New York Considers Taxing Non-Resident Owners of Luxury Apartments
(Bloomberg) -- Pressure to find revenue to finance a $40 billion fix for New York’s subways, buses and regional commuter rail has sparked renewed city and state interest in a tax on wealthy non-residents who own luxury city apartments.
New York Governor Andrew Cuomo’s budget director, Robert Mujica, jump-started the idea Wednesday in a statement that totaled up potential revenue sources for regional transit funding: $15 billion from congestion pricing, $5 billion from Internet sales, and $2 billion from yet-to-be-legalized cannabis. The so-called “pied-à-terre tax” on non-resident owners could raise as much as $9 billion, Mujica said.
“Even that leaves a shortfall to get to the low end of MTA’s capital budget, which is projected at $40 billion,” Mujica said.
Mayor Bill de Blasio has preferred a millionaires’ income tax on city residents. Since that proposal hasn’t received support in the legislature, the mayor said Thursday he could back the luxury-apartment tax.
“We need to tax the wealthy more,” the mayor said as he emerged from a subway ride for a news conference to promote congestion pricing fees on motorists entering Manhattan’s central business core. “Now if the governor is saying he thinks there’s a way to additionally get a pied-à-terre tax, I’m all ears.”
Under a 2014 proposal by the Fiscal Policy Institute, a research group, such a tax would raise about $665 million annually, requiring part-time New Yorkers to pay surcharges on dwellings valued at more than $5 million. The revenue could then be leveraged into billions of dollars more to pay off bonds for making transit-related capital improvements. Absentee owners pay no city or state income taxes.
The proposal has been opposed by the Real Estate Board of New York, the trade group for an industry that accounts for more than 30 percent of the city’s tax revenue. The board has said it would harm the city’s economy by suppressing investment, cutting jobs and lowering demand for high-priced apartment towers.
©2019 Bloomberg L.P.