3 ms·

> 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 g

> 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 5mo 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.
- apparent 5mo ago
  > increase the cost of hotel rooms and reduce the cost of owned-housing Reducing the cost of $5M+ homes will slightly help some wealthy people who live in NYC, and there will be a modest trickle-down effect into less expensive properties. But I thought the goal was to generate tax revenue from the taxes, which wouldn't happen to the extent they end up in the hands of NYC residents. EDIT: apparently it hits all homes over $1M, which means it will hit more homes but also won't generate revenue to the extent the homes end up being owned by New Yorkers.
  - ethbr1 5mo ago
    * Not to forget that most $5M NYC homes could also be a larger number of less valuable homes So this is also a developer / market incentive, if it actually changes demand.
  - jamiequint 5mo ago
    "I thought the goal was to generate tax revenue from the taxes, which wouldn't happen to the extent they end up in the hands of NYC residents." You're right, I'm saying I think it is a good tax for reasons secondary to revenue. We all know NYC is going to squander the money, at least they might make housing slightly cheaper for the average New Yorker in the process.
- 8note 5mo ago
  > 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. airbnb begs to differ? the conversion goes from owned/rented housing to airbnb conversions however, the slack is absorbed, and the airbnbs are gonna about match the actual need for how many ultra-rich people are actually in NY at a time
  - leephillips 5mo ago
    Not in NYC. Airbnb is effectively outlawed by regulation there.
  - queenkjuul 5mo ago
    Good news, Airbnb can't operate in NYC. Here in Chicago, they're banned from certain wards
pydry 5mo ago
Land value taxes don't discourage desirable behavior when raised. Property taxes might discourage construction but if land values are high enough then property taxes approximate land value taxes. Raising income tax on the other hand discourages working even when it is set very low. This is one which ought to be lowered if anything. tl;dr it doesnt work the same way for every tax.
- cucumber3732842 5mo ago
  >Land value taxes don't discourage desirable behavior Are you serious? LVTs expressly incentivizes landlords to kick out "grandfathered in" developments and uses in favor of redevelopment and sale for that purpose. But those grandfathered in developments and uses are exactly what made the place valuable in the first place and you need some amount of them to remain.
  - zozbot234 5mo ago
    Redevelopment often mitigates housing scarcity in general, including for existing residents. They may have to move to a slightly smaller apartment within a generally much improved area, which usually leaves them better off. This is especially true for LVT, which amounts to a decrease in property tax for the improvements to land.
    - senordevnyc 5mo ago
      They may have to move to a slightly smaller apartment within a generally much improved area, which usually leaves them better off. Good luck selling this to voters.
  - pydry 5mo ago
    I mean, I guess if you're a NIMBY who wants to inhibit the construction of more affordable housing that's a bad thing.
    - cucumber3732842 5mo ago
MSFT_Edging 5mo ago
I'm not sure why if you or I were to expatriate and let go of our US citizenship, we'd still be on the hook for taxes for (iirc) 15 years, but the ultra wealthy can get away with tax havens while remaining citizenship and reaping the benefits of protection by X state. What prevents the tax following the offshoring attempts? Is it simply that the IRS doesn't have the manpower? or is there a legal loophole for avoiding paying your share that only works for the ultra wealthy?
- throwaway2037 5mo ago
  > we'd still be on the hook for taxes for (iirc) 15 years This is defintely not true. I did some light Google searches and I cannot anything. There is an exit tax, but only applies if your net worth exceeds 2million USD.
  - MSFT_Edging 5mo ago
    Turns out it's an old law, if you expatriated between 2004 and 2008, and spent 30+ days in the US within 10 years of expatriation. > Further, expatriated individuals will be subject to U.S. tax on their worldwide income for any of the 10 years following expatriation in which they are present in the U.S. for more than 30 days, or 60 days in the case of individuals working in the U.S. for an unrelated employer.
    - beagle3 5mo ago
      IIRC, this law was a result of Ted Arrison giving up his US citizenship very shortly before death, saving a few billions for his heirs. The law was hastily passed to discourage copycats while working on the exit tax law without haste.
  - queenkjuul 5mo ago
    I thought US citizens are taxed on income (but not capital gains) even when outside the US? I had friends who had to file US income tax returns while living overseas
blactuary 5mo ago
The goal of this isn't simply to raise revenue, it's also to discourage parking money in empty properties when it's one of the most expensive cities to live in and doesn't have enough housing
- gruez 5mo ago
  >it's also to discourage parking money in empty properties when it's one of the most expensive cities to live in and doesn't have enough housing Is that really needed when the homeowner vacancy rate is 1.3% in the New York-Newark-Jersey City MSA? https://www.census.gov/housing/hvs/data/rates.html https://www.census.gov/housing/hvs/data/rates.html
  - queenkjuul 5mo ago
    Lots of the highest-value units are famously empty. The "pencil skyscrapers" in particular were called out in the media.
  - lux-lux-lux 5mo ago
    The actual vacancy rate is many times that, as properties are kept off market for a variety of reasons (one of which this tax directly addresses)
    - gruez 5mo ago
      Why wouldn't it be captured? This is from the census, so it presumably captures units that aren't on the market.
- dirtikiti 5mo ago
  No, the goal is to overhaul the property tax system. This is going to raise property taxes for everyone. The ultra wealthy can just pack up and move. It doesn't affect them in the slightest. But in two years when the property tax overhaul is complete, the middle class will foot the bill. As per usual.
  - 5mo ago
WalterBright 5mo ago
> If you make the tax too high it starts discouraging the behavior you're taxing, which can paradoxically reduce overall tax revenue. The Law of Supply and Demand is not a paradox.
- aerhardt 5mo ago
  You could maybe somehow relate it to supply and demand dynamics, but the idea that that higher taxes can start reducing receipts after a certain point is widely credited to Laffer (although apparently there are signals of others saying similar things throughout the history of economics). The Laffer model displays an inverted U curve.
  - WalterBright 5mo ago
    The Laffer curve is a result of the Law of Supply and Demand. It's no different than increasing the price of X causes the sales of X to go down.
    - aerhardt 5mo ago
      Classical supply and demand models do not show that increasing the price of x causes quantities to first go up then down after a certain inflection point… You could probably make the relationship through utility rather or a proxy model (you can model anything with enough imagination in economics) but to call it “the result of” as if it is immediately related is not accurate. It is apparent at first sight when you compare the curves…
      - tekne 5mo ago
        Wait... yes they do. If I raise the price of my product, less people will buy it but I'll make more profit per-unit -- so the amount of money I make is an inverted U with price on the x axis and money on the y axis, and I should set the price at the inflection point.
sandeepkd 5mo ago
I think its a good idea in general to tax the second property for any country where housing is a struggle. Its usage based taxation so fair in some sense. Housing is somewhat of a critical asset for a normal safe life. Commercialization of housing properties creates a circular effect on the pricing, thereby increasing the cost of almost everything else.
- dnautics 5mo ago
  [dead]
selfhoster1312 5mo ago
> France discovered this the hard way when they implemented their first wealth tax Citation needed (for a solid study, not right-wing propaganda from CNews/Libération). From a quick cursory look, it appears the French government had no problem raising taxes when the taxes were higher, and that the previous governments who reduced taxes for the rich setting blame on public debt have in fact increased public debt over and over. (disclaimer: i'm not an economist)
- aerhardt 5mo ago
  France's government expenditure is 57% of its GDP according to th OECD. It's probably an all-time record in the annals of global economic history in peacetime. It's more than the late Soviet Union spent around 1985-1990 according to the IMF / World Bank. The 2025 deficit ran at around ~150 billion euros. The Zucman wealth tax would raise 25 billion in the most optimistic projected scenario (so, one sixth of the deficit at most). This is the very best case as projected by its proponents - there's a decent chance receipts would be significantly lower than that. You're absolutely right that right wing parties did not, and almost certainly will not, solve any of these issues. Neither will a wealth tax. In my opinion, this is only solved in a bang.
  - steveBK123 5mo ago
    I agree a lot of these things end in a bang at some point. Western rich world boomers have gotten a great deal - unusually stable & high growth economies, relative housing abundance, and peace during their peak working life during which all sorts of retirement related benefits were introduced. Unfortunately many of those benefits only work in a higher population growth, higher economic growth, lower retired lifespans world that no longer exists.

jamiequint 5mo 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.

apparent 5mo ago
> increase the cost of hotel rooms and reduce the cost of owned-housing Reducing the cost of $5M+ homes will slightly help some wealthy people who live in NYC, and there will be a modest trickle-down effect into less expensive properties. But I thought the goal was to generate tax revenue from the taxes, which wouldn't happen to the extent they end up in the hands of NYC residents. EDIT: apparently it hits all homes over $1M, which means it will hit more homes but also won't generate revenue to the extent the homes end up being owned by New Yorkers.
- ethbr1 5mo ago
  * Not to forget that most $5M NYC homes could also be a larger number of less valuable homes So this is also a developer / market incentive, if it actually changes demand.
- jamiequint 5mo ago
  "I thought the goal was to generate tax revenue from the taxes, which wouldn't happen to the extent they end up in the hands of NYC residents." You're right, I'm saying I think it is a good tax for reasons secondary to revenue. We all know NYC is going to squander the money, at least they might make housing slightly cheaper for the average New Yorker in the process.
8note 5mo ago
> 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. airbnb begs to differ? the conversion goes from owned/rented housing to airbnb conversions however, the slack is absorbed, and the airbnbs are gonna about match the actual need for how many ultra-rich people are actually in NY at a time
- leephillips 5mo ago
  Not in NYC. Airbnb is effectively outlawed by regulation there.
- queenkjuul 5mo ago
  Good news, Airbnb can't operate in NYC. Here in Chicago, they're banned from certain wards

pydry 5mo ago

Land value taxes don't discourage desirable behavior when raised. Property taxes might discourage construction but if land values are high enough then property taxes approximate land value taxes. Raising income tax on the other hand discourages working even when it is set very low. This is one which ought to be lowered if anything. tl;dr it doesnt work the same way for every tax.

cucumber3732842 5mo ago
>Land value taxes don't discourage desirable behavior Are you serious? LVTs expressly incentivizes landlords to kick out "grandfathered in" developments and uses in favor of redevelopment and sale for that purpose. But those grandfathered in developments and uses are exactly what made the place valuable in the first place and you need some amount of them to remain.
- zozbot234 5mo ago
  Redevelopment often mitigates housing scarcity in general, including for existing residents. They may have to move to a slightly smaller apartment within a generally much improved area, which usually leaves them better off. This is especially true for LVT, which amounts to a decrease in property tax for the improvements to land.
  - senordevnyc 5mo ago
    They may have to move to a slightly smaller apartment within a generally much improved area, which usually leaves them better off. Good luck selling this to voters.
- pydry 5mo ago
  I mean, I guess if you're a NIMBY who wants to inhibit the construction of more affordable housing that's a bad thing.
  - cucumber3732842 5mo ago

MSFT_Edging 5mo ago

I'm not sure why if you or I were to expatriate and let go of our US citizenship, we'd still be on the hook for taxes for (iirc) 15 years, but the ultra wealthy can get away with tax havens while remaining citizenship and reaping the benefits of protection by X state. What prevents the tax following the offshoring attempts? Is it simply that the IRS doesn't have the manpower? or is there a legal loophole for avoiding paying your share that only works for the ultra wealthy?

throwaway2037 5mo ago
> we'd still be on the hook for taxes for (iirc) 15 years This is defintely not true. I did some light Google searches and I cannot anything. There is an exit tax, but only applies if your net worth exceeds 2million USD.
- MSFT_Edging 5mo ago
  Turns out it's an old law, if you expatriated between 2004 and 2008, and spent 30+ days in the US within 10 years of expatriation. > Further, expatriated individuals will be subject to U.S. tax on their worldwide income for any of the 10 years following expatriation in which they are present in the U.S. for more than 30 days, or 60 days in the case of individuals working in the U.S. for an unrelated employer.
  - beagle3 5mo ago
    IIRC, this law was a result of Ted Arrison giving up his US citizenship very shortly before death, saving a few billions for his heirs. The law was hastily passed to discourage copycats while working on the exit tax law without haste.
- queenkjuul 5mo ago
  I thought US citizens are taxed on income (but not capital gains) even when outside the US? I had friends who had to file US income tax returns while living overseas

blactuary 5mo ago

The goal of this isn't simply to raise revenue, it's also to discourage parking money in empty properties when it's one of the most expensive cities to live in and doesn't have enough housing

gruez 5mo ago
>it's also to discourage parking money in empty properties when it's one of the most expensive cities to live in and doesn't have enough housing Is that really needed when the homeowner vacancy rate is 1.3% in the New York-Newark-Jersey City MSA? https://www.census.gov/housing/hvs/data/rates.html https://www.census.gov/housing/hvs/data/rates.html
- queenkjuul 5mo ago
  Lots of the highest-value units are famously empty. The "pencil skyscrapers" in particular were called out in the media.
- lux-lux-lux 5mo ago
  The actual vacancy rate is many times that, as properties are kept off market for a variety of reasons (one of which this tax directly addresses)
  - gruez 5mo ago
    Why wouldn't it be captured? This is from the census, so it presumably captures units that aren't on the market.
dirtikiti 5mo ago
No, the goal is to overhaul the property tax system. This is going to raise property taxes for everyone. The ultra wealthy can just pack up and move. It doesn't affect them in the slightest. But in two years when the property tax overhaul is complete, the middle class will foot the bill. As per usual.
- 5mo ago

WalterBright 5mo ago

> If you make the tax too high it starts discouraging the behavior you're taxing, which can paradoxically reduce overall tax revenue. The Law of Supply and Demand is not a paradox.

aerhardt 5mo ago
You could maybe somehow relate it to supply and demand dynamics, but the idea that that higher taxes can start reducing receipts after a certain point is widely credited to Laffer (although apparently there are signals of others saying similar things throughout the history of economics). The Laffer model displays an inverted U curve.
- WalterBright 5mo ago
  The Laffer curve is a result of the Law of Supply and Demand. It's no different than increasing the price of X causes the sales of X to go down.
  - aerhardt 5mo ago
    Classical supply and demand models do not show that increasing the price of x causes quantities to first go up then down after a certain inflection point… You could probably make the relationship through utility rather or a proxy model (you can model anything with enough imagination in economics) but to call it “the result of” as if it is immediately related is not accurate. It is apparent at first sight when you compare the curves…
    - tekne 5mo ago
      Wait... yes they do. If I raise the price of my product, less people will buy it but I'll make more profit per-unit -- so the amount of money I make is an inverted U with price on the x axis and money on the y axis, and I should set the price at the inflection point.

sandeepkd 5mo ago

I think its a good idea in general to tax the second property for any country where housing is a struggle. Its usage based taxation so fair in some sense. Housing is somewhat of a critical asset for a normal safe life. Commercialization of housing properties creates a circular effect on the pricing, thereby increasing the cost of almost everything else.

dnautics 5mo ago
[dead]

selfhoster1312 5mo ago

> France discovered this the hard way when they implemented their first wealth tax Citation needed (for a solid study, not right-wing propaganda from CNews/Libération). From a quick cursory look, it appears the French government had no problem raising taxes when the taxes were higher, and that the previous governments who reduced taxes for the rich setting blame on public debt have in fact increased public debt over and over. (disclaimer: i'm not an economist)

aerhardt 5mo ago
France's government expenditure is 57% of its GDP according to th OECD. It's probably an all-time record in the annals of global economic history in peacetime. It's more than the late Soviet Union spent around 1985-1990 according to the IMF / World Bank. The 2025 deficit ran at around ~150 billion euros. The Zucman wealth tax would raise 25 billion in the most optimistic projected scenario (so, one sixth of the deficit at most). This is the very best case as projected by its proponents - there's a decent chance receipts would be significantly lower than that. You're absolutely right that right wing parties did not, and almost certainly will not, solve any of these issues. Neither will a wealth tax. In my opinion, this is only solved in a bang.
- steveBK123 5mo ago
  I agree a lot of these things end in a bang at some point. Western rich world boomers have gotten a great deal - unusually stable & high growth economies, relative housing abundance, and peace during their peak working life during which all sorts of retirement related benefits were introduced. Unfortunately many of those benefits only work in a higher population growth, higher economic growth, lower retired lifespans world that no longer exists.