote). Any person who owns rental properties pays taxes without representation (renter gets to vote in that district). It's been this way forever. No end in sight.
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Neither does huge gaps in income inequality.
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It’s way past time to make the wealthy pay their fair share. They have been robbing the worker of growth in wages associated with workers’ gains in productivity since Reagan. It’s time for the rich to start giving that back.
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@Patricia Can you tell us exactly what "your fair share" is and exactly when you get to that level?
My understanding is that "you fair share" always seems to increase with time and politicians refuse to quantify it.
11
@Patricia The famous and despised top 1% of earners make around 20% of our national income and pay over 40% of our federal income taxes. They also consume far less of the social welfare sercvices that those taxes support. If having 1% of the population pay over 40% of our federal income taxes is not enough, then what number is enough? Serious question.
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@Patricia
"the wealthy ... robbing the worker of growth in wages". Sounds like universal truth? How so? Everyone who has assets is robbing someone else? Is this the world you want to live in? Be careful -- that sort of reasoning can work against you.
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"A Pied-à-Terre Tax Will Bring Revenue New York Needs -
A tax on second homes of over $5 million won’t solve income inequality, but it could help boost the city’s coffers."
So - for a time - would collecting a commuter tax from AMTRAK passengers arriving at Penn and Grand Central Stations. ;-)
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Also, a modest surtax (say 10%) on excessive profits (say 25%) from the sale of residential co-ops or condos.
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The article would consider it a bad thing if real estate prices would sink as a result. I beg to disagree.
Sure, it is good for the property owners. But it means that the people who do the real work spend more time commuting and can be less productive.
4
Raising taxes will send the right signal to out of state rich people: we don’t want you here. The benefits gained from chasing away rich companies such as Amazon will be replicated if we chase away rich people. New York is in great financial shape now and we don’t need the money which rich people and companies bring.
19
New York needs more people living, working, spending, and building the economy in New York, not empty luxury apartments that largely serve simply as investments (or, in many cases, a way to launder illicit money). New stork workers build wrath for the city, and are the basis of the local economy - not the construction of bloated apartments and owners who jet in one-weekend a year.
Opposition to Amazon was based on the over-generous tax giveaway to a corporation that simply didn’t need it.
24
Not only should these types of luxury apartment sales be taxed, but the revenue the city receives from this tax should be earmarked exclusively for a dedicated fund to build affordable housing in all 5 boroughs.
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This has been implemented in Paris for while now. A second home is a luxury - it should be taxed accordingly.
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This is not correct, the tax in Paris is an extra 1500 Euros a year, here they are adding hundreds of thousands and even millions annually to each pied a Terre.
In my opinion it is illegal to usurp and discriminate against 1 group especially ones that have no vote.
Never been done and badly thought out.
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@Rafa
The non resident owners have CHOSEN NOT TO VOTE by maintaining residence elsewhere. They are not being discriminated against.
34
Sorry that’s not correct, you want to take a tax from someone let them have the facts upfront.
Anything otherwise is illegal actually, this type of stuff was done in the past and not in civilized countries.
4
Why not beyond NYC? There are upstate tourist areas where the wealthy purchase second homes at prices well beyond those who live year round. These extra taxes could fund local infrastructure projects, schools, etc.
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Clearly, taxes are too low in NYC. If you have to discuss taxing out of towners multi-million dollar properties, the locals are not paying their fair share.
You can't expect people that don't live there to solve your tax short falls.
21
@Mike, I can't tell if you're being sarcastic or not. New Yorkers pay extremely high state-and-local taxes. That's why the new cap on the federal SALT deduction hits us so hard, which is (in my opinion) a big reason NYC lost its last Republican member of the House of Representatives.
One argument for taxes on pied-a-terre housing is that the property may be sold to a tax-paying resident.
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@Mark Thomas I didn't think about that. If your taxes are to high, maybe you should elect different leaders.
1
The reality is that these apartments already provide a substantial windfall to NYC. As new construction, they receive temporary tax abatements but still generate tons of revenue, while consuming no muni services. A situation that will be even better as those abatements go away. They also generate economic activity as their residents come and spend.
Anyone who sees these places as crowding out noble middle class New Yorkers is dreaming. They are located in commercial districts, in the middle of office buildings. Any threat they represent is simple envy, which in the chase-Amazon era seems in especially high supply.
32
@GC
Neighborhoods in Manhattan are dying because of these empty apartments. Local businesses cannot survive by the patronage of superrich owners that only show-up a few weeks a year. Just look at all of the empty store fronts around the city...
It's hard to imagine that the revenue these folks bring to NYC is more than a middle class person that lives and works in the city, paying local and state income taxes, and supporting local businesses that also pay tax.
17
@GC Re. your comment that high-end NYC real estate is only "located in commercial districts, in the middle of office buildings" - you are joking, right? The commenters here lobbying on behalf of the uber-wealthy need to spend more time walking the actual streets of NYC and less time opining here. The idea that the city needs to pander to the whims of > 5mil second-home owners is absurd. Those folks are more than familiar with the concept "pay to play." No tears for them from me.
7
@GC
As to your "consuming no muni services" dos this mean that the police and fire keep lists of the properties with non resident properties so that they can avoid providing police and fire services?????
5
If this tax reduces the number of apartments being built for the super rich, then it will have done good.
Every square foot of NY housing that is wasted satisfying the whims of oligarchs who do not create jobs within the five boroughs, or seek to launder their unclean cash in it, is a foot that cannot be used to build more affordable housing for the rest of us.
182
@Matthew Carnicelli Nevertheless, they keep getting built because everyone in our government, from Cuomo, to de Blasio on down, is in the thrall of real estate. Harry Macklowe, a billionaire developer, and one of the greatest malefactors in destroying our skyline, is proposing a 1500 foot tower right across from St. Patrick's. This, he claims, would be his crowning glory! It's doubtful it will ever come to pass, but the fact he even has the chutzpah to pursue it, shows who really calls the shots in this town. Cuomo saw this tax as an easy out, but he doesn't have the guts to go after the real money, that of the wealthy actually living here in these monstrosities.
25
@Matthew Carnicelli Precisely. It's amazing how much hand-wringing there is in these comments, and how vigorously people are defending the 5400 homeowners who possess a second home valued over $5 million.
Disgusting. Embarrassing. Infuriating.
New York City is the greatest city in the world, and it is being turned, piece by piece, into a sterile luxury mall aimed at a tiny percentage of New Yorkers and tourists. The housing situation is a huge part of that, impacting the ability for neighborhoods to reflect who works in them and creating domino effects that flatten not just the lower and middle classes' ability to rent or own reasonably, but the upper class well. It's insanity that only benefits those with their hand in the cookie jar.
34
@Matthew Carnicelli
Do you really believe that these skyscrapers on Cental Park South are displacing affordable housing? Many of them have units dedicated to lower income renters as a condition of the city’s waiver of zoning violations like height.
3
“The added benefit that so called pied a terre taxes are politically palatable....”. So much for taxation without representation.
How bout imposing a tax on the windfall that stabilized tenants realize in the form of below market rents? Given that there are more tenants than landlords, that’s not gonna happen.
18
@GC Nobody wants "taxation without representation" here. In fact, everyone supporting this tax would LOVE it if the owners of these units voted in NYC elections. Of course, in order to do that, they would have to establish residency there. Which means they would have to pay NYC and state income taxes. And if they did do that, they would not have to pay a pied-a-terre tax under the new law! See how that works out?
108