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New York passes pied-a-terre tax

cnbc.com

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Re: New York passes pied-a-terre tax

#231

Post by jmye »

newaccountman2 wrote: post #89
sunshowers wrote: post #43

Earlier quoted context omitted.

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.

> 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.

> 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.

Help me understand your comment. Do you think the country is only made up of like, 3 big coastal cities? Do you think the only houses worth living in are several thousand square feet in only the coolest parts of town? I want to understand what you think the country actually looks like, here.

Re: New York passes pied-a-terre tax

#232

Post by mil22 »

waisbrot wrote: post #225
busterarm wrote: post #65

Earlier quoted context omitted.

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…

Are Seattle, the Rust Belt, and upstate NY examples of higher taxes driving wealthy job-creators out? I think they were the opposite: the market moved and then the wealthy people left to follow it. NYC has always been extremely expensive, and people have largely decided that it's worth the price. I don't see how a little wobble in either direction changes that. Everyone could have already moved to Miami, or Salt Lake…

A "little wobble" may not change it more than a "little", but enough "little wobbles" over time become a "big wobble" that may change it in a "big" way. The right question to ask is: what's the elasticity? So far the elasticity of domestic migration to tax increases has been smaller than many expected due to network effects and inertia, but nevertheless if you look at the population growth rates of high tax states like CA and NY and compare it to low tax states like FL and TX, you will definitely see a pattern. Rational people think on the margin. Perhaps only a few people will move if you increase tax rates by 0.1%, but more on average will decide to move than if you hadn't raised taxes - the question really is, how many?

Re: New York passes pied-a-terre tax

#233

Post by socalgal2 »

arw0n wrote: post #110
burlesona wrote: post #22

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 ou…

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.

Just curious what you think the correct solution is? You're rich, you have a kid, you die when the kid is 2yrs old. So they get nothing? 12? 22? 32?. Is there some "correct" number? If you're raising them in some $100m home do they get booted out and put in a tenement?

On the other hand, most people die closer to 75-80 and their kids are 50+. Leaving inheritance to them isn't really spoiling them as they are alread adults with established lives.

Re: New York passes pied-a-terre tax

#234

Post by nonethewiser »

eli wrote: post #229
nonethewiser wrote: post #196

Earlier quoted context omitted.

>t's a luxury tax that only affects people wealthy enough to have a second home in NYC. Not exclusively though, right? Since they are revising the valuation system to not artificially depress valuations, isnt this a global tax increase? No rate changes or extra tax for someone with a primary residence but the base is increasing, right? >While the tax seems large, experts say the city’s antiquated assessment and valua…

Those are two different things: the new tax, and fixing the broken appraisal process.

Its part of the same law. Regardless, the appraisal changes are global, right? That is, it would apply to a $200M 17th home and a $750k residence alike, right?

Re: New York passes pied-a-terre tax

#235

Post by joquarky »

jandrewrogers wrote: post #185
VikingCoder wrote: post #106

> 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 bu…

It isn't done because it has overt pathological economic characteristics. This forces the owner to write a long-term call option on a non-commodity asset without even collecting the offsetting risk premium expected for such a call option. This puts the asset permanently underwater by construction, which would crater asset values. The maths don't math. You can't just pick one side of a balanced equation and pretend th…

When people start using financial terminology outside the natural context, it's either gish gallop or justifying antisocial behavior.

Re: New York passes pied-a-terre tax

#236

Post by Manuel_D »

socalgal2 wrote: post #233
arw0n wrote: post #110

Earlier quoted context omitted.

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.

Just curious what you think the correct solution is? You're rich, you have a kid, you die when the kid is 2yrs old. So they get nothing? 12? 22? 32?. Is there some "correct" number? If you're raising them in some $100m home do they get booted out and put in a tenement? On the other hand, most people die closer to 75-80 and their kids are 50+. Leaving inheritance to them isn't really spoiling them as they are alread a…

In the US, the inheritance taxes don't kick in until $15M ($30M for married couples). Even at 2 years old, a child can inherit more money than most people will make in their lifetime before a dime is paid to the IRS.

Re: New York passes pied-a-terre tax

#237

Post by throw0101c »

burlesona wrote: post #22

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 ou…

> Property tax is the workable wealth tax.

There is a difference between property-as-primary-residence and property-as-secondary/tertiary-residence or property-as-proxy-for-parking-money.

Property taxes handle the first scenario, wealth taxes handle the latter.

Re: New York passes pied-a-terre tax

#238

Post by jdappletini »

nonethewiser wrote: post #190

>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. >Rather than overhaul the system immediately, the city will gradually update valuations – and the tax – according to the budget documents. Starting in the 2028-2029 tax year, the property va…

"everyone's taxes will increase" is not true because lot of newer apartments don't get the chance to undervalue.

Re: New York passes pied-a-terre tax

#239

Post by ceejayoz »

SoftTalker wrote: post #224
steveBK123 wrote: post #213

Earlier quoted context omitted.

Yes.. spend enough time amongst the inheritocracy and you'll see the wealth is as often as not wasted on them. There's just too much fun to be had with 0.1% wealth that you didn't have to sacrifice your 20s, 30s (and maybe 40s) to build. Coast at some job with a top 25-50% income and 0.1% inheritance in NYC and live the life.

So if you're spending your inheritance living the high life, that economic activity benefits a lot of other people. Still a net positive in my view. I get the political power concern, and money = power at a certain point. But I'd rather work on getting money out of politics than putting limits on what people can decide will happen to their assets after they die.

Sure, and rape helps the therapy industry.

https://en.wikipedia.org/wiki/Parable_of_the_broken_window

Re: New York passes pied-a-terre tax

#240

Post by underlipton »

petcat wrote: post #168
zeeveener wrote: post #156

Earlier quoted context omitted.

They attempt to sell it at market-rate which, assuming the previous owner intentionally under-valued the house, would earn them money that they can use to continue the program.

What if they have a backlog of inventory that they can't sell at "market rate"? Are the taxpayers just supposed to take a loss because of this brilliant tax assessment scheme?

The idea is that the houses are being bought by the government because they were erroneously valued by the owner under market rate. That presumably gives them room to come down from "market rate" to actual market rate (the rate it sells at on the market).

The only way to end up with a loss is a coordinated attack by owners and potential buyers: to intentionally understate the value, and then to hold off ANYONE attempting to purchase before the market sale price is below the compelled price. So multiple rich people lose their houses in a naked gambit to bankrupt the government. I mean... I guess it could happen? But at that point, it's open class warfare.

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