Fiscal Policy Institute proposes tax on luxe pied-á-terres

Written By Unknown on Selasa, 23 September 2014 | 18.18

Left-wing allies of Mayor de Blasio have come up with a new way to tax the rich by going after nonresidents who buy expensive co-ops and condos that they seldom use.

The liberal Fiscal Policy Institute on Monday proposed a tax of up to 4 percent on 1,556 pied-á-terres worth more than $5 million each. The tax would generate $665 million a year, the group said.

The mayor's office quickly said it was "reviewing" the proposal.

De Blasio's previous attempt to increase taxes on the city's wealthiest residents was shot down in Albany, which would also have to approve the condo-tax plan.

But the new targets of the tax hikers include many foreigners who don't vote.

The graduated tax would start at 0.5 percent for properties valued at $5 million to $6 million, and max out at 4 percent for units valued at more than $25 million.

State Sen. Brad Hoylman (D-Manhattan) is introducing a bill to enact the tax Tuesday.

In his report, institute director James Parrott said absentee owners of expensive condos and co-ops should be targeted because they don't pay local income tax.

"The owners bid up the price of New York City residential real estate, and since they don't spend much time in these use units, contribute little to the local economy compared to full-time residents," he said.

Brooklyn City Councilman Brand Lander, the deputy policy leader, embraced the tax on "extremely wealthy foreigners," saying many use their properties as "tax havens."

The powerful Real Estate Board of New York, which represents the city's largest developers, denounced the idea as an "administrative nightmare."

"It raises serious legal questions and ignores the potential impact of taxing apartment owners an additional $1 million to $2 million annually on top of their existing real-estate taxes and maintenance costs," said board president Steven Spinola.

But in a surprising development, the city's most influential business group, the New York City Partnership, said it was open to the tax as part of overall tax reform.

City officials are concerned that the government could lose revenues in the tax overhaul, Patnership CEO Kathryn Wylde said, adding that "the pied-á-terre tax would be a source of revenues that could be used to bridge any shortfall the city might experience as a result of conforming."


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