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burlesona 15 minutes ago [-]
Property tax is the workable wealth tax. There's no such thing as a perfect policy, but in the context of NYC this seems worth trying. I'll be interested to see if it helps create some liquidity in the housing market (the goal), or if it only functions as revenue source.
One wrinkle I haven't heard much discussion of -- cities respond to incentives too. NYC is a global destination for the mega wealthy. If it turns out the uber-rich don't mind paying and this becomes a cash cow for the city, that creates incentives for the city to cater to them and try and get more uber-rich people to have second homes in the city.
MyHonestOpinon 1 minutes ago [-]
Property taxes have the added benefit to lower property prices, and the money can go on improving the city. (Which make properties prices go higher)
elevation 10 minutes ago [-]
How will consumers not bear the brunt of property taxes?
skybrian 4 minutes ago [-]
What do you mean? It's not a tax on commercial property.
One effect might be that wealthy non-residents prefer to stay in a hotel when they visit New York? The amount of money being collected as property tax would pay for a very fancy suite.
I imagine there will be luxury hotel conversions.
malfist 4 minutes ago [-]
Who is the "consumer" in this case?
vardalab 6 minutes ago [-]
Because it's a tax I think on second properties.
Maxatar 32 seconds ago [-]
Yes and the second property must be mostly vacant, ie. not rented out as the primary residence of some other occupant.
thatmf 4 minutes ago [-]
...of property taxes on second homes valued > $1M?
blitzar 8 minutes ago [-]
The elites always promise us trickle down economics, maybe this time it will happen. I wont hold my breath though.
cakealert 3 minutes ago [-]
> The elites always promise us trickle down economics, maybe this time it will happen.
Are you under the impression that the wealthy keep their money in a savings account?
They have more money than they can spend so they invest it, what do you think investment does?
cjs_ac 21 minutes ago [-]
> New York City’s new tax on second homes will more than double property taxes owed by many wealthy luxury apartment owners, according to tax experts.
> State lawmakers on Wednesday passed the tax on nonprimary residences in order to help close the city’s budget gap. The so-called pied-a-terre tax will be imposed on second homes valued at $1 million or more. It’s expected to raise $500 million in revenue.
> Details on the tax obtained by CNBC show that the property tax would take effect in two different phases. In the first two years – the tax years 2026-2027 and 2027-2028 – condos and co-ops valued at more than $1 million by the city’s Department of Finance will be subject to the tax. Properties worth between $1 million and $3 million will face a 4% annual tax; properties valued at $3 million to $5 million will face a 5.25% tax; and those above $5 million will face a 6.5% tax.
The rates sound a bit steep (although I'm not familiar with the baseline tax rates on properties of that value) but the principle is sound. In the UK, the equivalent tax on housing is council tax, and local councils in Great Britain (but not Northern Ireland) are empowered to double the rates of council tax on second homes.
usefulcat 44 seconds ago [-]
Well, you need to read the rest too:
"While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said."
It also mentions they plan to adjust property valuations in coming years, and when the valuations go up the rates will go down:
"After the valuation adjustments ... properties over $25 million will be taxed at 1.3%"
I dunno, 1.3% seems.. not at all unreasonable? I live in TX and that's about what my property taxes are, for a property valued at several orders of magnitude less than any of Ken Griffin's NYC properties.
strongpigeon 32 seconds ago [-]
> The rates sound a bit steep.
Agreed, but you also have to keep in mind that those people don't pay NYC income tax.
mil22 6 minutes ago [-]
> In the UK, the equivalent tax on housing is council tax, and local councils in Great Britain (but not Northern Ireland) are empowered to double the rates of council tax on second homes.
Very interesting to know. Many readers may not be aware that council tax in the UK is quite regressive and tops out at ~£4-5K / year on properties valued higher than ~£1M. So you can own a £5M GBP house and still pay only £5K / year for an annual effective property tax rate of just 0.1%.
This is one of the reasons buying a luxury house in the UK is comparatively quite cheap in terms of total cost of ownership compared to many states in the US where you have to pay much higher property tax rates, insurance, and so on.
So even if the council tax is doubled on a second home, you still might be paying only 0.2%. Compare that to an average property tax rate of ~1.8% in NYC (before pied-a-terre).
altruios 17 minutes ago [-]
Second homes (and beyond) should be taxed out of existence while people are still trying to find their first. This tax is not steep enough, but it's a start.
gowld 8 minutes ago [-]
Taxing a pied-a-terre $40K/yr or more per year provides more resources for developing housing than simply evicting the owner and reclaiming the space. There aren't enough pied-a-terres to house the people who need housing. We need expensive premium housing to fund affordable housing at scale.
dml2135 7 minutes ago [-]
[dead]
Aurornis 3 minutes ago [-]
Actual title from the article:
> New York passes Mamdani’s pied-a-terre tax. Here’s who pays and how much
(The submitted title at time of commenting is "New York Passes Tax on the Ultra-Wealthy)
It's a tax on second homes. If you thought it was a wealth tax from the editorialized title, like I did, that's not correct.
nemomarx 25 minutes ago [-]
On unoccupied or secondary residences specifically, not on wealth overall. This is more of a housing policy?
toomuchtodo 22 minutes ago [-]
Real estate cannot move. If you are wealthy enough to own a second home worth at least $1M or more, you are likely very wealthy (top 2% of US households by net worth threshold is ~$5.5 million). It is a wealth tax implemented on a real estate asset component of a high net worth human's total portfolio.
nemomarx 20 minutes ago [-]
It affects wealth, but the owner can also sell the property to someone who'll live in it and then they won't be taxed despite owning expensive property. So it's more targeted than a general wealth tax would be and I think the intent is to free up housing supply a bit.
boringg 13 minutes ago [-]
Yeah not really. It generates money for the city to run their programs without raising taxes on residents. Those properties aren't being purchased by anyone who can't already get a home.
I think the revenue is probably overstated in the long run as people will find a way to offload the properties except for a select few who will consider a cost of doing business.
Also a great marketing move by Mamdami in terms of walking his talk.
andrewstuart2 13 minutes ago [-]
Or they can move to NY "full time", if I'm understanding correctly, which will likely also improve the city's tax revenue from more of that person's expenses incurring city taxes.
toomuchtodo 18 minutes ago [-]
I think it is unlikely anyone with a second home at these price levels is going to sell to avoid this (immaterial to them) tax. But certainly, if they do sell to someone who will occupy as primary residence, that's also a win, regardless of the coin flip (heads, wealth tax, tails, more housing for those who actively live in the city).
Edit: You start somewhere and keep tightening the policy ratchet as loopholes or other policy leakage are detected. You've found a clever hack? Congrats! The law is updated accordingly.
DocTomoe 13 minutes ago [-]
In reality, they will now just create a company in Singapore or Mongolia or another such place, which will then own the second home - while itself being owned by the original owner. Problem solved significantly cheaper than this new tax. In fact, I would not be surprised if they have already done that four months ago, when the law was being discussed.
The ones who will be hit are those who do not have the legal frameworks in place to erect such structures - Joe Homeowner who inherits grandmas city house, both worth slightly above the magic 7 figures.
paulddraper 17 minutes ago [-]
-
sunshowers 13 minutes ago [-]
Read the fine article?
> While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said.
toomuchtodo 15 minutes ago [-]
You have described an investment property, not an unoccupied second home exposed to the pied-a-terre tax, if you rent it out (whether mortgaged or free and clear).
slackfan 13 minutes ago [-]
What they also have described is a dacha.
24 minutes ago [-]
DocTomoe 21 minutes ago [-]
Can't wait to see the middle-class families now moving into Billionaire's Row.
slackfan 12 minutes ago [-]
Considering inflation - the middle class will be the ones being taxed by this in a few years.
cactacea 6 minutes ago [-]
Sure yeah, all those middle class families with second homes in New York City. Right.
Nobody affected by this is middle class. Nobody that will be affected by this in the next 20 years would be considered middle class by any rational measure.
slackfan 3 minutes ago [-]
Just like the federal income tax was only targeted at the top 5% of the population when implemented.
Inflation is cumulative.
hibikir 7 minutes ago [-]
If this has a problem, it's the difficulty of application: 2nd homes, and only if you have X amount of money, instead of just a flat increase. Property taxes (or really, in NYC land taxes, as most of the property tax is really the value of the land) are just very efficient, and make much less of a difference on the price of rents than you'd think.
Unfortunately, doing that is very unpopular. Unpopular enough that we see states trying to get rid of property taxes, and those providing limits to increases, which basically guarantee misallocation and rising prices. But what is economically reasonable and what the voters like have very little to do with each other.
Neywiny 25 minutes ago [-]
Probably the least complicated tax law. Increase taxes to increase revenue. Makes sense. Align valuations with reality while maintaining relatively constant absolute tax dollar amounts. Also makes sense. It's really not that hard.
GenerWork 10 minutes ago [-]
This is fantastic news for the Miami real estate market. Does anybody has stats as to how many homes this would actually affect?
lorecore 7 minutes ago [-]
Miami? Have you checked home insurance rates lately? The thought of these NYC second home owners getting gutted by the next hurricane is rather amusing though.
everdrive 16 minutes ago [-]
I'm really curious about this. Wont, as a rule, any super-rich 2nd, 3rd, and 4th homes in New York be completely unaffordable for almost everyone? It feels a bit like you're potentially spreading around the super-luxury homes across a wider breadth of the super-rich, but not much else.
Is there a better way to think about this?
SoftTalker 43 seconds ago [-]
If you can afford to pay $238 million for an apartment (the Ken Griffin example from the story) you can afford the annual $1.87 million in tax. That's about 0.785% tax rate.
By comparison, I have an investment property that's worth about $285k, and I pay 1.97% on that in annual property tax, so esp. considering he's in Manhattan, that rate looks like a bargain.
newaccountman2 2 minutes ago [-]
> Wont, as a rule, any super-rich 2nd, 3rd, and 4th homes in New York be completely unaffordable for almost everyone?
??
The point is to raise revenue.
In some sense, City is calling the bluff of these deeply immoral rich fucks; the tax is incredibly affordable for them, and almost all of them will simply complain and pay it, and thus generate revenue for the City.
minimaltom 5 minutes ago [-]
Yes. A tax on the ultra-wealthy, rather than a measure aimed at increasing housing.
Its very roundabout as NYC can only make taxes for NYC, but the net aim is to increase the effective tax rate for the ultra-wealthy, using secondary property as a proxy for that.
Edit: AND WE (I) LIKE THIS because progressive taxation is the core play of fixing income/wealth inequality
robbiewxyz 7 minutes ago [-]
For startets, the revenue raised makes NYC as a city more sustainable by funding social programs for the normal people who keep the lights on.
everdrive 6 minutes ago [-]
Thanks, I feel sort of stupid for failing to notice that it would if nothing else just increase tax revenue. I was stuck in a perspective that this was about increasing housing stock.
Aurornis 5 minutes ago [-]
It's for generating more tax revenue.
alexk307 4 minutes ago [-]
This seems like a no-brainer. Tax 10-15k ultra wealthy people who park their cash in second homes in exchange for ~$500M/year in revenue.
ExoticPearTree 13 minutes ago [-]
New York desperately wants all the people with money to leave the state.
LauraMedia 9 minutes ago [-]
This argument is used again and again and I wonder: Why do "people with money" stay where they are when there are countries, islands, even just states where there is less taxes to pay?
busterarm 2 minutes ago [-]
It's not the "people with money" leaving. There's equal evidence of people with money staying and people with money leaving.
It's people who use their money to generate more value and employ lots of people that are, consistently, leaving. That means that thousands of jobs for the lower middle class are leaving and going to somewhere with a more favorable business environment.
And that's not good (well, it's good for the other city).
strongpigeon 3 minutes ago [-]
This specifically targets people who don't live in New York though (and thus don't pay income tax).
tartoran 10 minutes ago [-]
If I tax you one cent would you budge? This is what this tax amounts to the ultra wealthy.
tintor 11 minutes ago [-]
Real Estate can't move out of New York. Someone else would have to buy it.
robbiewxyz 6 minutes ago [-]
Wealth follows an extreme power law. This tax is pennies to those who will pay it.
lorecore 6 minutes ago [-]
Sounds like a great way to lower housing costs.
richwater 5 minutes ago [-]
Curtailing spending is impossible. Just keep raising taxes!
onlyrealcuzzo 24 minutes ago [-]
I think this is in the right direction, but the cut off at $1M is interesting.
Why's there an obsession with the $1m cutoff?
The dollar has been turned to dust. $1M is not that much money, especially in housing, especially in NYC.
Why tax $1m second homes and not second homes generally? Effectively, you're going to tax almost all second homes.
So why the arbitrary cutoff?
Chicago wanted to add a "millionaire's tax" on $1m+ home sales. At least in Chicago, that isn't effectively taxing the vast majority of housing (and total value) - so there's some distinction worth having.
sunshowers 13 minutes ago [-]
Read the fine article?
> While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said.
happytoexplain 21 minutes ago [-]
Below 1M in NYC it becomes unclear why you have a second home. Maybe you're not quite "wealthy" and it's really helping your family out in some way. No reason to complicate things, the cutoff actually simplifies it while sacrificing almost nothing in terms of what the tax is trying to accomplish.
davidguetta 23 minutes ago [-]
It's symbolic for it's demographic voters
dominotw 20 minutes ago [-]
what does it symbolize?
nemomarx 19 minutes ago [-]
"going after the rich", yeah? millionaire is still generally understood as an economic class by voters.
DocTomoe 16 minutes ago [-]
1 million remains the hallmark of 'wealthy' (as in: not us), to the point where pop culture has started mocking the concept decades ago (See: That Austin Powers movie...)
Hardly everyone understands 'owning a house' as millionaire-level wealth. Which is why people cheer the policy on until they realize it is them who is being shaken down.
dbalatero 8 minutes ago [-]
Sure, but it's only a shakedown if it's an unoccupied second home, which is hard to have sympathy for. It can easily be an occupied second home (family, renters) or a first home for those in the upper middle class paying for $1mm+ apartments in NYC. I'm not really worried about Jeff Bezos or some Hollywood actor's crash pad when they have business in nyc.
sunshowers 8 minutes ago [-]
In what world is 1 million US not wealthy? Have tech salaries distorted people's opinions that much?
Owning a house where your equity in it is over a million is absolutely wealthy.
gowld 11 minutes ago [-]
Flagged misleading editorialized title.
Actual title is "New York passes Mamdani’s pied-a-terre tax"
picafrost 12 minutes ago [-]
As I understand it many of the very wealthy do not "own" properties directly but control LLCs that do. The chain of trust/LLC ownership can be complex. Also as I understand it, this legislation does not really answer that call effectively -- though I have, of course, not read the full legal text myself.
I suppose in Ken Griffin's case, even if his residence is owned by an LLC he controls, he is known to reside in it. But how effective is this legislation when the purpose of LLC ownership is expressly anonymity and accounting convenience?
jmclnx 25 minutes ago [-]
$ have to come from somewhere, with the Fed cutting taxes for the rich and benefits for the poor every other term, time for the states to take over.
nxm 16 minutes ago [-]
Issue is not revenue, it's spending.
Florida has 2x the population, yet half the spending on NY.
One wrinkle I haven't heard much discussion of -- cities respond to incentives too. NYC is a global destination for the mega wealthy. If it turns out the uber-rich don't mind paying and this becomes a cash cow for the city, that creates incentives for the city to cater to them and try and get more uber-rich people to have second homes in the city.
One effect might be that wealthy non-residents prefer to stay in a hotel when they visit New York? The amount of money being collected as property tax would pay for a very fancy suite.
I imagine there will be luxury hotel conversions.
Are you under the impression that the wealthy keep their money in a savings account?
They have more money than they can spend so they invest it, what do you think investment does?
> State lawmakers on Wednesday passed the tax on nonprimary residences in order to help close the city’s budget gap. The so-called pied-a-terre tax will be imposed on second homes valued at $1 million or more. It’s expected to raise $500 million in revenue.
> Details on the tax obtained by CNBC show that the property tax would take effect in two different phases. In the first two years – the tax years 2026-2027 and 2027-2028 – condos and co-ops valued at more than $1 million by the city’s Department of Finance will be subject to the tax. Properties worth between $1 million and $3 million will face a 4% annual tax; properties valued at $3 million to $5 million will face a 5.25% tax; and those above $5 million will face a 6.5% tax.
The rates sound a bit steep (although I'm not familiar with the baseline tax rates on properties of that value) but the principle is sound. In the UK, the equivalent tax on housing is council tax, and local councils in Great Britain (but not Northern Ireland) are empowered to double the rates of council tax on second homes.
"While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said."
It also mentions they plan to adjust property valuations in coming years, and when the valuations go up the rates will go down:
"After the valuation adjustments ... properties over $25 million will be taxed at 1.3%"
I dunno, 1.3% seems.. not at all unreasonable? I live in TX and that's about what my property taxes are, for a property valued at several orders of magnitude less than any of Ken Griffin's NYC properties.
Agreed, but you also have to keep in mind that those people don't pay NYC income tax.
Very interesting to know. Many readers may not be aware that council tax in the UK is quite regressive and tops out at ~£4-5K / year on properties valued higher than ~£1M. So you can own a £5M GBP house and still pay only £5K / year for an annual effective property tax rate of just 0.1%.
This is one of the reasons buying a luxury house in the UK is comparatively quite cheap in terms of total cost of ownership compared to many states in the US where you have to pay much higher property tax rates, insurance, and so on.
So even if the council tax is doubled on a second home, you still might be paying only 0.2%. Compare that to an average property tax rate of ~1.8% in NYC (before pied-a-terre).
> New York passes Mamdani’s pied-a-terre tax. Here’s who pays and how much
(The submitted title at time of commenting is "New York Passes Tax on the Ultra-Wealthy)
It's a tax on second homes. If you thought it was a wealth tax from the editorialized title, like I did, that's not correct.
I think the revenue is probably overstated in the long run as people will find a way to offload the properties except for a select few who will consider a cost of doing business.
Also a great marketing move by Mamdami in terms of walking his talk.
Edit: You start somewhere and keep tightening the policy ratchet as loopholes or other policy leakage are detected. You've found a clever hack? Congrats! The law is updated accordingly.
The ones who will be hit are those who do not have the legal frameworks in place to erect such structures - Joe Homeowner who inherits grandmas city house, both worth slightly above the magic 7 figures.
> While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said.
Nobody affected by this is middle class. Nobody that will be affected by this in the next 20 years would be considered middle class by any rational measure.
Inflation is cumulative.
Unfortunately, doing that is very unpopular. Unpopular enough that we see states trying to get rid of property taxes, and those providing limits to increases, which basically guarantee misallocation and rising prices. But what is economically reasonable and what the voters like have very little to do with each other.
Is there a better way to think about this?
By comparison, I have an investment property that's worth about $285k, and I pay 1.97% on that in annual property tax, so esp. considering he's in Manhattan, that rate looks like a bargain.
??
The point is to raise revenue.
In some sense, City is calling the bluff of these deeply immoral rich fucks; the tax is incredibly affordable for them, and almost all of them will simply complain and pay it, and thus generate revenue for the City.
Its very roundabout as NYC can only make taxes for NYC, but the net aim is to increase the effective tax rate for the ultra-wealthy, using secondary property as a proxy for that.
Edit: AND WE (I) LIKE THIS because progressive taxation is the core play of fixing income/wealth inequality
It's people who use their money to generate more value and employ lots of people that are, consistently, leaving. That means that thousands of jobs for the lower middle class are leaving and going to somewhere with a more favorable business environment.
And that's not good (well, it's good for the other city).
Why's there an obsession with the $1m cutoff?
The dollar has been turned to dust. $1M is not that much money, especially in housing, especially in NYC.
Why tax $1m second homes and not second homes generally? Effectively, you're going to tax almost all second homes.
So why the arbitrary cutoff?
Chicago wanted to add a "millionaire's tax" on $1m+ home sales. At least in Chicago, that isn't effectively taxing the vast majority of housing (and total value) - so there's some distinction worth having.
> While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said.
Hardly everyone understands 'owning a house' as millionaire-level wealth. Which is why people cheer the policy on until they realize it is them who is being shaken down.
Owning a house where your equity in it is over a million is absolutely wealthy.
Actual title is "New York passes Mamdani’s pied-a-terre tax"
I suppose in Ken Griffin's case, even if his residence is owned by an LLC he controls, he is known to reside in it. But how effective is this legislation when the purpose of LLC ownership is expressly anonymity and accounting convenience?