N.Y. Assembly Chief Backs Tax on NYC Luxury Apartments
(Bloomberg) -- New York Assembly Speaker Carl Heastie added momentum to the idea of taxing non-resident owners of multi-million dollar apartments as a way to help pay for billions of dollars of regional transit improvements.
The state Assembly has supported such a tax for years, Heastie said Friday, and will propose it in a budget resolution that his Democratic colleagues are preparing this month. The chances for enacting it have improved, he said, because Democrats control the state Senate for the first time in decades, and Governor Andrew Cuomo supports the idea to help finance a 10-year, $40 billion plan to upgrade regional transportation.
During a breakfast forum sponsored by Crain’s New York magazine, Heastie said Cuomo supports the measure because “you have people coming in buying $200 million apartments and there’s no mortgage-recording tax because they’re pretty much paying cash, and we still have to provide services. So we’re asking people to contribute a little more.”
The idea gained momentum this week with Cuomo’s budget director, Robert Mujica, and Mayor Bill de Blasio each saying they could support the idea. Mujica included the proposal in a discussion of potential sources of revenue that could finance the regional transit upgrade. The so-called “pied-a-terre tax” could raise as much as $9 billion, he said, adding to $15 billion from congestion pricing, $5 billion from Internet sales and $2 billion from yet-to-be-legalized cannabis.
The items, all under discussion as lawmakers prepare a state budget due by April 1, remain uncertain, Heastie said. The idea of congestion-pricing fees for motorists entering Manhattan’s central business core remains controversial with lawmakers concerned about whether the program’s revenue would benefit residents in outer-borough areas who need express bus service and other transit options as well as suburban residents commuting by car and train, he said.
Cuomo has warned that if congestion pricing fails to pass the legislature, subway and bus riders could see a 30 percent increase in fares to more than $3.50 per ride.
Under a 2014 proposal by economist James Parrott for the Fiscal Policy Institute, a research group, a luxury-apartment 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 pied-a-terre tax has been opposed by the Real Estate Board of New York, which has said it would harm the city’s economy by suppressing investment, cutting jobs and lowering demand for high-priced apartment towers.
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