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.
Aurornis 6 minutes ago [-]
> 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.
The tax is reasonably small enough that I wouldn't expect a lot of wealthy people from divesting from their properties, but it's probably going to make them think twice about buying new properties.
That second-order effect is the important balancing act for any locality-based wealth tax. If you make the tax too high it starts discouraging the behavior you're taxing, which can paradoxically reduce overall tax revenue.
France discovered this the hard way when they implemented their first wealth tax: Many ultra-wealthy people moved their capital out of France to avoid the tax, which was suspected to have had an overall decreasing effect on tax revenue from that demographic. They replaced the wealth tax with a property tax, which probably played a large role in inspiring this pied-à-terre policy.
jamiequint 1 minutes ago [-]
"If you make the tax too high it starts discouraging the behavior you're taxing, which can paradoxically reduce overall tax revenue."
I am generally against more taxes, but the structure of this one is quite good in terms of the incentives. If wealthy people who only live in the city part-time stay in hotels instead of buying second homes, the net effect should be to increase the cost of hotel rooms and reduce the cost of owned-housing. NYC charges nearly 10% tax on hotel stays, so recoups some of the cost there. Having property in your city mostly being occupied by people who live their full time, particularly when property is already very expensive, seems like a good thing overall.
arw0n 1 minutes ago [-]
The fairest and easiest to realize wealth tax is on inheritance. It is great to want to give your kids a headstart in the world, it is terrible for them and the people around them to set them up for life.
elevation 21 minutes ago [-]
How will consumers not bear the brunt of property taxes?
newaccountman2 2 minutes ago [-]
You sound like you feel the need to criticize this tax because you want to reflexively attack any idea whereby the rich have to pay their fair share of anything, and thus have strung together a bunch of tokens that seem relevant to you, but actually don't constitute a logical response at all to the issue being discussed.
skybrian 15 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.
vardalab 17 minutes ago [-]
Because it's a tax I think on second properties.
Maxatar 11 minutes ago [-]
Yes and the second property must be mostly vacant, ie. not rented out as the primary residence of some other occupant.
malfist 14 minutes ago [-]
Who is the "consumer" in this case?
hiddencost 11 minutes ago [-]
Separate commercial and residential rates? The first $X dollars are not taxed?
We can and have done this.
thatmf 15 minutes ago [-]
...of property taxes on second homes valued > $1M?
blitzar 19 minutes ago [-]
The elites always promise us trickle down economics, maybe this time it will happen. I wont hold my breath though.
zthrowaway 4 minutes ago [-]
Trickle down economics is a political label to criticize Reagan era policies, it’s not an actual thing.
cakealert 14 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?
EliRivers 4 minutes ago [-]
To what degree do they really invest it? A lot of rich people just buy shares (other than at an IPO) and just move money around each other's pockets rather than investing in something wealth creating, or just swap already-existing overpriced properties around each other.
swiftcoder 3 minutes ago [-]
> what do you think investment does?
Accrue more money pretty much indefinitely?
skybrian 9 minutes ago [-]
Currently it seems to be funding frenzied investment in data centers.
6 minutes ago [-]
10 minutes ago [-]
somewhereoutth 2 minutes ago [-]
Push up asset prices mainly - so locking poorer people out of (e.g.) home ownership.
Money is not a tangible thing, you can't eat or drink it. Instead it is a signalling protocol for resource allocation. If the very wealthy have many empty homes, when many people are homeless or inadequately housed, then that signalling protocol has failed (from a social justice point of view), and 'trickle down' is not working.
MyHonestOpinon 12 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)
Aurornis 14 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.
VikingCoder 14 seconds ago [-]
Dumb question - what about corporations (or charities?) that own homes? Are they automatically "second homes", since a corporation has no primary residence?
Are we going to see things classified as not-residences, but then people can vacation there anyway, much like Mar-a-Lago supposedly cannot be a residence, but apparently President Trump lives there and votes there, anyway?
lokar 26 seconds ago [-]
They would probably be better off fixing how they asses the value of condos. Which, AIUI (and one have a good explanation?) is based on imputed rent, capped at the rent of the closest example they can find. So no condos get taxed more then the most expensive rental (I could have this wrong).
cjs_ac 31 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 12 minutes 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% of the actual value 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.
mil22 8 minutes ago [-]
> 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.
Bear in mind, it's 1.3% on top of the existing ~1.8% average NYC property tax rate, so it may still be comparatively expensive relative to TX property taxes.
usefulcat 5 minutes ago [-]
Good point, I missed that.
mil22 17 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).
woodpanel 6 minutes ago [-]
Yeah thanks for nothing for comparing a single kind of tax to your country, whilst your country/states don't have the excessive overall tax regimes as are present in Europe.
Nothing, absolutely nothing do we have to adjust to America, neither up or downwards.
That being said, and as much as I think Mamdani is an Ideologue, taxing second, unoccupied homes sounds absolutely reasonable (at least if they aren't rented out). Expect all kinds of shenanigans to circumvent this, but still.
giobox 10 minutes ago [-]
> In the UK, the equivalent tax on housing is council tax
Council tax is difficult to compare to a percentage based property tax - the band based system means people in super valuable homes pay virtually nothing, at least relative to the value of the property, and each of the ~8 bands pays a fixed fee - once in the max band the tax stays the same no matter how valuable the home.
This is especially acute in places like Scotland, where the top band kicks in at anything over 212,000 and hasn't been adjusted since 1991... Essentially any new build starter home in many places will automatically be in the top band and taxed the same as some dude who bought a castle for millions.
Personally I've never thought of council tax as a property tax, even if the bands superficially are linked to it- the link to underlying property values is so broken now.
My first rented flat outta college was taxed at the highest band, and I sure wasn't rich then. It's widely argued to be a very regressive form of taxation - its opponents indeed argue it should be replaced with an actual property tax.
strongpigeon 11 minutes 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.
altruios 28 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 19 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 18 minutes ago [-]
[dead]
VikingCoder 3 minutes ago [-]
> 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.
I heard about a system for this that struck me as brilliant. Make someone declare the value of their property. Then the government has the choice of taxing them at the scheduled rate, or buying the property from them, for that cost.
TADA.
And if someone wants to artificially inflate the value of their home, to reflect the difficulty of moving out, finding a new secondary residence, etc, then that's their business. No worries. We'll tax that additional value, no problem.
I think this system goes back thousands of years. Why not use it?
nemomarx 36 minutes ago [-]
On unoccupied or secondary residences specifically, not on wealth overall. This is more of a housing policy?
strongpigeon 3 minutes ago [-]
It's a luxury tax that only affects people wealthy enough to have a second home in NYC. These people, by virtue of not living there, aren't paying income tax and thus don't contribute as much as someone who is.
toomuchtodo 33 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 31 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 24 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 24 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.
usefulcat 32 seconds ago [-]
Wouldn't that mean that they would then also pay NY income tax?
toomuchtodo 29 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 24 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.
ndiddy 11 minutes ago [-]
Isn't that a good thing? It would encourage Joe Homeowner to sell the house to someone who could use it as a primary residence rather than leaving it empty and speculating on the real estate value.
paulddraper 28 minutes ago [-]
-
sunshowers 24 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 26 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 24 minutes ago [-]
What they also have described is a dacha.
35 minutes ago [-]
DocTomoe 31 minutes ago [-]
Can't wait to see the middle-class families now moving into Billionaire's Row.
slackfan 23 minutes ago [-]
Considering inflation - the middle class will be the ones being taxed by this in a few years.
cactacea 16 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.
dec0dedab0de 8 minutes ago [-]
That really depends on how you define middle class. I can easily see how someone with a net worth of 100m being considered middle class compared to billionaires.
cactacea 6 minutes ago [-]
Thanks, I needed a laugh. Only on HN...
slackfan 14 minutes ago [-]
Just like the federal income tax was only targeted at the top 5% of the population when implemented.
Inflation is cumulative.
cactacea 7 minutes ago [-]
So the numbers will need adjusted for inflation. Eventually. Like any other tax. If you're making an argument it is entirely unclear what your position is.
apercu 5 minutes ago [-]
You didn’t read the article. This tax is for 2 years then as assessments are fixed it changes calculation.
Neywiny 36 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.
freediddy 11 minutes ago [-]
What's to stop them from selling to a holding company so that it's not literally his own second house?
11101010010001 5 minutes ago [-]
>“All my clients already feel like they pay too much,” Pollack said. “These numbers are significant. I don’t care how wealthy you are.”
If that argument holds up in court, we are all screwed.
GenerWork 21 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 17 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.
GenerWork 8 minutes ago [-]
The rich don't really care about insurance rates down here because they can a) pay them, b) tend to gravitate towards newer buildings that have better protection and c) have the money to retrofit older buildings with the necessary protection to lower insurance rates. Miami has the strictest hurricane codes in the country, so while there's a possibility that they may get gutted, it's probably going to be less than people expect.
I live in FL so if you have questions about insurance feel free to ask.
throw4847285 4 minutes ago [-]
But the people who can easily afford the insurance in Florida. can afford the new tax as well. And as an added bonus, they don't have to live in Florida!
But in all seriousness, they all already own homes in Florida.
hibikir 18 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.
everdrive 26 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 12 minutes 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% (about $5,800) on that in annual property tax, so esp. considering he's in Manhattan, that rate looks like a bargain.
newaccountman2 13 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.
everdrive 4 minutes ago [-]
>??
>The point is to raise revenue.
Yep, I'm sorry -- I was very confused here, sorry for the not-very-useful initial post.
dml2135 4 minutes ago [-]
This is really more about raising revenue for the city than increasing the housing supply.
minimaltom 16 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 18 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 16 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.
9 minutes ago [-]
Aurornis 15 minutes ago [-]
It's for generating more tax revenue.
thrownaway561 2 minutes ago [-]
If you want to tax the ultra-wealthy, prevent Securities-Based Loan (SBL) or a Securities-Based Line of Credit (SBLOC). Honestly this is how EVERY SINGLE wealthy person gets around paying taxes.
Stocks should be bought and sold, period the end. That is how the market is supported to work.
If you closed this simple loophole, you would see a massive amount of tax revenue.
alexk307 15 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.
onlyrealcuzzo 35 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 23 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 32 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 34 minutes ago [-]
It's symbolic for it's demographic voters
dominotw 31 minutes ago [-]
what does it symbolize?
nemomarx 30 minutes ago [-]
"going after the rich", yeah? millionaire is still generally understood as an economic class by voters.
jimbob45 11 minutes ago [-]
I agree and I’d prefer to see apartments excluded from this. Apartments are what I want second-homeowners to own rather than hoarding valuable land.
DocTomoe 27 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.
newaccountman2 10 minutes ago [-]
Almost nobody casually owns a second home in New York worth $1m or more. What a dumb comment (like pretty much every comment criticizing this tax--just stupid and immoral).
dbalatero 19 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 19 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.
newaccountman2 7 minutes ago [-]
> In what world is 1 million US not wealthy?
In the US itself (?) lol
I disagree with the comment and entire existence of the person to whom you are replying, but they aren't wrong about $1m actually not being as big or watershed a number as it used to be.
A basic middle-class house in just about any part of the country that's worth living in is going to be $1m, plus or minus 200k.
josefritzishere 9 minutes ago [-]
The wealthy are very easy to tax. They possess a lot of assets. Really, all of them should be taxed progressively, like shooting fish in a barrel.
gowld 22 minutes ago [-]
Flagged misleading editorialized title.
Actual title is "New York passes Mamdani’s pied-a-terre tax"
picafrost 22 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 35 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.
hervature 9 minutes ago [-]
The Fed (with a capital F) refers to the Federal Reserve which explicitly does not control tax policy.
nxm 27 minutes ago [-]
Issue is not revenue, it's spending.
Florida has 2x the population, yet half the spending on NY.
toomuchtodo 53 minutes ago [-]
“It always seems impossible until it's done."
wetpaws 20 minutes ago [-]
Surpriosingly sane idea suddenly
richwater 16 minutes ago [-]
Curtailing spending is impossible. Just keep raising taxes!
ExoticPearTree 24 minutes ago [-]
New York desperately wants all the people with money to leave the state.
LauraMedia 19 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?
mil22 7 minutes ago [-]
Person with money and former NYC'er here. I didn't stay. I moved to a state with less taxes to pay. I haven't looked back.
busterarm 13 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).
It's easy for people in tech hub cities to think that's never going to change but history shows boom towns going bust repeatedly. Sometimes they come back (Seattle). Sometimes they don't (the whole Rust Belt + Upstate NY).
And once the talent pool from a few large companies moves to another metro, whole industries relocate their offices to chase it.
strongpigeon 14 minutes ago [-]
This specifically targets people who don't live in New York though (and thus don't pay income tax).
tartoran 21 minutes ago [-]
If I tax you one cent would you budge? This is what this tax amounts to the ultra wealthy.
ur-whale 9 minutes ago [-]
> This is what this tax amounts to the ultra wealthy.
Because you would know what the ultra wealthy think ?
boringg 6 minutes ago [-]
Bots can't think.
tintor 22 minutes ago [-]
Real Estate can't move out of New York. Someone else would have to buy it.
robbiewxyz 17 minutes ago [-]
Wealth follows an extreme power law. This tax is pennies to those who will pay it.
boringg 7 minutes ago [-]
I think there is a real argument here that everyone will love to yell at you. Same thing happened with California. Its always a balance -- if the tax is too much people will leave, if they get the number just right in that its a nuisance and not material they will stay.
Though when you start engaging with the bots they can't handle the nuance.
lorecore 17 minutes ago [-]
Sounds like a great way to lower housing costs.
Rendered at 16:37:07 GMT+0000 (Coordinated Universal Time) with Vercel.
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.
The tax is reasonably small enough that I wouldn't expect a lot of wealthy people from divesting from their properties, but it's probably going to make them think twice about buying new properties.
That second-order effect is the important balancing act for any locality-based wealth tax. If you make the tax too high it starts discouraging the behavior you're taxing, which can paradoxically reduce overall tax revenue.
France discovered this the hard way when they implemented their first wealth tax: Many ultra-wealthy people moved their capital out of France to avoid the tax, which was suspected to have had an overall decreasing effect on tax revenue from that demographic. They replaced the wealth tax with a property tax, which probably played a large role in inspiring this pied-à-terre policy.
I am generally against more taxes, but the structure of this one is quite good in terms of the incentives. If wealthy people who only live in the city part-time stay in hotels instead of buying second homes, the net effect should be to increase the cost of hotel rooms and reduce the cost of owned-housing. NYC charges nearly 10% tax on hotel stays, so recoups some of the cost there. Having property in your city mostly being occupied by people who live their full time, particularly when property is already very expensive, seems like a good thing overall.
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.
We can and have done this.
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?
Accrue more money pretty much indefinitely?
Money is not a tangible thing, you can't eat or drink it. Instead it is a signalling protocol for resource allocation. If the very wealthy have many empty homes, when many people are homeless or inadequately housed, then that signalling protocol has failed (from a social justice point of view), and 'trickle down' is not working.
> 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.
Are we going to see things classified as not-residences, but then people can vacation there anyway, much like Mar-a-Lago supposedly cannot be a residence, but apparently President Trump lives there and votes there, anyway?
> 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% of the actual value 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.
Bear in mind, it's 1.3% on top of the existing ~1.8% average NYC property tax rate, so it may still be comparatively expensive relative to TX property taxes.
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).
Nothing, absolutely nothing do we have to adjust to America, neither up or downwards.
That being said, and as much as I think Mamdani is an Ideologue, taxing second, unoccupied homes sounds absolutely reasonable (at least if they aren't rented out). Expect all kinds of shenanigans to circumvent this, but still.
Council tax is difficult to compare to a percentage based property tax - the band based system means people in super valuable homes pay virtually nothing, at least relative to the value of the property, and each of the ~8 bands pays a fixed fee - once in the max band the tax stays the same no matter how valuable the home.
This is especially acute in places like Scotland, where the top band kicks in at anything over 212,000 and hasn't been adjusted since 1991... Essentially any new build starter home in many places will automatically be in the top band and taxed the same as some dude who bought a castle for millions.
Personally I've never thought of council tax as a property tax, even if the bands superficially are linked to it- the link to underlying property values is so broken now.
My first rented flat outta college was taxed at the highest band, and I sure wasn't rich then. It's widely argued to be a very regressive form of taxation - its opponents indeed argue it should be replaced with an actual property tax.
Agreed, but you also have to keep in mind that those people don't pay NYC income tax.
I heard about a system for this that struck me as brilliant. Make someone declare the value of their property. Then the government has the choice of taxing them at the scheduled rate, or buying the property from them, for that cost.
TADA.
And if someone wants to artificially inflate the value of their home, to reflect the difficulty of moving out, finding a new secondary residence, etc, then that's their business. No worries. We'll tax that additional value, no problem.
I think this system goes back thousands of years. Why not use it?
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.
If that argument holds up in court, we are all screwed.
I live in FL so if you have questions about insurance feel free to ask.
But in all seriousness, they all already own homes in Florida.
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% (about $5,800) 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.
Yep, I'm sorry -- I was very confused here, sorry for the not-very-useful initial post.
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
Stocks should be bought and sold, period the end. That is how the market is supported to work.
If you closed this simple loophole, you would see a massive amount of tax revenue.
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.
In the US itself (?) lol
I disagree with the comment and entire existence of the person to whom you are replying, but they aren't wrong about $1m actually not being as big or watershed a number as it used to be.
A basic middle-class house in just about any part of the country that's worth living in is going to be $1m, plus or minus 200k.
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?
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).
It's easy for people in tech hub cities to think that's never going to change but history shows boom towns going bust repeatedly. Sometimes they come back (Seattle). Sometimes they don't (the whole Rust Belt + Upstate NY).
And once the talent pool from a few large companies moves to another metro, whole industries relocate their offices to chase it.
Because you would know what the ultra wealthy think ?
Though when you start engaging with the bots they can't handle the nuance.