One of the dumber ideas New York Governor Kathy Hochul has pitched yet (there’s considerable competition) is to levy extra taxes on wealthy people who own second homes in the Big Apple. It’s Hochul’s latest way (congestion pricing was the first) of saying: Keep Out!
Hochul’s newest scheme to increase revenues is meant to punish New Yorkers who have fled the city to other, more friendly, jurisdictions like Palm Beach, but who have maintained a pied-à-terre in the city. The idea is that these folks are taking advantage of the great things New York can offer, like Broadway shows or the Metropolitan Museum of Art, but aren’t paying their “fair share” of maintaining city services. That’s because they’re ducking New York’s highest-in-the-nation income taxes.
The notion is preposterous and short-sighted, in that the newly-registered Floridians or Texans who choose to keep an apartment or house in New York are still paying the city’s high real estate taxes, still paying for the doormen and porters who work in their buildings, still paying for cleaners to look after their property, and, naturally, propping up the restaurants, theaters, cabs and other businesses that lure them back to the city. Does Hochul really want to lose that support?
Lashing out at the rational New Yorkers who have escaped the high income taxes demanded by the city and state, which can amount to 14.776% combined for top earners, makes no sense. Remember, that’s on top of federal income tax rates of 37%; in other words, successful New Yorkers pay more than half of their income over to the government.
One of my favorite tax stories comes from Sweden, often held up as the standard of the liberal welfare state. Progressive Bernie Sanders, who has railed about the rich not paying their “fair share” for decades, used to cite Sweden as exemplifying the wonders of socialism, but that Scandinavian country’s experiment with income redistribution came to a crashing halt in 1976. As I wrote previously for The Hill: “Astrid Lindgren, the beloved author of the Pippi Longstocking books, discovered that under Sweden’s tax code she was paying a marginal tax of more than 100 percent – in other words, more than every extra dollar earned was going to the state. She then penned a satirical fairytale, Pomperipossa in Monismania, about a writer forced to pay outrageous taxes. It produced an uproar over Sweden’s tax regime and led to the ouster of the Social Democratic party, which had ruled for more than 40 years.”
The conclusion: people have their limits. We are not yet at the point where the government snatches your entire incremental dollar of income, but New York officials are heading in that direction. This new idea of a pied-à-terre tax is just Hochul’s way of jumping on the progressive bandwagon – showing she, too, shares the disdain Zohran Mamdani, Elizabeth Warren and Bernie Sanders have for our most productive citizens.
New York City, home to 8 million people, spends nearly as much as the entire state of Florida, which boasts 23 million residents. Does that make sense? Absolutely not.
The upshot of imposing a tax on second homes will naturally be that fewer people want to make such commitments, and that the value of New York properties will go down. We have already seen a serious drop in the prices being paid for high-end apartments and town houses; the exodus of so many people to Florida, Tennessee and other low-tax states has taken a toll. Hochul doesn’t care that some well-off folks are taking a hit when they sell their homes, but she should. It makes newcomers wary of investing in New York, especially given that Mayor Mamdani is constantly threatening new property taxes; that creates a doom-loop, driving prices down even more.
Hochul, Mamdani et al have one excellent way to reduce the high fiscal deficits plaguing the city and state – cut the budget. Sadly, because they are puppets totally subservient to the public employee unions that pull their strings, that concept is utterly ignored.
Consider this: New York City, home to 8 million people, spends nearly as much as the entire state of Florida, which boasts 23 million residents. Does that make sense? Absolutely not. Nor does Hochul’s proposed pied-à-terre tax.
