March 20, 2019

New York to adopt ‘Vancouver tax’ to pay for subway

Only they call it the ‘pied-à-terre  tax.  

From the New York Times:

A plan to tax the rich on multimillion-dollar second homes in New York City has rapidly moved closer to reality, as legislative leaders in Albany and Gov. Andrew M. Cuomo have all signed off on the idea as a funding stream for the city’s beleaguered subway system. …

Under the Senate’s bill, a pied-à-terre tax would institute a yearly tax on homes worth $5 million or more, and would apply to homes that do not serve as the buyer’s primary residence.


Same arguments too:

Kathryn Wylde, president of the Partnership for New York City, said the tax would not be well received within the business community. She suggested that such a tax … could further push the wealthy to reconsider living here. …

But Moses Gates, a vice president at the Regional Plan Association, disputed the notion that New Yorkers would leave the city. The association believes that most wealthy pied-à-terre owners would pay the tax. If they chose to sell, then the property has the chance of being purchased by a full-time city resident, who would then be subject to income and sales tax.

Actually Governor Cuomo’s first choice was a marijuana tax:

Mr. Cuomo said on Monday that with other potential sources of revenue in question — the possible legalization of marijuana, for example, has been slowed by political and practical concerns — other sources are now needed.


And here’s what provoked it all:

The purchase of a $238 million apartment on Central Park South by Kenneth C. Griffin, a hedge fund billionaire with an estimated net worth of $10 billion, may have helped make the legislation more feasible, proponents said.

(It was) a visceral reminder that when wealthy buyers like Mr. Griffin purchase expensive apartments as second homes or investments, New York City and the state get less financial benefit than if the home were owned as a primary residence. If the buyers live out of state, they are not subject to state or city income taxes, and do not pay New York sales tax while outside the state.

Thanks to Dean Alexander.

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  1. What is perhaps even more interesting about NYC is that they have other taxation powers (notably the ability to levy sales and income taxes). Part of our problem in Metro Vancouver is that cities are primarily limited to property tax which on its own is a pretty limited and crude form of taxation, complicated all the more by the independence of each city to set their rates.