It seems like a place like Manhattan might benefit from first up-zoning the low slung sections that are currently 4-8 stories.
My point here is that I'd start with trying to build enough housing before spending political capital on marginal things that neither unlock supply nor generate much revenue.
It isn't that which is the issue. It is the fact greenwich village has been at the same height since even before Don Draper's time. You see, the suburban enclaves of long island and upstate and new jersey and the comparatively more built up areas of manhattan do have the exact same issue with regards to housing, and that is there is little room in the zoned capacity to legally add any more housing.
In 1961, NYC adopted a zoning plan that saw zoned capacity reduced by 80%. These sort of changes to zoning happened around the country in the 1960s and 70s in response to red lining being made illegal. If you can't prevent black people from living near you by law, maybe you could instead prevent anyone from living near you and guarantee a supply side crisis such that the wealthiest individuals in the economy are who can afford to be your neighbors, and in 1961 surely they won't be black. You should look up the median income differences between a white nycer and a black nycer today, it is shocking. Median household wealth for whites just within the scope of new york state, not even at city resolution, is nearly 15x higher (1).
Today, 80 years later, we have kept the racist-by-transitive-property laws on the books all over the country. And as such, cities remain highly segregated by both race and class. Civil right era in terms of housing was essentially a failure to achieve any change from this status quo.
With historic landmarks or districts you can generally transfer unused development capacity to other sites. Grand Central famously was spared from demolition but its unused zoning rights have been transferred elsewhere.
Sure but they are still a finite resource. Once you've transferred those rights to a super tall luxury condo building, you can't readily transform that into affordable middle class and lower income housing.
One issue with using hollywood accounting for zoning is failing to consider the context of the site, especially in terms of infrastructure and job access, in favor of historical protections. All that subway capacity and walkability to so many jobs in greenwich village for example is being squandered by punting potential upzoning elsewhere.
Do you live here? I do, and I’m astounded by the number of 1- to 3-story buildings and surface parking lots (!) dotted throughout Manhattan, especially outside of the skyscraper clusters in midtown and downtown.
There is an unbelievable shortage of housing that is solvable only by increasing supply and building upwards. It’s not even single-family homes; why are there any one-story buildings in the lower east side?
is that really what people want? The fact that people say why not have 50 story concrete blocks everywhere to get more people feels like exact thing that would destroy what makes living in the city nice... Tenement housing sucked, why add thousands of people to crammed parts of city. We should be incentivizing sprawl and better transportation.
I am a New Yorker, people want more housing but there is still NIMBYism because they want to preserve the charm, and I'm mostly only talking about manhattan. While people are not fans of the low density luxury skyscrapers popping up in places, I've not seen people who currently live in the place think we should add massive housing blocs carte blanche. Sure there few scattered places for a few projects but not like advocating to tear down to build bigger. That mentality comes from people who are definitely not new yorkers or live in fringes.
I currently live in Manhattan, have lived here for years, and I support relaxing zoning at least to the point where most Manhattan neighborhoods can ~double their building heights. YIMBYs are everywhere. Not everyone can be fortunate enough to get a stabilized unit (like me) or to have bought decades ago when prices were low.
> add massive housing blocs carte blanche
IMO this is dichotomous thinking that is actually brought on by zoning rules.
It is very difficult and very expensive to get construction approved, so the only projects that make sense to fund are towers full of units, which can attract more rent and therefore higher returns per lot, justifying the risk and expense of permitting.
If you just deleted zoning restrictions carte blanche and made it much easier to build (an automatic "Yes" if you meet basic criteria), then a lot of sagging and old 1-3 story buildings which are everywhere in Manhattan would get naturally replaced with six- to eight-story buildings. This is the natural evolution of a built environment.
The amount of additional housing and commercial space that comes online from this is huge, and there's no need to dot the city itself or even Brooklyn/Queens with commie blocks
> Would paving over all of Central Park to fill the area with residential skyscrapers be a good idea?
As a moderately wealthy former New Yorker? I say no. If we put it to a referendum? I’d give it even odds. If the referendum were for developing part of Central Park into public housing? I’d guess it would pass.
Relaxing the zoning requirements that unnaturally force huge swaths of the city to be under-built would fix this without sprawling housing into existing greenspace.
You are missing the point. Of course people want to live in one of the most vibrant cities in the world. People also want a vacation home at the beach or in the mountains thats private and beautiful and easy to get to. Except if we built giant monstrosities and condos in the hamptons and make all ski homes tenement housing it will be much less desirable to go to them. No ones asking to make more apartments and housing in rust belt cities.
This. We don’t have a housing problem. We have a “I want to live here problem.” And if we could snap our fingers and everybody in the world who wanted to live in NY could, it would be the same second nobody would want to live in NY.
It just does not scale like people think. And that is why the price has to go up, and that is the forcing factor for max capacity of any given parcel of land.
The fact is we all can’t live in the same city. And people need to do what we did in the past. And that is move to new locations that are cheaper.
Every hot spot today once was a crappy place, it was over time that it became the desirable place. That is just how it works. You got to move and live where you can afford.
Every city has a max amount of occupancy, and density. It’s so silly to even think about this on the individual level. I can find 1BN people who want to live in NY today if told today they could have a place today for $500 a month but 1BN other people are also joining would instantly turn down the offer.
It has a huge amount of areas that are underdeveloped relative to demand. Many areas with height restrictions that block basically all new developments. For example West Village is one of the most in demand zip codes in the entire world caps new builds around 80 feet. East village caps housing @ mid rise so new grads who live there spend half their income on housing.
Among a few ultrarich which amplify their voices by screaming through their media mouthpieces to make them sound like they're of any importance to society, from which they leech their wealth in the first place.
If someone tried to "up-zone," wouldn't they incur enormous popular and media backlash for demolishing buildings and displacing communities that have been there for decades just so they could build high-rent luxury skyscrapers?
I feel like that was the backdrop to about half the movies I watched in the '80s.
i think upzoning which requires kicking people out of the homes they currently live in is spending more political capital than changing tax policy to get more utilization out of the existing empty houses.
The people that have second luxury homes in new york are the people that spent through the roof to avoid mamdani being elected
If I was a developer and building owner who only cared about money, it seems like it would be much better to build a luxury building where the units are sold, but sit empty most of the time. This seems to be the environment in NYC. The proper systems need to be in place so it makes sense to build housing for actual people, rather than building stored real estate value for the ultra rich, especially foreign investors who may never even set foot in the US and are just looking to diversify their portfolio.
I’m not an “eat the rich” person, but these mostly vacant buildings in a city with a housing affordability problem are a crime. I don’t necessarily fault the billionaires for this, I fault the politicians who sat back and watched it happen, approving all the projects along the way.
> these mostly vacant buildings in a city with a housing affordability problem
Vacancy rates are extremely low in NYC at 1.4%. Anything below 5% indicates drastic under-supply of housing. I don’t think that vacant real estate for billionaires is a significant contributor; it’s almost exclusively an issue of supply.
That percentage only includes the openly listed units; NYC has a massive shadow inventory of rentable inventory deliberately kept off-market for various reasons.
1 Wall St, for example, kept 85% of its units arbitrarily off market in order to prop up rents, and thus imputed property valuation. This kind of behavior shouldn’t be encouraged by the state and financial system, but guess what we do!
If I might put my tinfoil hat on for a moment, I think the recent obsession with upzoning is to distract from the possibility of regulating landlords—as if there were any large number of people opposed to upzoning before....
In Manhattan the low zones are due to the soil not being good for higher construction. Lower Manhattan and midtown are made of basalt stone that is extremely strong and apt for skyscrapers.
the real reason midtown is where it is, is because that is where the train stations are due to the city banning surface running railways south of 42nd St. (The remaining surface railways north of that point have been covered up.)
As a result, Midtown is now one of the few places in New York's metropolitan that can reach the millions of people in the five boroughs and the suburbs all at once, which means the labor market is substantially larger than what it is in Lower Manhattan or Downtown Brooklyn, and makes it massively more attractive for employers.
I'm guessing it would be tough to make the numbers work demolishing a 4-story building and building one that's only 2-2.5x the square footage, especially with today's interest rates.
You'll lose a ton of square footage to compliance. Those wide doorways with non conflicting doors, wide staircases, required clearances around everything, all the other stuff that's been done to old apartments that isn't compatible with modern codes.
So that 2.5x square footage is more like 1.5x when it comes to the number of units of like quality/liveability you can pack in.
LOL. Why not just build bunkhouses and then rent out bunk beds there? For a cool $5000 a month. Because that's the end goal, isn't it? Manhattan is _already_ one of the densest cities in the world.
It needs a good _downzoning_ to be liveable again.
The market prices full one-bedrooms at less than this in most of Manhattan. Flophouse beds would cost a fraction of this and they would get cheaper the more of them you have. They’d also slow the growth of rent price in NYC.
Let’s take your example at face value. Suppose Manhattan added one million beds to its existing ~3.8M bedroom housing stock via the “missing middle” housing that you described, perhaps over the next ten years. These might have small private bedrooms and shared kitchen/office/bathroom facilities. They might even include dorms, but I’ll focus on single-room occupancy units. You’d get the space for this from some mix of re-developing office buildings or upzoning or re-developing low-slung buildings.
The rent of these single-room occupancy units would be a fraction of the rent of a normal place. The people living there would be far less rent-burdened than they would have been otherwise, freeing up more income for consumption or savings/investment, boosting economic activity. Some of them would be new residents, whose income taxes (if they pay them) and spent dollars/sales taxes would be a net benefit to the city budget. Some of them would otherwise become transiently homeless due to affordability concerns, which would be destabilizing for them and expensive for the city due to homeless program spending.
Others would be people who currently live in apartments but would move to these units because they prefer cheaper rent, greater privacy (they might be sharing a room today), a newer building, or the greater efficiency of having multiple bathrooms. Maybe right now they are sharing e.g. a four-bedroom one-bathroom apartment with three strangers in Hell’s Kitchen for $1400/month. These people would otherwise be in the housing market for a full apartment, and removing them leaves more full apartments for people who want to occupy them, either alone or with roommates. Ergo we get downward pressure on full apartment rents.
The flophouses and dorms and SROs were a key part of the housing market that kept Manhattan more affordable and therefore livable in the 20th century, when density was up to 40% greater than it is now. It was deeply shortsighted to get rid of them. The idea that we should downzone even further makes no sense to me; you get to decrease affordability and decrease the economic benefits of agglomeration to the local economy at the same time, all so… there are fewer people on the subway, I guess? I disagree with the “too much density” argument on its face anyway. Density has clear economic benefits via agglomeration and productivity gains; diverse and dense housing stock via upzoning increases affordability via supply/demand and filtering effects; and the way you manage density is through appropriate infrastructure spending on housing, services, and public spaces which—you guessed it!-becomes cheaper per person the denser you build. Seoul has twice the density of Manhattan.
I live here. The thing making Manhattan unlivable is that a one-bedroom is $4500 in the east village due to not enough supply. Fix the housing costs by building more of any and all kinds of housing and then we can deal with the other problems via better governance and increased tax revenues. There’s nothing we can do otherwise that isn’t just rationing or some other bandaid solution.
> The flophouses and dorms and SROs were a key part of the housing market that kept Manhattan more affordable and therefore livable in the 20th century, when density was up to 40% greater than it is now.
???? Can you provide the citation for higher density in the early 20th century?
> I live here. The thing making Manhattan unlivable is that a one-bedroom is $4500 in the east village due to not enough supply.
And there is never going to be enough supply. Your only choice is to Detroitify your city.
"Just build more" in Manhattan is beyond ridiculous. It's literally the definition of madness: "The definition of insanity is doing the same thing over and over again and expecting a different result".
> Can you provide the citation for higher density in the early 20th century?
It was a quick google search and the value was taken from the Gemini result, which is not great practice. Thank you for asking for citations. Unironically! Good discussion on this site matters to me, and I want my positions to have strong foundations.
I looked into it more deeply and have found the actual numbers. The 1910 density was more like 54% higher.
Manhattan reached its peak population of ~2.3M around 1910, with a built-up area on the island of ~4,000 hectares=15.44 square miles. This gives a population density of 149k people per built-up square mile. This is per NYU professor Angel Shlomo's 2015 paper, which seems to be the most in-depth analysis I could find ([0]). We use built-up area because north Manhattan still had large tracts of uninhabited farmland at the time; this area should be excluded to better represent the experience of the residents.
Manhattan's current population is ~1.66M (per [1]), and I am estimating the current built-up area at 4466 hectares=17.24 square miles, as this was the exact built-up area given in [0] for 2013. I am assuming Manhattan was, then and now, basically fully built-up and therefore the area is unchanged. (If I'm wrong, then I would guess there's actually more built-up area now, and therefore the population density is lower, strengthening my POV.)
This gives a current Manhattan population density of 96.3k residents per built square mile. This means the peak density in 1910 was actually (149k/96.3k=)154.7% what it is today! My initial Google estimate was undershooting it.
Ergo Manhattan today is nowhere near its historic density.
From all this, I think it is clear that Manhattan and NYC are nowhere near their carrying capacity. There are other safe, clean metros on planet earth with much higher density and lower housing costs (e.g. Seoul), and the thing preventing greater density and lower costs isn't some fundamental upper bound or even economic incentives: it's just zoning.
What has changed since 1910? New York City has much better infrastructure that would allow even greater density in the city, outer boroughs, and surrounding area without negatively impacting quality of life. Modern building techniques allow us to build far more than six stories high without imperiling residents in tenement housing. There is a robust subway and rail network that allows commuters to come from other, even less dense areas. I think we could build to these historic densities much more safely and pleasantly now, which is also the opinion of the authors of [0].
> And there is never going to be enough supply.
I simply do not understand your rationale. We have not seriously tried to provide enough supply, due to the zoning constraints.
In 2023 there were ~3.7M housing units in NYC ([2]). We are adding ~9,450 units every quarter ([3]), for a total of ~38k units per year, a yearly increase of about 1%. This is a drastic undershooting of NYC's own goal to build 500,000 new homes from 2022 to 2032, which would look more like 13k to 14k new units per quarter ([3])—and some groups estimate that the housing shortage is even more than that 500k units. It takes 3.4 years on average to build a unit in NYC and more than four years to build an apartment in Manhattan ([3]), which is absurdly slow, and the vacancy rate is an absurdly low 1.4% where ~5% is the marker for a healthy real estate market ([2]+general knowledge).
Manhattan (and NYC in general) has onerous zoning and review requirements that prevent the adequate building of new housing to meet demand. Of the existing building stock, fully 40% of it would not be permitted nowadays, primarily because they are "too tall" or "have too many apartments," "too many businesses," or any number of other absurd requirements in a city with extremely high housing costs ([4]). There are even regulations around having enough parking spots in parts of Manhattan, a place with ample public transit, lots of street parking, and subsidized van service for the disabled. These buildings are the backbone of our urban core; they provide housing for hundreds of thousands of people and commercial space that drives much of the NYC metro area's economy, the GDP of which is over $2T and makes up ~9% of the US economy ([5]).
Conversely, there are many land uses in Manhattan that fit these zoning requirements and are ridiculous and uneconomical uses of land. For example: a small parking lot structure in the West Village (of which there are a depressing number) is a valid usage of land, while an eight-floor apartment building with an elevator and retail space on the bottom is "too tall" and disallowed because it would exceed the 80-foot limit in the village. How does another small parking lot serve a city gripped by housing crisis that is caused by a shortage of units—which also has excellent rail connection and plenty of parking already—better than an apartment building? The apartment building could even be on top of a parking garage if we wanted it to, but adding the residential space and/or more commercial space (which raises incomes via agglomeration and therefore improves affordability by higher salaries relative to housing) is not allowed because it runs afoul of height restrictions.
This is irrational policy that directly contributes to the housing crisis.
> Your only choice is to Detroitify your city.
It's interesting that you claim densifying Manhattan will turn it into Detroit.
When you send factories to the suburbs and then put highways straight through the neighborhoods in your city where people actually live and work, that's not densification leading to bad outcomes. It is detonating a city via discriminatory urban policy and then falsely claiming it is the natural end result for those pesky cities and their residents.
>I claim that Detroit was hollowed out precisely by anti-density and pro-suburbanization practices.
>When you send factories to the suburbs and then put highways straight through the neighborhoods in your city where people actually live and work, that's not densification leading to bad outcomes. It is detonating a city via discriminatory urban policy
Isn't this overstating the role of policy?
1. Wage arbitrage by the Big 3 to avoid urban auto unions out to the suburbs
2. Post-WW2 economic manuf. wind-down [1]
3. Post-WW2 highway build-up enabling suburbia
Looking at the things out of Detroit's hands, I don't think we should lean on policy as much because policy can't nail the factories to the ground or prevent their closure. The economic trends simply appeared much more powerful than city policy.
The fate of the Detroit city limits auto cluster could have been sealed with the war end. Businesses often want to escape high costs if they can do so without giving up their operation or market share, and they were able to do just that with the MI suburbs and highways.
Policy might have been able to delay the collapse if, like you promote, the city managed to encourage building housing to relieve the rent and home price pressure. However this seems nigh impossible in practice (even in NYC?) because property owners are politically connected and generally do not like values to go down, a classic case of concentrated benefits and diffuse costs [2].
We have similar taxes in major cities in Canada (including both metro and provincial taxes here in Vancouver).
Housing is still massively squeezed and unaffordable for many in the Vancouver metro area, but the taxes definitely have encouraged some homeowners to sell or rent their properties, especially foreign investors, and their seem to be few or no downsides for people of middle-class and even moderately-affluent incomes.
I doubt that NYC will lose too much sleep over the protestations from extraordinarily wealthy people who own multiple extraordinarily expensive homes, and where NYC isn't their primary residence.
the political and financial elite of New York are coming to terms with the fact that they have completely lost the faith of the lower and middle classes in terms of maintaining or improving living standards. it has been interesting watching the media try to contort themselves to address this.
It has to be a deliberate joke, right? Isn’t rotisserie chicken the poster child for loss leaders? For all the reasons to buy it, luxury is the bottom of the list.
The rich have in my view become increasingly (outwardly) selfish and craven, so it makes sense that they are now associating with the vibes of apocryphal Marie Antoinette quotes.
sorry but all of your yachts are currently in the process of being dismantled and sold for parts to feed people, house and clothe people on UBI. enjoy!
No, which is why there are very few vacant units in NYC: 1.4%-ish percent of total supply, whereas the rule of thumb I've heard is that around 5% is the sign of a reasonable equilibrium.
(In a well-functioning real estate market there are some units offline due to vacancy, turnover, and renovation, so we don't expect 0%. High vacancies of e.g. 10% suggest insufficient demand for the supply.)
Reactionary taxes like this have a tendency to be ill-considered and have unintended side effects.
NY also has a 1% penalty on paying more than $1 million for housing, which was probably enacted to proletariat applause when $1 million was still considered a lot of money. Now it distorts the value of entry level housing in NYC, where you'll have a hard time finding anything more than a studio apartment for $1 million. High closing costs and similar distortions mean people tend to lose money on housing in NYC unless it's held for many years.
$5 million is expensive enough that this probably won't add much housing stock in the short term. Still, politicians never seem to think through the consequences of headline-grabbing tax policies.
You're comparing the wrong numbers. The question is what 1% of the purchase price does to the amount you need for your down payment and fees. On a 10% down payment an extra 1% increases the amount you need by 10%. Remember that while a million dollar home sounds extravagant, it's first time buyers who often have just barely enough who are trying to buy these.
Even in worse case scenario, which this isn't, the affected persons would at most try to cheat the system. This proposal is really narrow to non-primary residences, that are also very valuable. None of which will affect 99.999% of the population.
they way to “handle” this is to stop viewing housing as “investment” - especially short-term investment. once you do that, you are good. when you buy you will consider all the implications of that decision and then you can live with it when you need different housing
whether something is an investment or not is not a subjective opinion, but an objective fact.
If it takes effort, capital and time/labour to create, it's an investment, because such resources have alternative uses.
Just because this cost have been paid as a lump sum in the past (for constructing a building and/or buying the land etc), doesn't mean that cost is now sunk and is "lost" - it is, and must be, recouped in the future, otherwise the initial cost will not make sense to have been spent, and said investment would not be made and the world would now have one less of it.
Food is obviously not comparable (you must consume it and only s*t is left over).
Cars depreciate quickly becase they wear out in the timespan of a couple decades. You can keep them going longer but it's a labor of love, not really economically worthwhile.
Housing is completely different. Absent some disaster (fire, earthquakes) it will last centuries with just basic routine maintenance. Given that inflation is a perpetual constant, something that lasts that long can't possibly not appreciate, it inevitably must.
With all due respect I am not sure how you can write this with a straight face. You premise is that "something that last long can't possibly not appreciate"?? I am sure you can find myriad of examples where this simply does not hold water.
The housing is artificially inflated and you are one administration away (e.g. see current one for the kind of power we experience in 'democracy') from having your "investment" worth a lot less than you think it is. Why do you think you and I are able to deduct mortgage interest but when I charge my credit card for gambling, hookers and cocaine (a lot more enjoyable than housing) I am unable to deduct my 29.99% interest on my Visa?! What about "villas for 1 euro" that you can buy throughout say Italy? some of them are older than our country is and I am not sure you'd be happy with your "investment" if you bought it in 1999 but you know, "something that last that long can't possibly not appreciate, right?!"
> You premise is that "something that last long can't possibly not appreciate"??
Not "something", housing. A pebble may last billions of years and not appreciate, but we're talking housing.
Yes housing which last a very long time cannot help but appreciate because we always have inflation. The only exception is what you identified, if the town has an economic collapse. Then, sure, nobody wants to live there. Detroit of the past being the typical USA example.
Looking at records my house cost ~$90/sqft to build. Today the exact same house on the exact same lot would cost about ~$500/sqft to build on the low end if you can find the labor, but probably closer to ~$650/sqft if you want to get it done this year.
So of course the older equivalent houses in the neighborhood will match in price to the new construction. Anything else would be impossible.
If you disagree, explain by what mechanism the old house wouldn't do that?
the investment for a car is in the manufacturing facility, similarly with food. While there's a consumption component to both, it's the same as a house - it's an investment to build it, and it produces shelter (which would be the equivalent of the food from the investment in a farm).
Golly gee willikers, not the spooky potential for possible side effects! Wouldn't want any of those when we could have gigantic sucker-punch scarcity-amid-plenty instead!
Taxes = theft is one of the most tired, low-brow, and intellectually lazy viewpoints ever.
We all understand the concept of commons. We all understand the concept of money pooling. Don't pretend it doesn't make sense or it's evil when most people pay for private insurance anyway or even fucking Claude Code subscription plans which follow the same concept.
meanwhile they’re scheming against you to see how much you’re willing to pay before you can’t afford to eat anymore just to buy that extra home. it’s an absolutely beautiful thing. they deserve it all and rightfully so!
This kind of talking point is reiterated ad nauseam, but never justified or backed by any empirical research.
I'll state one simple thing: if America is unable to raise taxes on second homes over $5M in Manhattan by 1% then this country is well and utterly fucked. The 1% are paying less taxes than anyone else in this country while hoarding the majority of the wealth. Homelessness is skyrocketing, debt levels are through the roof, but god forbid we raise the tax on second homes over $5M by 1%.
> an initiative to appease Mayor Zohran Mamdani and liberal voters
Taxing the rich is not a Liberal thing, but the Rich is calling it that because they do not want to pay any taxes at all.
He was elected because people are starting to feel real pain and seeing the ultra rich paying far less taxes then they are. If it was up to me, I would tax all the second homes above 5 million USD and add a Luxury Tax on all valuable Autos too.
This claim is often repeated but simply misleading. Taxable income is only a tiny fraction of the wealth of ultra rich folks - many even take symbolic wages, because their real compensation happens in stock, which they can use to lend effectively infinite money. There's a great episode of the Ezra Klein Show on this topic too[0].
That does not address the point. You say they should pay even more to address the idea that very few people pay most of the taxes, what is the logic here?
You're insisting on shifting framing to percentage of tax collected. That's irrelevant to the fairness question of percentage of income paid as taxes. The insane imbalance where the rich end up paying half of all taxes while simultaneously paying a fraction of their proportional wealth in taxes only highlights the massive difference in personal wealth. Taxing that at a higher rate only seems unfair if you take the view that all wealth is earned fairly and any attempt at altering the market's allocation of wealth is against the natural order.
I'm not. I'm saying that the numbers OP stated were misleading. They refer to people with a high income - surgeons, laywers, or engineers -, but not the ultra rich, which don't have a high income in the first place, or it's a tiny slice of their cash flow, while the majority of it is made via non-taxable or low-taxed income streams.
Which means that a lot of people pay a proportionally high percentage of their income, while the Epstein class pays effectively none. That's the logic here.
I'm someone who uses the same "loophole" the wealthy use to "avoid" paying taxes. Turns out you really only need around ~$100k to unlock it, and you still will pay ~0.5% interest over the overnight lending rate. But it's about as rock bottom as any non-united-states-government will get a dollar denominated loan for.
But it is not a tax dodging scheme. It's a tax deferral scheme wrapped in a risk-on loan package, that is used almost entirely to maintain ownership of a company rather than to defer taxes. On smaller scales you can use it to unlock money tied up in stocks, if you think the stock will keep going up (if the stock falls, you now might get margin called as well as coming out worse then just getting a regular loan).
Because wealth is also distributed in a very lumpy way across the city.
154 residents of NYC own 33% of the entire wealth of the city... notice I didn't say 1%, I said top 154. They are not contributing 33% of the tax income to the city.
So yes, the ultra rich pay "less taxes" if you look at how much of the resident wealth they control.
Also, property taxes are significantly lower than appraised value and the richer you get the bigger the disparity. That Ken Griffin’s $238M penthouse pied-a-terre? It's assessed value is $9M. So yea, he's paying like $150k/yr in property taxes.
And finally, it is a known fact that sales tax definitely hits poor people harder (re: "everyone pays sale tax equally"). What you want to look at is what percentage of a person's post taxincome vs sales tax paid, because if you make like $60k/yr you're probably close to 60% of all post tax income paying some form of sales tax (you buy with all the money you make). If you have $2B, your percentage of "tax paid as sales tax" is significantly lower, because you don't typically spend a billion dollars the same way you spend $60k.
Wealth distribution is a false flag. Rain distribution across the globe is not equal, solar light distribution is not equal and they impact people's life more than wealth distribution. USA and the entire planet's population is at record high in living standards and wealth, but some people are still unhappy because not everything is perfectly equal and at zero entropy like the thermal death of the universe: this is more than illogical, it is just envy without limits.
NYC only has 154 billionaires. The percentage of NYC's second homes owned by NYC billionaires is fractional (59,000 total units).
No, this will disproportionately negatively affect middle-class people and families and fuck them hard.
> I didn’t realize the billionaires ... are crabs in the same bucket as us.
All of us go to the same place in the end my dude. Life is too short and too hard to spend all your time living by comparisons. I'm sure the people you're worried about are just as miserable for other reasons.
If you have a second home in manhattan, you are not the middle class _and_ you can afford it.
If the idea of paying taxes affects your poor fragile mind so negatively then there is an easy solution where you can sell said extra home.
No one is being fucked hard by this other than people who are appalled at the thought that they need to contribute to society for the negative externalities they create, like accumulating excess shelter in regions with a dearth of housing capacity.
If you live in New York you rolled at least a 15 on life's D20. That's how good of an opportunity that location is. I started and lived most of my life there and started in poverty -- for there. That's still a better opportunity than most people ever get.
All these people pointing at the nat 20s losing their minds screaming like they rolled 1s.
Last year year Jeff bezos and I both paid taxes for the year of 2024. The percentage he paid on the money he made is far less than I did. I gave higher share of my income to the government than he did. Bezos's true tax rate was less than 1% and mine was around 25%.
IDK what Bezos made as "income" last year but paper gains in asset values are not "income" for tax purposes, though some people might look at the increase in his wealth and call that money he "made" that year. But we don't have a wealth tax on a federal level at least.
He pays income tax just like everyone else. But the majority of his money is in investments, which many Americans already do as well with 401k and personal brokerage accounts. The people who can't afford to invest like that already pay close to 0% income tax as 40%-60% of households, historically, have paid 0% income tax in the US.
I 100% agree. Roosevelt implemented that in 1935 and it was meant as a safety net for social security. Economists estimate that by 2035 social security, as its currently structured, will no longer be able to fund the aging population.
Instead, a better alternative is to invest that same amount into an ETF that tracks the S&P 500 and after a 40 year working career the individual would have almost $5 million assuming a median wage and current employer matching on payroll tax. This would give them a yearly $200k payout which grows at 6% per year if they follow the 4% rule on withdrawals, lasting them indefinitely and leaving something behind for their children when they pass away. In contrast, social security right now, on average, pays $26k per year.
This would also generate federal taxes through transactions of the companies composing the S&P 500 which would give the government an additional tax revenue source.
The trouble with "investments did better" is that they did so in considerable part due to 40 years of trickle down economics that swung the pendulum away from labor and towards capital. The pendulum is slowing, so that trick is extremely unlikely to work twice. If that's not concrete enough for you, we can talk about what it would take to swing the pendulum as far in the next 40 as we did in the last 40 and this thought experiment will make it obvious that this approach makes the social security trust fund look like an exercise in sustainability.
Payroll taxes were capped because the related benefits were capped. We could uncap either or both ends of that. Although removing the cap should have been unnecessary if the government acted responsibly, and the removal of the cap would not force them to act responsibly in the future.
He only paid income taxes on $80k while at Amazon.
The wealthy often make their money as capital gains, which if they held for at least one year, are exempt from the income tax and taxed at no higher than 20%
The wealthy in NYC pay the top Federal 23.8% LTCG rate, + the top New York State income tax rate (10.9%) + the NYC income tax rate (3.876%) on their long-term capital gains.
> The wealthy often make their money as capital gains, which if they held for at least one year, are exempt from the income tax
Not even close. As your link shows, "the wealthy" pay taxes on long-term capital gains. The lowest rate (for "the wealthy") is 15% but they can owe 20% or even 28% in certain circumstances.
Stock is easier to sell, yes, but it's still just a gain on paper until you actually sell it. Otherwise, those gains could be lost next year. Or tomorrow.
Now this is just disingenuous. As if the net worth of Jeff Bezos and the rest of the Epstein class was somehow threatened by market fluctuations or some high-risk investments.
As long as the economy continues to grow, these people will thrive. All while avoiding to pay their share for society.
This is well known. The question is whether they should be. It's not some immutable law of nature, it's a deliberate policy choice to tax returns on capital differently from returns on labor.
I don't think it's all that well understood. People see a headline that Bezos "made" $X billion last year, when that was the increase in his net worth, not that he actually was paid $X billion in cash income. Then they complain that he didn't pay taxes on any of that.
Whether or not we should have a wealth tax and at what level that should apply is an entirely separate issue. I'm quite sure Bezos pays all the taxes he's legally obligated to pay.
Few people think the ultra rich are illegally evading taxes. The issue is exactly that they’re paying all they’re obligated to, and it’s not very much, relatively.
You’re really strawmanning here. Instead of arguing as if we’re morons who don’t know that unrealized gains aren’t taxed and think Bezos is committing tax evasion, convince us of why it’s wrong to think that Bezos should be legally obligated yo pay more, maybe by taxing those unrealized gains.
My networth increased by $600k in the past year, but my actual income after taxes was a quarter of that. I haven't sold and collected gains, but it still feels like I "made" that much money in that span of time, especially since most of the appreciation came from RSUs. I'm just choosing to not convert it to cash.
It seems your article is saying the same sort of thing I already stated - "The share of taxes paid by the richest 1 percent (24 percent)", right?
You are talking about effective taxes rates, which are different. To discuss that, I would have liked to see a bit more detail in the article, like what the income sources were and the deductions and losses to offset gains. I think changes around capital gains and loans against equities could use some adjustments. The other taxes like payroll are basically moot as Bezos's payroll income is only about $90k per year anyways.
> I think changes around capital gains and loans against equities could use some adjustments.
At minimum, taking out a loan based on the current value of an asset should trigger immediate realization of capital gains/losses for at least those assets used as collateral. After all, the gains are already de facto being realized for the purpose of the loan.
Unfortunately, I'm not quite sure how to address the other side of things - that said loans often don't have to be repaid so long as the assets continue to gain. As such, the capital gains are actually being realized continuously by the loan, but I doubt it's feasible to properly handle that in tax law.
The easy thing to do is set a limit for how much and how long you can borrow against, tax the loans as income, or outlaw loans against investment instruments entirely.
This post makes the mistake of counting unrealized gains as income. That's not how taxes or investments work. Unrealized gains are NOT income. That's how they mistakenly come up with the number that he pays less than 1% in income tax. Investments, in general, are not income (unless held less than 12 months or if they pay dividends).
Imagine you had to pay income taxes every year on the unrealized gains of your 401k, house, and car value. You too would be said to be paying a very low income tax rate. But again that's not how income taxes work because none of those things are income.
If Bezos were to sell those shares and actually realize those gains then he would be rightly taxed but that would also likely tank the stock as his 8% ownership is significant enough to drop the price drastically. 55% of Amazon is owned by 401k and other retirement accounts so if the price tanks average Americans take a huge hit.
Bezos does sell shares, all the time actually. You can see this in the SEC filings. And he is rightly taxed on those realized gains. But he's not going to sell all of his shares as that would be damaging to Amazon, the workers, retirement accounts, and his own investments.
Instead, the money stays in the company paying worker wages, buying new facilities, etc. This is even better for the economy because it keeps the funds in circulation. This generates even more tax revenue than if he did a 1 time sale of his investments. That's why unrealized gains don't get taxed, because its financially a worse outcome than keeping the money in circulation.
>>This post makes the mistake of counting unrealized gains as income. That's not how taxes or investments work. Unrealized gains are NOT income.
Rich people always borrow money on the stocks they own. In effect, those unrealized gains help them borrow money which they spend like income. I will spend part of my paycheck to buy a cup of coffee and they will spend part of the loaned money to buy the same cup of coffee. They can also buy a house with that money. All they need to do is keep paying the 4-5% interest rate on that loan meanwhile the underlying stock appreciates at 15-20%.
Is this a loophole that rich people enjoy? Absolutely. Does this loophole need to be closed - absolutely.
What is the loophole? That banks are allowed to give out loans to trusted clients? Are you proposing that banks can no longer loan to rich people or what? Why does the source of the collateral being a stock matter? A normal person gets a loan based on his home value, assets, other factors, all of which might appreciate faster than the interest rate. When does it become a loophole?
You really don't want loans to be taxed as income, that would cause a lot worse problems than rich people existing...
The loophole is that they never pay taxes on the unrealized gains bc they lived on the borrowed money their whole life. They will never sell their stocks, so there will be no taxable event. When they die they will leave their wealth to the children which effectively erases the unrealized gains. So no one pays taxes on that huge chunk of money. Google "buy,borrow,die".
Yes, but that's only the long term part of the plan. The short term part of the plan is that the marginal propensity to consume drops with income. Poor people earn and spend all their money, both of which are heavily taxed, while rich people "earn" capital gains and invest all their money, neither of which are taxed.
Here's how investment isn't taxed: take out a loan collateralized against the assets with unrealized gains. If the investment works, it can service its own interest, which is deductible. If it doesn't, the capital loss offsets the capital gain made by selling the collateral. Both cases result in approximately zero tax.
I'm not a five year old, you simplified it to the point of nonsense. The workable aspects of it are complex and unusual. I did Google it and understand now, no thanks to your comments.
The interest rate charged generates taxes, the purchases they make with the credit they borrow generate taxes, and the money they leave in their investments generate taxes through capital usage like paying employees, paying vendors, building facilities, etc. The government taxes every little thing so don't think that money is not generating taxes at all. It actually generates more federal and state taxes by staying invested and that's why unrealized gains are not taxed. The tax revenue outcome is better that way.
The government taxes every little thing that a poor person does, like earn and consume. The government hardly taxes anything that a rich person does, like rest and invest and watch the green number in the brokerage account go up.
Monetary velocity is notoriously high among the poor and low among the wealthy. If you have a dollar and want to generate maximum economic activity or maximum taxes, the answer is unambiguous that you should give it to the poor person.
How does the interest rate of margin loans generate taxes? Just curious since I'm not sure there's any provision explicitly taxing margin income for banks and brokerages. Especially since some brokers will give you the prime rate plus a few basis points, I can't see how there's enough margin in that to cover an explicit tax on it.
Good attempt at manipulation. Why don't you link some studies here which say it will be better to leave the tax system as is than taxing the unrealized gains somehow.
The numbers are self evident. If you've ever owned a business you know that you have:
1. Corporate income tax
2. Employee Federal income tax
3. FICA Payroll Tax
4. Sales Tax on transactions
5. Property Taxes
Now multiply that by each node on the graph. Each employee, vendor, business that comes in contact with your company spends the money you paid them and is taxed on it as well. It grows exponentially after just a couple of nodes. If each of those nodes is trying to make a profit from their own capital it generates even more tax revenue for the government.
Contrast that with capital gains tax which is a 1 time event at a maximum of 20%. That 20% needs to be taken out of the business in order to pay the taxes if you're going to tax unrealized gains. That means that 20% only gets taxed once instead of going through the graph and getting taxed exponentially many more times as it grows.
You're getting confused because you are failing to recognize that the owners wealth is being taxed when those other taxes are paid.
If the company had a magical exemption from all taxes, the owner would have a substantially high net worth. The gap between that hypothetical value, and the real value, is the tax being paid.
This is not only self-serving and/or bootlicking drivel, it's economically illiterate at a level that shouldn't exist outside econ 101 class. Taxes on a transaction are paid by the party with less elasticity / bargaining power, which is, in aggregate, the worker.
Also, you didn't address the r>g elephant in the room.
From the governments POV, they don't care, businesses are farms where tax money grows. The corn may claim full ownership of it's kernels, but the farmer and the broker know that the farmer is the one who took the risk and provided all the needs for the corn to safely divide cells all day. The larger the farm, the more money tax revenue harvested.
Thankfully we are not corn, and every one of us is free to break off and make our own farm (or go to another one). However for the last few hundred years, people have flocked away from having their own farms into just safely dividing cells all day on someone else's farm. It's not surprising that capital concentrates when everyone would rather work for someone else than work for themselves. But at least we have a lifeline, where pretty much anyone can sign up with a broker and buy capital assets in a day.
Yes, "collateralization counts as realization" is the bare basement minimum of what we should do to fixed up the tax code, but I'm less offended by the scenario you described -- which involves skin-in-the-game capital allocation decisions, the whole point of capitalism -- than I am by the far more common situation where the assets just sit and grow and are rewarded for their sloth by a complete absence of tax on the one activity billionaires are best at: sitting back and getting paid for being rich.
This post makes the mistake of assuming that everyone is on board with the "unrealized gains are totally different from income and should never ever be taxed a penny because that would be communism and implode the economy and kill kittens" hustle. It's a good hustle, because it takes precision to argue against and it's built around a kernel or two of truth, but these two kernels are firmly planted in a gigantic monumental turd of tax avoidance by the obscenely wealthy.
Would you rather they hoard the money under their mattress or invest it back into the economy? Like I explained, the reason unrealized gains are not taxed is because they generate more tax revenue than if the individuals pulled out the money, made a 1 time lump sum tax payment, and hoarded the rest. Its not tax avoidance at all. Its a way to multiply tax revenue as that capital is used through numerous transactions that all generate federal and state income and sales taxes.
It's exactly the other way around. The USA is not a developing economy, we do not suffer from a lack of capital and abundance of investment opportunity, we suffer from an abundance of capital and lack of investment opportunity. The average American billionaire has no idea what to do with a marginal dollar, so he just bids up assets with it and maybe punts on spaceships or something. The average American, in stark contrast, spends the dollar satisfying very real as-yet-unsatisfied consumptive wants and needs, at which point the dollar gets spent and taxed and spent and taxed again and again and again. That's understatement: the velocity factors are 0.7x and 5x, last I recall.
You can read the balance of explanations off interest rates, you can read it off of valuation metrics, you can read it off of judgement calls about the quality of the marginal investment opportunity. You can't read it off the anus of a billionaire or the turd of self-serving think tank propaganda it pinched out, though, and that's where you are clearly looking for it.
Top 10% is the upper middle class, not the ultra rich. A successful surgeon making $1M per year is paying well over 40% a year in taxes, while Bezos is paying 1%.
Do you have the data for that? I was wondering about tax paid (as dollars not effective rate- I know effective tends to me lower for HNW individuals due to accountants and other financial professionals they can afford).
- The top 1% of income earners pay 40.4% of the total U.S. Federal Income Tax receipts
- Top 5% pays 61.0%
- Top 10% pays 72.0%
- Top 25% pays 87.2%
- Top 50% pays 97.0%
...of course that doesn't include payroll taxes (Social Security).
Focusing on a single tax is silly. We should look at all taxes paid across all levels of government. Federal income tax is one of the most progressive taxes out there, so of course that's what people focus on when they want to make the point that wealthy people are being sacrificed to the altar of taxation.
If you look at all taxes, the share paid is remarkably close to the share earned. According to https://itep.org/who-pays-taxes-in-america-in-2024/, in 2024, the top 1% earned 20.1% of income while paying 23.9% of taxes. The bottom 20% paid 1.5% of taxes while earning 2.6% of income.
> in 2024, the top 1% earned 20.1% of income while paying 23.9% of taxes.
Within that group, the share is not evenly distributed, though.
Most who are in the 1% club are people who are earning wage income, like doctors, and are getting absolutely reamed with taxes. The vast majority of the 1% are not rich enough to be doing elaborate schemes to avoid taxes.
Billionaires, who are in the top 0.0002%, are an entirely whole different story. There are many figures that show they generally do not pay their fair share in taxes.
His assets are not income. Just like your assets are not taxed.
Ok, but he does that loan-against-assets hack!
Well the fact is that those loans eventually need to be paid, so at some point he will pay that 40% (unless he does the step-up basis hack when he dies)
Ok, but he should be paying annually like everyone else!
Well, technically he is, his assets, the company Amazon, pays a lot of taxes annually. The government views Amazon as a money printer, states get their sales taxes, and the federal government gets their income taxes. All of which originate with Amazon.
All of which is to say, that the uppe-middle/upper-class, the successful surgeon, is the one that needs to be paying more taxes to equilibriate society.
If you can convince people that Amazon is a bad value proposition (i.e. stop giving amazon money for stuff), then you will effectively accomplish that.
But you probably couldn't even count the number of people with Prime subscriptions that show up to an "Eat the 1%!" march...
It's very unlikely, he has pledged to give away most of his wealth in his lifetime, but there are a variety of factors that will always add space for detractors to make fair points. Bill Gates is still worth billions despite being an endless waterfall of charity money for decades.
Either way, the step-up thing is way way way more common in the upper class, where people with ~$24M want their kids to get $6M each. These people are nobodies with no public image, and light years away from "Billionaire Class" status.
>Except when states fall all over themselves to give Amazon a massive tax break to build their second HQ.
All the employees will pay income tax, and they will mostly spend their money in the state, generating sales tax. Then there is the second order effect of businesses that pop-up to feed off the money that the employees make.
What's often missed, and never explained, is that the government loves businesses, because businesses convert people into tax revenue, on almost all levels. Don't miss that.
> It's very unlikely, he has pledged to give away most of his wealth in his lifetime,
The ultra rich give away donations in the form of stock, so they never sell it, just transfer it. So no tax to them and they get a tax deduction for the donation fair market value.
He can't give away the securities he has used as collateral for his loans.
The businesses that are laying off employees because of competition from Amazon were less efficient and this employed far more people than Amazon does, thus paying more in taxes.
taxing the rich is a how the fuck do we afford to take care of society thing, plain and simple. a poor government can’t provide services and infrastructure. anything else is framing and optics
Texting the rich when they’ve managed to get into the position of paying far less tax than almost everyone else is also the obviously right thing to do.
I assume this will be challenged in court immediately. Does anyone understand whether it is likely to survive those legal challenges?
EDIT:
Here is a list reported by Google search but I really do not understand or know how reasonable these challenges are.
Equal Protection: Owners may argue the tax unfairly treats similar properties differently based on second-home status, value threshold, or owner residence. This is likely a weaker challenge because tax classifications usually receive deferential rational-basis review.
Nonresident Discrimination: A challenge could claim the tax targets out-of-city, out-of-state, or foreign owners rather than property use. The law is safer if written as a tax on non-primary luxury residences, not on nonresidents as a class.
Assessment Inequality: Owners may challenge how the city values condos, co-ops, townhouses, and mixed-use properties. This could be significant if the $5 million threshold is applied inconsistently or without reliable valuation rules.
Due Process: Owners may argue the law lacks clear notice, proof, exemption, and appeal procedures. This would be especially relevant for disputes over whether a home is truly a second home.
Residency Conflicts: Taxpayers may challenge inconsistent treatment if the city treats them as NYC residents for income tax but non-primary homeowners for this tax. Clear coordination between residency rules would reduce this risk.
Home Rule Authority: Opponents may argue NYC lacks authority unless the state clearly authorizes the tax. This challenge is less likely to succeed if Albany passes valid enabling legislation and NYC follows required procedures.
Property taxes already exist. There is no obvious reason why this particular property tax would be legally problematic.
The tax is also likely politically difficult to counter. Consider how limited in scope these taxes are, how the tax revenue benefits residents who live in NYC through providing more revenue for services without taxing residents at all, and how the only constituent the taxes negatively affects are non-residents (aka it’s non-trivial to argue that these people should even be considered constituents) who benefit from the services the city offers through stable apartment prices that nicely store their wealth yet provide little value in return.
The only rebuttal one could conceive is the value these high-net-worth individuals altruistically provide the city through developing office space and giving jobs to the city is not worth risking, but that is like saying the tail wags the dog. The reason these CEOs go to NYC is because that is where the talent and economic clustering is: if these high-net-worth individuals could get the talent they need to run their firms in Miami and Austin, they would have done so already. They have tried and they have failed up until this point.
Regardless, a claim into the future in such a complex system such as the markets and the judicial system (especially a common law system) always relies on induction which is never going to be deterministic. However, this tax is just another property tax meaning it likely will stand in court. Additionally, given that the opposition has very weak rebuttals against a well-versed counterparty implies the legislature or other political machinery won’t have a strong enough incentive to fight this tax.
>The reason these CEOs go to NYC is because that is where the talent and economic clustering is: if these high-net-worth individuals could get the talent they need to run their firms in Miami and Austin, they would have done so already. They have tried and they have failed up until this point.
This needs to be shouted from the rooftops.
I am from NYC and live in Miami.
I have seen hedge funds try and fail to bring talent down here, and paying talent through the nose to convince them. It has failed, because 1. local private schools won't let Ken Griffin buy his way to the front of the line; and 2. there's no local talent pipelines to recruit from that come even remotely close to what is found in the Northeast, or in the Bay Area.
UM pales in comparison to the fact that almost every Ivy League school is within a 3 hour drive of NYC, not counting other strong school (NYU, NEASC colleges, MIT, etc). FIU or UF isn't even in the same stratosphere.
Taxes pay for the establishment of a strong educational foundation so that even local public schools can send kids to Ivies or top colleges. Taxes pay to keep that going.
NYS already has tax breaks for one's primary residence which varies by income and a tax on the sale of homes >$1Mil. Given how entrenched those are, I have trouble imagining a way in which this new tax is incongruous with existing rules.
Nope, bailing out banks is a bad idea, why would I think otherwise? Two things can be bad at the same time: socialism is a dysfunctional ideology just like crony capitalism is a bad idea.
Depends on the alternatives. The real alternative is technofeudalism and eventual coming revolutions where you won't get constructive reformists anymore.
Given that a number of modern social and economic problems can be traced back to Thatcher and Reagan policies, anybody quoting Thatcher unironically should not be taken seriously.
What specific “modern social and economic problems” can be attributed to them? The 90s was a period of economic growth after their policies proved to be effective.
Given that Socialism has shown time and time again to lead to economical and societal disaster, anyone supporting it unironically should not be taken seriously.
Show me the proof of a working Socialist system [1] and I might change my mind. Otherwise you're just deflecting through misplaced ad-hominems.
[1] No, the Scandinavian countries are not socialist countries - I live in one of then. Neither is the Netherlands, nor France nor any other European country.
democratic socialist isn't inherently interchangeable with social democracy. the DSA defines democratic socialism as explicitly at odds with capitalism, and aims to achieve socialism by going through and past social democracy (where european social democracy is plenty capitalist). Mamdani himself has actively disavowed capitalism.
> Capitalism is a system designed by the owning class to exploit the rest of us for their own profit. We must replace it with democratic socialism, a system where ordinary people have a real voice in our workplaces, neighborhoods, and society.
> We believe there are many avenues that feed into the democratic road to socialism. Our vision pushes further than historic social democracy and leaves behind authoritarian visions of socialism in the dustbin of history.
> [...] We want to win “radical” reforms like single-payer Medicare for All, defunding the police/refunding communities, the Green New Deal, and more as a transition to a freer, more just life.
"We find that, before adjusting for these factors, our choice of tax rates and brackets could raise almost exactly $500 million from a little over 11,200 properties. However, revenues could be reduced to between roughly $340 million and $380 million based on assumptions on exclusions for rented units and behavioral changes following the imposition of the tax."
It's all media feel goodsies but not actually do anything substantive.
I think that this has the benefit of both raising a non trivial amount of money as well as reducing housing demand from the wealthy in a supply constrained market
So, in addition to doing something very popular, meaning gaining political capital, it is ALSO expected to get hundreds of millions from this? That’s very substantial in my book
From what I know this is going to be challenged in the court and it probably it is not going to pass the legal challenge (renting part is one interesting loophole - I think that one caused similar tax law in SF to be struck down).
I strongly doubt that this is going to have the effect that they want it to.
It won't raise the taxes that they expect it to. It won't free up inventory. It will halt construction.
This guy thinks a tax on second homes in fucking NYC is going to disproportionately harm the middle class.
He is economically illiterate.
Edit: scratch that, he also mentioned leaving a rent controlled apartment because of a crabs in a bucket mentality. I think he’s lying to push his own political agenda which appears to be that of the rich never paying taxes.
I’ll lol if he’s some pleb like most of us and is just running defense for his “betters”
many people are convinced on some level that things are the way they have to be for a reason. lots of people internalise capitalism. it’s a way to rectify the cognitive dissonance
It’s nothing to do about capitalism. It’s just being deceitful or ignorant to reality. It’s one of the most expensive areas for land and homes on the planet. Owning multiple units means you are definitionally not in the middle class.
You can be in that cohort and not necessarily be the 1%, 0.1%, etc but you are not the middle.
While rent control and exclusionary zoning do have measurable negative impacts on building, a vacancy tax on second homes is unlikely to have side effects beyond raising revenue. If a price-sensitive owner of a pied-à-terre is forced to sell or rent out the unit, then the policy is successful: the residence will be occupied.
Ideally no second home tax would be implemented, and we could treat housing as an export. But due to intense local planning constraints, housing is scarce.
> Almost by definition you cannot out build the demand for housing.
Would love to see some justification for this claim, which tacitly suggests that adding, say, 2M extra apartments over baseline would have zero effect on our housing market.
2 million new apartments is doubling the number of apartments in NYC.
I call water safe, but you may say it's a tacit admission that you could drink 5 gallons in an hour an experience zero effects. I wouldn't call that an honest rebuttal
There are 3.7M existing units in NYC, and I meant it as a 54% increase in overall housing units([0]), but that's on me for not clarifying that I did not mean "apartments" specifically and intended instead to say "housing units". It's still a very large number of units, and I think filtering effects from adding these in whatever configuration—studio apartments, large apartments, houses, mixed stock, etc.—would increase affordability across the market.
> I call water safe, but you may say it's a tacit admission that you could drink 5 gallons in an hour an experience zero effects. I wouldn't call that an honest rebuttal
I meant it as an honest rebuttal, and I largely disagree that your analogy applies.
Humans obviously die from hyponatremia if they drink massive amounts of water: in your example, 5 gallons of water, which is 5X-10X someone's daily consumption in a short period of time. OK, I agree.
I don't think the theoretical example of increasing the housing stock in NYC by 54% is likely to lead to serious negative effects, especially if it happens over a period of several years, because the city has astronomically high rents and even higher house prices [1]. I believe the culprit is primarily zoning and other restrictions on building, which I defended in another comment upthread.
I do think radically relaxing zoning laws and regulations could theoretically lead to such an increase in supply within a period of, say, ten years. It is politically infeasible and would require basically every voter to understand that supply and demand pricing works in the housing market, which they don't.
The reason I used that exact number—which was deliberately chosen to be large—is that I simply disagree with your claim, if I am understanding it correctly, and I felt a larger number would drive the point home more.
I interpreted your claim as: adding marginal units to the housing market in NYC will not change the price of housing, relative to the universe in which we do not add more units, because there is alway a marginal person waiting in the wings who would like to move to NYC but hasn't yet.
The thing is, what is actually preventing that marginal person from moving here? There is some vacancy here in NYC, even if it's low at 1.4%. Just adding one more unit with no change in price anywhere should not affect anything. In order for that person to actually go from "I am staying where I am" to "I am moving to NYC," the thing that has to change is the value of that apartment: it must breach the threshold at which point they'd move to NYC. I claim this predominantly happens through increased supply driving down price for a given unit compared to the universe where supply is held constant, which happens with basically any additional housing (via the filtering effect). If the increased supply held rents steady, there is no reason for that in-migration. This is the underlying mechanism by which all supply and demand works from my understanding; I don't see a reason why it should be different solely for housing in exactly one metropolitan area.
Obviously individual decision making for a given person is not this simplistic, but at a population level I think the desirability vs. price calculation holds and the increase in supply decreasing price holds, which is why metro areas that have built a lot (e.g. Tokyo, Austin, Nashville) have even seen falling housing prices, while NYC and SF see rising rents.
I picked a large number of units in my initial claim, but I basically do not think the logic changes for a small number of units either. Adding 100 units relative to baseline would nudge it down a smaller, but still meaningful amount.
Seriously. Instead of using that land to build a $250 million penthouse Ken Griffin only spends 10 days a year in, they could probably build enough housing for 500+ middle class families.
Who will build those homes? Who will pay for them? If it were a lucrative business to build those homes I'd assume someone would be building them but that does not seem to be the case. Why is this?
Upvoting you for a great question! Not everything has to be lucrative amigo. The city could build multifamily housing and finance it through municipal bonds that pay a reasonable rate (tax free, booyakasha).
I'm not sure it's that clear, and the taxes might not be the point. If this halts construction of second homes in the higher price ranges, then those construction crews will still need to do something. So, that might make it possible to find construction capacity for higher-density construction that otherwise wasn't available. Whether or not such a trickle-down effect will happen isn't guaranteed, but it's possible. It's also possible that no construction happens and we see a loss of jobs in the process.
It's a complex market and this is definitely a risk.
Good! Second homes in any region with low inventory should be taxed...
It seems like a place like Manhattan might benefit from first up-zoning the low slung sections that are currently 4-8 stories.
My point here is that I'd start with trying to build enough housing before spending political capital on marginal things that neither unlock supply nor generate much revenue.
You're right, when I think of a place that has an overabundance of 2 floor single family homes, I think of Manhattan.
It isn't that which is the issue. It is the fact greenwich village has been at the same height since even before Don Draper's time. You see, the suburban enclaves of long island and upstate and new jersey and the comparatively more built up areas of manhattan do have the exact same issue with regards to housing, and that is there is little room in the zoned capacity to legally add any more housing.
In 1961, NYC adopted a zoning plan that saw zoned capacity reduced by 80%. These sort of changes to zoning happened around the country in the 1960s and 70s in response to red lining being made illegal. If you can't prevent black people from living near you by law, maybe you could instead prevent anyone from living near you and guarantee a supply side crisis such that the wealthiest individuals in the economy are who can afford to be your neighbors, and in 1961 surely they won't be black. You should look up the median income differences between a white nycer and a black nycer today, it is shocking. Median household wealth for whites just within the scope of new york state, not even at city resolution, is nearly 15x higher (1).
Today, 80 years later, we have kept the racist-by-transitive-property laws on the books all over the country. And as such, cities remain highly segregated by both race and class. Civil right era in terms of housing was essentially a failure to achieve any change from this status quo.
1. https://comptroller.nyc.gov/reports/the-racial-wealth-gap-in...
With historic landmarks or districts you can generally transfer unused development capacity to other sites. Grand Central famously was spared from demolition but its unused zoning rights have been transferred elsewhere.
Sure but they are still a finite resource. Once you've transferred those rights to a super tall luxury condo building, you can't readily transform that into affordable middle class and lower income housing.
You could, theoretically, just keep upzoning the underlying parcel without any detriment to neighborhood character.
One issue with using hollywood accounting for zoning is failing to consider the context of the site, especially in terms of infrastructure and job access, in favor of historical protections. All that subway capacity and walkability to so many jobs in greenwich village for example is being squandered by punting potential upzoning elsewhere.
Bulldoze greenwich village.
Do you live here? I do, and I’m astounded by the number of 1- to 3-story buildings and surface parking lots (!) dotted throughout Manhattan, especially outside of the skyscraper clusters in midtown and downtown.
There is an unbelievable shortage of housing that is solvable only by increasing supply and building upwards. It’s not even single-family homes; why are there any one-story buildings in the lower east side?
It's really shocking how much underutilized space there is in Manhattan and near Brooklyn/Queens.
is that really what people want? The fact that people say why not have 50 story concrete blocks everywhere to get more people feels like exact thing that would destroy what makes living in the city nice... Tenement housing sucked, why add thousands of people to crammed parts of city. We should be incentivizing sprawl and better transportation.
> is that really what people want?
Yes. I feel like Americans and New Yorkers have been very clear about what they want in housing: more of it, and cheaper.
I am a New Yorker, people want more housing but there is still NIMBYism because they want to preserve the charm, and I'm mostly only talking about manhattan. While people are not fans of the low density luxury skyscrapers popping up in places, I've not seen people who currently live in the place think we should add massive housing blocs carte blanche. Sure there few scattered places for a few projects but not like advocating to tear down to build bigger. That mentality comes from people who are definitely not new yorkers or live in fringes.
> people who currently live in the place
I currently live in Manhattan, have lived here for years, and I support relaxing zoning at least to the point where most Manhattan neighborhoods can ~double their building heights. YIMBYs are everywhere. Not everyone can be fortunate enough to get a stabilized unit (like me) or to have bought decades ago when prices were low.
> add massive housing blocs carte blanche
IMO this is dichotomous thinking that is actually brought on by zoning rules.
It is very difficult and very expensive to get construction approved, so the only projects that make sense to fund are towers full of units, which can attract more rent and therefore higher returns per lot, justifying the risk and expense of permitting.
If you just deleted zoning restrictions carte blanche and made it much easier to build (an automatic "Yes" if you meet basic criteria), then a lot of sagging and old 1-3 story buildings which are everywhere in Manhattan would get naturally replaced with six- to eight-story buildings. This is the natural evolution of a built environment.
The amount of additional housing and commercial space that comes online from this is huge, and there's no need to dot the city itself or even Brooklyn/Queens with commie blocks
Would paving over all of Central Park to fill the area with residential skyscrapers be a good idea?
> Would paving over all of Central Park to fill the area with residential skyscrapers be a good idea?
As a moderately wealthy former New Yorker? I say no. If we put it to a referendum? I’d give it even odds. If the referendum were for developing part of Central Park into public housing? I’d guess it would pass.
Eh, I would only think if its like at the top of the park where less people/tourists ever visit.
> its like at the top of the park where less people/tourists ever visit
Tourists don't vote or show up to community-board meetings. The top of the park is closer to Harlem. That is why it would be easier to bulldoze.
Relaxing the zoning requirements that unnaturally force huge swaths of the city to be under-built would fix this without sprawling housing into existing greenspace.
This is the opposite of a steel-man.
Yes nobody wants to live in cities which is why nobody lives there.
Tokio, Singapore, Amsterdam- all ghost towns.
You are missing the point. Of course people want to live in one of the most vibrant cities in the world. People also want a vacation home at the beach or in the mountains thats private and beautiful and easy to get to. Except if we built giant monstrosities and condos in the hamptons and make all ski homes tenement housing it will be much less desirable to go to them. No ones asking to make more apartments and housing in rust belt cities.
This. We don’t have a housing problem. We have a “I want to live here problem.” And if we could snap our fingers and everybody in the world who wanted to live in NY could, it would be the same second nobody would want to live in NY.
It just does not scale like people think. And that is why the price has to go up, and that is the forcing factor for max capacity of any given parcel of land.
The fact is we all can’t live in the same city. And people need to do what we did in the past. And that is move to new locations that are cheaper.
Every hot spot today once was a crappy place, it was over time that it became the desirable place. That is just how it works. You got to move and live where you can afford.
Every city has a max amount of occupancy, and density. It’s so silly to even think about this on the individual level. I can find 1BN people who want to live in NY today if told today they could have a place today for $500 a month but 1BN other people are also joining would instantly turn down the offer.
It has a huge amount of areas that are underdeveloped relative to demand. Many areas with height restrictions that block basically all new developments. For example West Village is one of the most in demand zip codes in the entire world caps new builds around 80 feet. East village caps housing @ mid rise so new grads who live there spend half their income on housing.
He is right.
You'll notice I specifically said 4 to 8 story buildings.
Spending political capital? Mamdani is gaining political capital with such taxes!
Gaining in some places and losing it in others.
Among a few ultrarich which amplify their voices by screaming through their media mouthpieces to make them sound like they're of any importance to society, from which they leech their wealth in the first place.
If someone tried to "up-zone," wouldn't they incur enormous popular and media backlash for demolishing buildings and displacing communities that have been there for decades just so they could build high-rent luxury skyscrapers?
I feel like that was the backdrop to about half the movies I watched in the '80s.
Then star with Greenwich Village.
i think upzoning which requires kicking people out of the homes they currently live in is spending more political capital than changing tax policy to get more utilization out of the existing empty houses.
The people that have second luxury homes in new york are the people that spent through the roof to avoid mamdani being elected
If I was a developer and building owner who only cared about money, it seems like it would be much better to build a luxury building where the units are sold, but sit empty most of the time. This seems to be the environment in NYC. The proper systems need to be in place so it makes sense to build housing for actual people, rather than building stored real estate value for the ultra rich, especially foreign investors who may never even set foot in the US and are just looking to diversify their portfolio.
I’m not an “eat the rich” person, but these mostly vacant buildings in a city with a housing affordability problem are a crime. I don’t necessarily fault the billionaires for this, I fault the politicians who sat back and watched it happen, approving all the projects along the way.
> these mostly vacant buildings in a city with a housing affordability problem
Vacancy rates are extremely low in NYC at 1.4%. Anything below 5% indicates drastic under-supply of housing. I don’t think that vacant real estate for billionaires is a significant contributor; it’s almost exclusively an issue of supply.
That percentage only includes the openly listed units; NYC has a massive shadow inventory of rentable inventory deliberately kept off-market for various reasons.
1 Wall St, for example, kept 85% of its units arbitrarily off market in order to prop up rents, and thus imputed property valuation. This kind of behavior shouldn’t be encouraged by the state and financial system, but guess what we do!
How do you know it's ineffective? Other targeted taxes, such as alcohol tax, tobacco tax, congestion tax, etc., have been shown to be very effective.
The power to tax is the power to destroy
Why not both? To suggest otherwise is absurd.
If I might put my tinfoil hat on for a moment, I think the recent obsession with upzoning is to distract from the possibility of regulating landlords—as if there were any large number of people opposed to upzoning before....
Is increasing housing the goal of the tax, or is it just raising revenues to balance the budget?
both
In Manhattan the low zones are due to the soil not being good for higher construction. Lower Manhattan and midtown are made of basalt stone that is extremely strong and apt for skyscrapers.
Bedrock is only a little lower in the "Midtown Gap", and in any case a lot of those 4 story buildings could be 8-10.
the real reason midtown is where it is, is because that is where the train stations are due to the city banning surface running railways south of 42nd St. (The remaining surface railways north of that point have been covered up.)
As a result, Midtown is now one of the few places in New York's metropolitan that can reach the millions of people in the five boroughs and the suburbs all at once, which means the labor market is substantially larger than what it is in Lower Manhattan or Downtown Brooklyn, and makes it massively more attractive for employers.
I'm guessing it would be tough to make the numbers work demolishing a 4-story building and building one that's only 2-2.5x the square footage, especially with today's interest rates.
You'll lose a ton of square footage to compliance. Those wide doorways with non conflicting doors, wide staircases, required clearances around everything, all the other stuff that's been done to old apartments that isn't compatible with modern codes.
So that 2.5x square footage is more like 1.5x when it comes to the number of units of like quality/liveability you can pack in.
That's pretty hard to say in a blanket way, I wouldn't want to speculate. But there's never a bad time to fix zoning.
LOL. Why not just build bunkhouses and then rent out bunk beds there? For a cool $5000 a month. Because that's the end goal, isn't it? Manhattan is _already_ one of the densest cities in the world.
It needs a good _downzoning_ to be liveable again.
If everyone who wants to pay $5k a month to live in NYC is able to; I’ll be super happy and pleased for them.
> bunk beds… $5000/month
The market prices full one-bedrooms at less than this in most of Manhattan. Flophouse beds would cost a fraction of this and they would get cheaper the more of them you have. They’d also slow the growth of rent price in NYC.
Let’s take your example at face value. Suppose Manhattan added one million beds to its existing ~3.8M bedroom housing stock via the “missing middle” housing that you described, perhaps over the next ten years. These might have small private bedrooms and shared kitchen/office/bathroom facilities. They might even include dorms, but I’ll focus on single-room occupancy units. You’d get the space for this from some mix of re-developing office buildings or upzoning or re-developing low-slung buildings.
The rent of these single-room occupancy units would be a fraction of the rent of a normal place. The people living there would be far less rent-burdened than they would have been otherwise, freeing up more income for consumption or savings/investment, boosting economic activity. Some of them would be new residents, whose income taxes (if they pay them) and spent dollars/sales taxes would be a net benefit to the city budget. Some of them would otherwise become transiently homeless due to affordability concerns, which would be destabilizing for them and expensive for the city due to homeless program spending.
Others would be people who currently live in apartments but would move to these units because they prefer cheaper rent, greater privacy (they might be sharing a room today), a newer building, or the greater efficiency of having multiple bathrooms. Maybe right now they are sharing e.g. a four-bedroom one-bathroom apartment with three strangers in Hell’s Kitchen for $1400/month. These people would otherwise be in the housing market for a full apartment, and removing them leaves more full apartments for people who want to occupy them, either alone or with roommates. Ergo we get downward pressure on full apartment rents.
The flophouses and dorms and SROs were a key part of the housing market that kept Manhattan more affordable and therefore livable in the 20th century, when density was up to 40% greater than it is now. It was deeply shortsighted to get rid of them. The idea that we should downzone even further makes no sense to me; you get to decrease affordability and decrease the economic benefits of agglomeration to the local economy at the same time, all so… there are fewer people on the subway, I guess? I disagree with the “too much density” argument on its face anyway. Density has clear economic benefits via agglomeration and productivity gains; diverse and dense housing stock via upzoning increases affordability via supply/demand and filtering effects; and the way you manage density is through appropriate infrastructure spending on housing, services, and public spaces which—you guessed it!-becomes cheaper per person the denser you build. Seoul has twice the density of Manhattan.
I live here. The thing making Manhattan unlivable is that a one-bedroom is $4500 in the east village due to not enough supply. Fix the housing costs by building more of any and all kinds of housing and then we can deal with the other problems via better governance and increased tax revenues. There’s nothing we can do otherwise that isn’t just rationing or some other bandaid solution.
> The flophouses and dorms and SROs were a key part of the housing market that kept Manhattan more affordable and therefore livable in the 20th century, when density was up to 40% greater than it is now.
???? Can you provide the citation for higher density in the early 20th century?
> I live here. The thing making Manhattan unlivable is that a one-bedroom is $4500 in the east village due to not enough supply.
And there is never going to be enough supply. Your only choice is to Detroitify your city.
"Just build more" in Manhattan is beyond ridiculous. It's literally the definition of madness: "The definition of insanity is doing the same thing over and over again and expecting a different result".
> Can you provide the citation for higher density in the early 20th century?
It was a quick google search and the value was taken from the Gemini result, which is not great practice. Thank you for asking for citations. Unironically! Good discussion on this site matters to me, and I want my positions to have strong foundations.
I looked into it more deeply and have found the actual numbers. The 1910 density was more like 54% higher.
Manhattan reached its peak population of ~2.3M around 1910, with a built-up area on the island of ~4,000 hectares=15.44 square miles. This gives a population density of 149k people per built-up square mile. This is per NYU professor Angel Shlomo's 2015 paper, which seems to be the most in-depth analysis I could find ([0]). We use built-up area because north Manhattan still had large tracts of uninhabited farmland at the time; this area should be excluded to better represent the experience of the residents.
Manhattan's current population is ~1.66M (per [1]), and I am estimating the current built-up area at 4466 hectares=17.24 square miles, as this was the exact built-up area given in [0] for 2013. I am assuming Manhattan was, then and now, basically fully built-up and therefore the area is unchanged. (If I'm wrong, then I would guess there's actually more built-up area now, and therefore the population density is lower, strengthening my POV.)
This gives a current Manhattan population density of 96.3k residents per built square mile. This means the peak density in 1910 was actually (149k/96.3k=)154.7% what it is today! My initial Google estimate was undershooting it.
Ergo Manhattan today is nowhere near its historic density.
From all this, I think it is clear that Manhattan and NYC are nowhere near their carrying capacity. There are other safe, clean metros on planet earth with much higher density and lower housing costs (e.g. Seoul), and the thing preventing greater density and lower costs isn't some fundamental upper bound or even economic incentives: it's just zoning.
What has changed since 1910? New York City has much better infrastructure that would allow even greater density in the city, outer boroughs, and surrounding area without negatively impacting quality of life. Modern building techniques allow us to build far more than six stories high without imperiling residents in tenement housing. There is a robust subway and rail network that allows commuters to come from other, even less dense areas. I think we could build to these historic densities much more safely and pleasantly now, which is also the opinion of the authors of [0].
> And there is never going to be enough supply.
I simply do not understand your rationale. We have not seriously tried to provide enough supply, due to the zoning constraints.
In 2023 there were ~3.7M housing units in NYC ([2]). We are adding ~9,450 units every quarter ([3]), for a total of ~38k units per year, a yearly increase of about 1%. This is a drastic undershooting of NYC's own goal to build 500,000 new homes from 2022 to 2032, which would look more like 13k to 14k new units per quarter ([3])—and some groups estimate that the housing shortage is even more than that 500k units. It takes 3.4 years on average to build a unit in NYC and more than four years to build an apartment in Manhattan ([3]), which is absurdly slow, and the vacancy rate is an absurdly low 1.4% where ~5% is the marker for a healthy real estate market ([2]+general knowledge).
Manhattan (and NYC in general) has onerous zoning and review requirements that prevent the adequate building of new housing to meet demand. Of the existing building stock, fully 40% of it would not be permitted nowadays, primarily because they are "too tall" or "have too many apartments," "too many businesses," or any number of other absurd requirements in a city with extremely high housing costs ([4]). There are even regulations around having enough parking spots in parts of Manhattan, a place with ample public transit, lots of street parking, and subsidized van service for the disabled. These buildings are the backbone of our urban core; they provide housing for hundreds of thousands of people and commercial space that drives much of the NYC metro area's economy, the GDP of which is over $2T and makes up ~9% of the US economy ([5]).
Conversely, there are many land uses in Manhattan that fit these zoning requirements and are ridiculous and uneconomical uses of land. For example: a small parking lot structure in the West Village (of which there are a depressing number) is a valid usage of land, while an eight-floor apartment building with an elevator and retail space on the bottom is "too tall" and disallowed because it would exceed the 80-foot limit in the village. How does another small parking lot serve a city gripped by housing crisis that is caused by a shortage of units—which also has excellent rail connection and plenty of parking already—better than an apartment building? The apartment building could even be on top of a parking garage if we wanted it to, but adding the residential space and/or more commercial space (which raises incomes via agglomeration and therefore improves affordability by higher salaries relative to housing) is not allowed because it runs afoul of height restrictions.
This is irrational policy that directly contributes to the housing crisis.
> Your only choice is to Detroitify your city.
It's interesting that you claim densifying Manhattan will turn it into Detroit.
I claim that Detroit was hollowed out precisely by anti-density and pro-suburbanization practices. I'm lazy and have been typing forever at this point, so: https://en.wikipedia.org/wiki/Decline_of_Detroit#Population_....
When you send factories to the suburbs and then put highways straight through the neighborhoods in your city where people actually live and work, that's not densification leading to bad outcomes. It is detonating a city via discriminatory urban policy and then falsely claiming it is the natural end result for those pesky cities and their residents.
[0] https://marroninstitute.nyu.edu/uploads/content/Manhattan_De...
[1] https://censusreporter.org/profiles/06000US3606144919-manhat...
[2] https://www.nyc.gov/content/tenantprotection/pages/fast-fact...
[3] https://www.nytimes.com/2025/12/23/nyregion/nyc-housing-deve...
[4] https://www.nytimes.com/interactive/2016/05/19/upshot/forty-...
[5] https://edc.nyc/sites/default/files/2025-12/NYCEDC-2025-Stat...
(This is a more readable but much less detailed intro to [0]: https://urbanomnibus.net/2014/10/the-rise-and-fall-of-manhat...).
Thoughtful reply.
>I claim that Detroit was hollowed out precisely by anti-density and pro-suburbanization practices.
>When you send factories to the suburbs and then put highways straight through the neighborhoods in your city where people actually live and work, that's not densification leading to bad outcomes. It is detonating a city via discriminatory urban policy
Isn't this overstating the role of policy?
1. Wage arbitrage by the Big 3 to avoid urban auto unions out to the suburbs
2. Post-WW2 economic manuf. wind-down [1]
3. Post-WW2 highway build-up enabling suburbia
Looking at the things out of Detroit's hands, I don't think we should lean on policy as much because policy can't nail the factories to the ground or prevent their closure. The economic trends simply appeared much more powerful than city policy.
The fate of the Detroit city limits auto cluster could have been sealed with the war end. Businesses often want to escape high costs if they can do so without giving up their operation or market share, and they were able to do just that with the MI suburbs and highways.
Policy might have been able to delay the collapse if, like you promote, the city managed to encourage building housing to relieve the rent and home price pressure. However this seems nigh impossible in practice (even in NYC?) because property owners are politically connected and generally do not like values to go down, a classic case of concentrated benefits and diffuse costs [2].
[1] https://www.chicagofed.org/publications/chicago-fed-letter/2...
[2] https://1889institute.org/the-problem-of-diffuse-costs-and-c...
We have similar taxes in major cities in Canada (including both metro and provincial taxes here in Vancouver).
Housing is still massively squeezed and unaffordable for many in the Vancouver metro area, but the taxes definitely have encouraged some homeowners to sell or rent their properties, especially foreign investors, and their seem to be few or no downsides for people of middle-class and even moderately-affluent incomes.
I doubt that NYC will lose too much sleep over the protestations from extraordinarily wealthy people who own multiple extraordinarily expensive homes, and where NYC isn't their primary residence.
"there seem", not *their seem… argh, embarrassingly uneditable
All the owners have to do is transfer the property to an LLC. I'm sure none of them will figure this out. This proposal's only purpose is PR.
Which isn’t a bad thing per se. A lot of politics is about messaging, there is value in formalizing a position such as this one
Yup
Zohran is doing too much. I hope he at least leaves the second yachts alone.
The intersection between those with a second home and having a yacht is probably not that many.
What's the context here? Isn't he doing enough?
It's sarcasm (and I enjoyed it).
Yes, and I'm asking what the context for that sarcasm is.
the political and financial elite of New York are coming to terms with the fact that they have completely lost the faith of the lower and middle classes in terms of maintaining or improving living standards. it has been interesting watching the media try to contort themselves to address this.
The WSJ somehow managed to best the infamous "avocado toast" line about saving for a house by suggesting that current youngsters are splurging on rotisserie chicken: https://www.yahoo.com/entertainment/articles/wall-street-jou...
> rotisserie chicken
It has to be a deliberate joke, right? Isn’t rotisserie chicken the poster child for loss leaders? For all the reasons to buy it, luxury is the bottom of the list.
The rich have in my view become increasingly (outwardly) selfish and craven, so it makes sense that they are now associating with the vibes of apocryphal Marie Antoinette quotes.
And the second beach house in the Hamptons!
Damn socialists.
sorry but all of your yachts are currently in the process of being dismantled and sold for parts to feed people, house and clothe people on UBI. enjoy!
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https://fortune.com/2026/05/16/new-york-private-jet-tax-mamd...
One way to avoid the tax is to rent out the residence: https://comptroller.nyc.gov/reports/the-pied-a-terre-tax-and...
It's interesting that people choose to leave their properties vacant - They're effectively "taxing" themselves by foregoing rent (4+%/yr cap rate).
Is vacant real estate even a good investment?
No, which is why there are very few vacant units in NYC: 1.4%-ish percent of total supply, whereas the rule of thumb I've heard is that around 5% is the sign of a reasonable equilibrium.
(In a well-functioning real estate market there are some units offline due to vacancy, turnover, and renovation, so we don't expect 0%. High vacancies of e.g. 10% suggest insufficient demand for the supply.)
Reactionary taxes like this have a tendency to be ill-considered and have unintended side effects.
NY also has a 1% penalty on paying more than $1 million for housing, which was probably enacted to proletariat applause when $1 million was still considered a lot of money. Now it distorts the value of entry level housing in NYC, where you'll have a hard time finding anything more than a studio apartment for $1 million. High closing costs and similar distortions mean people tend to lose money on housing in NYC unless it's held for many years.
$5 million is expensive enough that this probably won't add much housing stock in the short term. Still, politicians never seem to think through the consequences of headline-grabbing tax policies.
Gosh, 1% on $1m, that's almost $10k! I can see that how would discourage homeownership and distort the market.
Actually wait, I can't.
You're comparing the wrong numbers. The question is what 1% of the purchase price does to the amount you need for your down payment and fees. On a 10% down payment an extra 1% increases the amount you need by 10%. Remember that while a million dollar home sounds extravagant, it's first time buyers who often have just barely enough who are trying to buy these.
> On a 10% down payment an extra 1% increases the amount you need by 10%
Because you are not allowed to roll that tax into the loan?
That seems to be the case, though there are other tricks (like raising the sale price and getting the seller to pay the tax).
“almost”?
Even in worse case scenario, which this isn't, the affected persons would at most try to cheat the system. This proposal is really narrow to non-primary residences, that are also very valuable. None of which will affect 99.999% of the population.
> people tend to lose money on housing in NYC unless it's held for many years.
I'd generally consider that a success metric? People making money flipping houses on short terms is a bad thing
What's a reasonable time horizon?
What should happen when you find a mate and need more space than you did when you moved into your current unit?
A friend moved out of his space after 7 years to start a family, and the appreciation didn't cover the closing costs.
they way to “handle” this is to stop viewing housing as “investment” - especially short-term investment. once you do that, you are good. when you buy you will consider all the implications of that decision and then you can live with it when you need different housing
> stop viewing housing as “investment”
whether something is an investment or not is not a subjective opinion, but an objective fact.
If it takes effort, capital and time/labour to create, it's an investment, because such resources have alternative uses.
Just because this cost have been paid as a lump sum in the past (for constructing a building and/or buying the land etc), doesn't mean that cost is now sunk and is "lost" - it is, and must be, recouped in the future, otherwise the initial cost will not make sense to have been spent, and said investment would not be made and the world would now have one less of it.
Now do cars and food…
There’s no reason that the cost of something you need “must be recouped” in future by you having and using that thing.
> Now do cars and food…
Food is obviously not comparable (you must consume it and only s*t is left over).
Cars depreciate quickly becase they wear out in the timespan of a couple decades. You can keep them going longer but it's a labor of love, not really economically worthwhile.
Housing is completely different. Absent some disaster (fire, earthquakes) it will last centuries with just basic routine maintenance. Given that inflation is a perpetual constant, something that lasts that long can't possibly not appreciate, it inevitably must.
With all due respect I am not sure how you can write this with a straight face. You premise is that "something that last long can't possibly not appreciate"?? I am sure you can find myriad of examples where this simply does not hold water.
The housing is artificially inflated and you are one administration away (e.g. see current one for the kind of power we experience in 'democracy') from having your "investment" worth a lot less than you think it is. Why do you think you and I are able to deduct mortgage interest but when I charge my credit card for gambling, hookers and cocaine (a lot more enjoyable than housing) I am unable to deduct my 29.99% interest on my Visa?! What about "villas for 1 euro" that you can buy throughout say Italy? some of them are older than our country is and I am not sure you'd be happy with your "investment" if you bought it in 1999 but you know, "something that last that long can't possibly not appreciate, right?!"
> You premise is that "something that last long can't possibly not appreciate"??
Not "something", housing. A pebble may last billions of years and not appreciate, but we're talking housing.
Yes housing which last a very long time cannot help but appreciate because we always have inflation. The only exception is what you identified, if the town has an economic collapse. Then, sure, nobody wants to live there. Detroit of the past being the typical USA example.
Looking at records my house cost ~$90/sqft to build. Today the exact same house on the exact same lot would cost about ~$500/sqft to build on the low end if you can find the labor, but probably closer to ~$650/sqft if you want to get it done this year.
So of course the older equivalent houses in the neighborhood will match in price to the new construction. Anything else would be impossible.
If you disagree, explain by what mechanism the old house wouldn't do that?
It can easily not appreciate if more of it is built than is needed (glut of supply) or nobody wants to live in that places anymore (lack of demand).
There are multiple real examples of both, even in America.
the investment for a car is in the manufacturing facility, similarly with food. While there's a consumption component to both, it's the same as a house - it's an investment to build it, and it produces shelter (which would be the equivalent of the food from the investment in a farm).
Golly gee willikers, not the spooky potential for possible side effects! Wouldn't want any of those when we could have gigantic sucker-punch scarcity-amid-plenty instead!
my neighbors have so much they don't deserve, how can i steal their property!
Taxes = theft is one of the most tired, low-brow, and intellectually lazy viewpoints ever.
We all understand the concept of commons. We all understand the concept of money pooling. Don't pretend it doesn't make sense or it's evil when most people pay for private insurance anyway or even fucking Claude Code subscription plans which follow the same concept.
meanwhile they’re scheming against you to see how much you’re willing to pay before you can’t afford to eat anymore just to buy that extra home. it’s an absolutely beautiful thing. they deserve it all and rightfully so!
> ...when $1 million was still considered a lot of money
They knew exactly what they were doing by not indexing it.
Who are you protecting here?
You realize a very small subset of the population can afford a million dollar home, let alone a five million dollar home?
The majority of the city does not give a shit.
"The majority of the city does not give a shit."
Based on the voting, it seems they do give a shit but in the opposite direction.
I'll hit you with a big: source?
This kind of talking point is reiterated ad nauseam, but never justified or backed by any empirical research.
I'll state one simple thing: if America is unable to raise taxes on second homes over $5M in Manhattan by 1% then this country is well and utterly fucked. The 1% are paying less taxes than anyone else in this country while hoarding the majority of the wealth. Homelessness is skyrocketing, debt levels are through the roof, but god forbid we raise the tax on second homes over $5M by 1%.
> an initiative to appease Mayor Zohran Mamdani and liberal voters
Taxing the rich is not a Liberal thing, but the Rich is calling it that because they do not want to pay any taxes at all.
He was elected because people are starting to feel real pain and seeing the ultra rich paying far less taxes then they are. If it was up to me, I would tax all the second homes above 5 million USD and add a Luxury Tax on all valuable Autos too.
i am not in NY, but aren't yearly auto registrations scaled significantly by the value of the auto?
that seems to be true in Arizona, for example.
That varies a lot by state.
> Arizona
That’s funny, isn’t Arizona a red state? I guess I’m not that surprised though.
Arizona, i find, doesn't so much subscribe to the red / blue dichotomy, seems blended and somewhat balanced, as far as i can tell.
The top 1% of NYC residents contribute 40-48% of all personal income tax collected in NYC. When you extend that to Top 2.5% you cross 51%.
Personal Income Tax accounts for around 31% of collected NYC tax revenue.
"The rich" also pay property tax. NYC's poorer residents generally don't have property to pay tax on. Everyone pays sales tax equally.
So how exactly are the ultra rich paying "less taxes"?
This claim is often repeated but simply misleading. Taxable income is only a tiny fraction of the wealth of ultra rich folks - many even take symbolic wages, because their real compensation happens in stock, which they can use to lend effectively infinite money. There's a great episode of the Ezra Klein Show on this topic too[0].
[0]: https://open.spotify.com/episode/3Jjy4drElYHNMRtxVQPENR?si=5...
That does not address the point. You say they should pay even more to address the idea that very few people pay most of the taxes, what is the logic here?
You're insisting on shifting framing to percentage of tax collected. That's irrelevant to the fairness question of percentage of income paid as taxes. The insane imbalance where the rich end up paying half of all taxes while simultaneously paying a fraction of their proportional wealth in taxes only highlights the massive difference in personal wealth. Taxing that at a higher rate only seems unfair if you take the view that all wealth is earned fairly and any attempt at altering the market's allocation of wealth is against the natural order.
I'm not. I'm saying that the numbers OP stated were misleading. They refer to people with a high income - surgeons, laywers, or engineers -, but not the ultra rich, which don't have a high income in the first place, or it's a tiny slice of their cash flow, while the majority of it is made via non-taxable or low-taxed income streams.
Which means that a lot of people pay a proportionally high percentage of their income, while the Epstein class pays effectively none. That's the logic here.
I'm someone who uses the same "loophole" the wealthy use to "avoid" paying taxes. Turns out you really only need around ~$100k to unlock it, and you still will pay ~0.5% interest over the overnight lending rate. But it's about as rock bottom as any non-united-states-government will get a dollar denominated loan for.
But it is not a tax dodging scheme. It's a tax deferral scheme wrapped in a risk-on loan package, that is used almost entirely to maintain ownership of a company rather than to defer taxes. On smaller scales you can use it to unlock money tied up in stocks, if you think the stock will keep going up (if the stock falls, you now might get margin called as well as coming out worse then just getting a regular loan).
Because wealth is also distributed in a very lumpy way across the city.
154 residents of NYC own 33% of the entire wealth of the city... notice I didn't say 1%, I said top 154. They are not contributing 33% of the tax income to the city.
So yes, the ultra rich pay "less taxes" if you look at how much of the resident wealth they control.
Also, property taxes are significantly lower than appraised value and the richer you get the bigger the disparity. That Ken Griffin’s $238M penthouse pied-a-terre? It's assessed value is $9M. So yea, he's paying like $150k/yr in property taxes.
And finally, it is a known fact that sales tax definitely hits poor people harder (re: "everyone pays sale tax equally"). What you want to look at is what percentage of a person's post taxincome vs sales tax paid, because if you make like $60k/yr you're probably close to 60% of all post tax income paying some form of sales tax (you buy with all the money you make). If you have $2B, your percentage of "tax paid as sales tax" is significantly lower, because you don't typically spend a billion dollars the same way you spend $60k.
Wealth distribution is a false flag. Rain distribution across the globe is not equal, solar light distribution is not equal and they impact people's life more than wealth distribution. USA and the entire planet's population is at record high in living standards and wealth, but some people are still unhappy because not everything is perfectly equal and at zero entropy like the thermal death of the universe: this is more than illogical, it is just envy without limits.
Imagine 1.6% of the earth receiving nearly 50% of all sunlight, and 82% of the earth only receiving 12% of all precipitation.
If rain distribution and solar light distribution were even half as unequal as wealth distribution, our global ecosystem would collapse.
Wealth is not income. Most of the world has zero or negative wealth so these types of calculations are kind of silly.
A better comparison would be imagine 1.6% of the earth having 50% of the valuable minerals. But that’s roughly what it actually is!
A false flag to what?
A false flag to fight for. A wrong purpose in life.
Surely you know this, but the rich are paying less percentage taxes relative to the money they have.
I'm familiar with the concept of crabs in a bucket, yes. That's why I left New York and abandoned my rent controlled apartment to do so.
Oh shit, I didn’t realize the billionaires who can have multiple homes in Manhattan are crabs in the same bucket as us.
Luckily the law is much more egalatarian and bars the rich and poor alike from sleeping under bridges or stealing bread.
NYC only has 154 billionaires. The percentage of NYC's second homes owned by NYC billionaires is fractional (59,000 total units).
No, this will disproportionately negatively affect middle-class people and families and fuck them hard.
> I didn’t realize the billionaires ... are crabs in the same bucket as us.
All of us go to the same place in the end my dude. Life is too short and too hard to spend all your time living by comparisons. I'm sure the people you're worried about are just as miserable for other reasons.
If you have a second home in manhattan, you are not the middle class _and_ you can afford it.
If the idea of paying taxes affects your poor fragile mind so negatively then there is an easy solution where you can sell said extra home.
No one is being fucked hard by this other than people who are appalled at the thought that they need to contribute to society for the negative externalities they create, like accumulating excess shelter in regions with a dearth of housing capacity.
Voters don't feel like it's a fair deal. Telling voters that their concerns aren't real is a losing strategy.
If you live in New York you rolled at least a 15 on life's D20. That's how good of an opportunity that location is. I started and lived most of my life there and started in poverty -- for there. That's still a better opportunity than most people ever get.
All these people pointing at the nat 20s losing their minds screaming like they rolled 1s.
"seeing the ultra rich paying far less taxes then they are."
Is this actually true? I thought looking at the aggregates that the top 10% pay something like 1/3rd of all income/cap gain taxes.
Last year year Jeff bezos and I both paid taxes for the year of 2024. The percentage he paid on the money he made is far less than I did. I gave higher share of my income to the government than he did. Bezos's true tax rate was less than 1% and mine was around 25%.
Link - https://itep.org/washington-post-rich-not-paying-fair-share/
>(including unrealized gains)
They wrote that whole article out just to make it all meaningless with 3 words in parenthesis.
"The plane crashed and everyone lived! (not including those who died)"
IDK what Bezos made as "income" last year but paper gains in asset values are not "income" for tax purposes, though some people might look at the increase in his wealth and call that money he "made" that year. But we don't have a wealth tax on a federal level at least.
> some people might look at the increase in his wealth and call that money he "made" that year
What in gods name would you call that otherwise?
> But we don't have a wealth tax on a federal level at least
And that somehow justifies rich people paying less taxes, because they navigate the system better than regular people?
He pays income tax just like everyone else. But the majority of his money is in investments, which many Americans already do as well with 401k and personal brokerage accounts. The people who can't afford to invest like that already pay close to 0% income tax as 40%-60% of households, historically, have paid 0% income tax in the US.
They still pay payroll taxes, among others, which disproportionately affect poor people.
I 100% agree. Roosevelt implemented that in 1935 and it was meant as a safety net for social security. Economists estimate that by 2035 social security, as its currently structured, will no longer be able to fund the aging population.
Instead, a better alternative is to invest that same amount into an ETF that tracks the S&P 500 and after a 40 year working career the individual would have almost $5 million assuming a median wage and current employer matching on payroll tax. This would give them a yearly $200k payout which grows at 6% per year if they follow the 4% rule on withdrawals, lasting them indefinitely and leaving something behind for their children when they pass away. In contrast, social security right now, on average, pays $26k per year.
This would also generate federal taxes through transactions of the companies composing the S&P 500 which would give the government an additional tax revenue source.
The trouble with "investments did better" is that they did so in considerable part due to 40 years of trickle down economics that swung the pendulum away from labor and towards capital. The pendulum is slowing, so that trick is extremely unlikely to work twice. If that's not concrete enough for you, we can talk about what it would take to swing the pendulum as far in the next 40 as we did in the last 40 and this thought experiment will make it obvious that this approach makes the social security trust fund look like an exercise in sustainability.
Payroll taxes were capped because the related benefits were capped. We could uncap either or both ends of that. Although removing the cap should have been unnecessary if the government acted responsibly, and the removal of the cap would not force them to act responsibly in the future.
> He pays income tax just like everyone else.
He only paid income taxes on $80k while at Amazon.
The wealthy often make their money as capital gains, which if they held for at least one year, are exempt from the income tax and taxed at no higher than 20%
Billionaires literally have their own set of tax brackets in this country: https://www.irs.gov/taxtopics/tc409
The wealthy in NYC pay the top Federal 23.8% LTCG rate, + the top New York State income tax rate (10.9%) + the NYC income tax rate (3.876%) on their long-term capital gains.
Not if their second home in NYC is not their primary residence .... and like bezos, has a primary residence in a state where that isn't the case
> The wealthy often make their money as capital gains, which if they held for at least one year, are exempt from the income tax
Not even close. As your link shows, "the wealthy" pay taxes on long-term capital gains. The lowest rate (for "the wealthy") is 15% but they can owe 20% or even 28% in certain circumstances.
I didn't say they didn't pay taxes. I said the money was exempt from the income tax, which it is.
Capital gains are not taxed as income, it is taxed as a capital gain, which has significantly lower rates than income tax.
Even though it would hurt me, I feel like eliminating the distinction between capital gains, income, and payroll taxes would be a fairer solution.
I'd be happy with just a couple of brackets added to the income and capital gains taxes to target the 0.1% and 0.01%
Capital gains are taxed lower as an incentive to make long term investments, vs. short term speculation.
That is a perfectly fine goal, however, I don't think the current structure actually accomplishes that goal very well.
Let's say you own your home and it increased in value last year. Do you feel like you "made" any money from that? Unless you sold it, probably not.
Only because I live it in and can't easily sell it to raise cash.
Let's say you own some stock and it increased in value last year. Do you feel like you "made" any money from that? I did and it did and I do.
Stock is easier to sell, yes, but it's still just a gain on paper until you actually sell it. Otherwise, those gains could be lost next year. Or tomorrow.
Now this is just disingenuous. As if the net worth of Jeff Bezos and the rest of the Epstein class was somehow threatened by market fluctuations or some high-risk investments.
As long as the economy continues to grow, these people will thrive. All while avoiding to pay their share for society.
I have no doubt his investments are well-diversified. He's not an idiot.
My point was simply that income and wealth are two different things, at least for tax purposes.
This is well known. The question is whether they should be. It's not some immutable law of nature, it's a deliberate policy choice to tax returns on capital differently from returns on labor.
I don't think it's all that well understood. People see a headline that Bezos "made" $X billion last year, when that was the increase in his net worth, not that he actually was paid $X billion in cash income. Then they complain that he didn't pay taxes on any of that.
Whether or not we should have a wealth tax and at what level that should apply is an entirely separate issue. I'm quite sure Bezos pays all the taxes he's legally obligated to pay.
Few people think the ultra rich are illegally evading taxes. The issue is exactly that they’re paying all they’re obligated to, and it’s not very much, relatively.
You’re really strawmanning here. Instead of arguing as if we’re morons who don’t know that unrealized gains aren’t taxed and think Bezos is committing tax evasion, convince us of why it’s wrong to think that Bezos should be legally obligated yo pay more, maybe by taxing those unrealized gains.
False equivalence. You're comparing liquid assets with an illiquid one here.
Oh, then Bezos must be living a humble, middle-class life with very limited liquidation of his assets.
Surely, he’s not using loans, write-offs, and legal tricks to fund a Great Gatsby lifestyle while pretending to have no actual income?
Right?
Your headline-expert confusion on how it works isn't the flex you think it is.
Thanks for the completely content-free comment! You're a credit to the community.
My networth increased by $600k in the past year, but my actual income after taxes was a quarter of that. I haven't sold and collected gains, but it still feels like I "made" that much money in that span of time, especially since most of the appreciation came from RSUs. I'm just choosing to not convert it to cash.
So, you didn't pay taxes on the $600k increase? Do you think it would have been more "fair" if you had to?
It seems your article is saying the same sort of thing I already stated - "The share of taxes paid by the richest 1 percent (24 percent)", right?
You are talking about effective taxes rates, which are different. To discuss that, I would have liked to see a bit more detail in the article, like what the income sources were and the deductions and losses to offset gains. I think changes around capital gains and loans against equities could use some adjustments. The other taxes like payroll are basically moot as Bezos's payroll income is only about $90k per year anyways.
> I think changes around capital gains and loans against equities could use some adjustments.
At minimum, taking out a loan based on the current value of an asset should trigger immediate realization of capital gains/losses for at least those assets used as collateral. After all, the gains are already de facto being realized for the purpose of the loan.
Unfortunately, I'm not quite sure how to address the other side of things - that said loans often don't have to be repaid so long as the assets continue to gain. As such, the capital gains are actually being realized continuously by the loan, but I doubt it's feasible to properly handle that in tax law.
The easy thing to do is set a limit for how much and how long you can borrow against, tax the loans as income, or outlaw loans against investment instruments entirely.
This post makes the mistake of counting unrealized gains as income. That's not how taxes or investments work. Unrealized gains are NOT income. That's how they mistakenly come up with the number that he pays less than 1% in income tax. Investments, in general, are not income (unless held less than 12 months or if they pay dividends).
Imagine you had to pay income taxes every year on the unrealized gains of your 401k, house, and car value. You too would be said to be paying a very low income tax rate. But again that's not how income taxes work because none of those things are income.
If Bezos were to sell those shares and actually realize those gains then he would be rightly taxed but that would also likely tank the stock as his 8% ownership is significant enough to drop the price drastically. 55% of Amazon is owned by 401k and other retirement accounts so if the price tanks average Americans take a huge hit.
Bezos does sell shares, all the time actually. You can see this in the SEC filings. And he is rightly taxed on those realized gains. But he's not going to sell all of his shares as that would be damaging to Amazon, the workers, retirement accounts, and his own investments.
Instead, the money stays in the company paying worker wages, buying new facilities, etc. This is even better for the economy because it keeps the funds in circulation. This generates even more tax revenue than if he did a 1 time sale of his investments. That's why unrealized gains don't get taxed, because its financially a worse outcome than keeping the money in circulation.
>>This post makes the mistake of counting unrealized gains as income. That's not how taxes or investments work. Unrealized gains are NOT income.
Rich people always borrow money on the stocks they own. In effect, those unrealized gains help them borrow money which they spend like income. I will spend part of my paycheck to buy a cup of coffee and they will spend part of the loaned money to buy the same cup of coffee. They can also buy a house with that money. All they need to do is keep paying the 4-5% interest rate on that loan meanwhile the underlying stock appreciates at 15-20%.
Is this a loophole that rich people enjoy? Absolutely. Does this loophole need to be closed - absolutely.
What is the loophole? That banks are allowed to give out loans to trusted clients? Are you proposing that banks can no longer loan to rich people or what? Why does the source of the collateral being a stock matter? A normal person gets a loan based on his home value, assets, other factors, all of which might appreciate faster than the interest rate. When does it become a loophole?
You really don't want loans to be taxed as income, that would cause a lot worse problems than rich people existing...
Let me simplify it like i would for a 5 year old.
The loophole is that they never pay taxes on the unrealized gains bc they lived on the borrowed money their whole life. They will never sell their stocks, so there will be no taxable event. When they die they will leave their wealth to the children which effectively erases the unrealized gains. So no one pays taxes on that huge chunk of money. Google "buy,borrow,die".
Yes, but that's only the long term part of the plan. The short term part of the plan is that the marginal propensity to consume drops with income. Poor people earn and spend all their money, both of which are heavily taxed, while rich people "earn" capital gains and invest all their money, neither of which are taxed.
Here's how investment isn't taxed: take out a loan collateralized against the assets with unrealized gains. If the investment works, it can service its own interest, which is deductible. If it doesn't, the capital loss offsets the capital gain made by selling the collateral. Both cases result in approximately zero tax.
This is nuts.
Poor people pay no income tax. It isn't "heavily taxed."
They pay payroll and consumption tax, which are quite steep compared to the 0% tax bracket for mega billionaires.
I'm not a five year old, you simplified it to the point of nonsense. The workable aspects of it are complex and unusual. I did Google it and understand now, no thanks to your comments.
The interest rate charged generates taxes, the purchases they make with the credit they borrow generate taxes, and the money they leave in their investments generate taxes through capital usage like paying employees, paying vendors, building facilities, etc. The government taxes every little thing so don't think that money is not generating taxes at all. It actually generates more federal and state taxes by staying invested and that's why unrealized gains are not taxed. The tax revenue outcome is better that way.
The government taxes every little thing that a poor person does, like earn and consume. The government hardly taxes anything that a rich person does, like rest and invest and watch the green number in the brokerage account go up.
Monetary velocity is notoriously high among the poor and low among the wealthy. If you have a dollar and want to generate maximum economic activity or maximum taxes, the answer is unambiguous that you should give it to the poor person.
How does the interest rate of margin loans generate taxes? Just curious since I'm not sure there's any provision explicitly taxing margin income for banks and brokerages. Especially since some brokers will give you the prime rate plus a few basis points, I can't see how there's enough margin in that to cover an explicit tax on it.
You can use the same "loop hole", it's called a securitized loan.
The real hack is being able to save money rather than "treat yourself" every single time you get more money.
Good attempt at manipulation. Why don't you link some studies here which say it will be better to leave the tax system as is than taxing the unrealized gains somehow.
The numbers are self evident. If you've ever owned a business you know that you have:
1. Corporate income tax 2. Employee Federal income tax 3. FICA Payroll Tax 4. Sales Tax on transactions 5. Property Taxes
Now multiply that by each node on the graph. Each employee, vendor, business that comes in contact with your company spends the money you paid them and is taxed on it as well. It grows exponentially after just a couple of nodes. If each of those nodes is trying to make a profit from their own capital it generates even more tax revenue for the government.
Contrast that with capital gains tax which is a 1 time event at a maximum of 20%. That 20% needs to be taken out of the business in order to pay the taxes if you're going to tax unrealized gains. That means that 20% only gets taxed once instead of going through the graph and getting taxed exponentially many more times as it grows.
"I shouldn't be taxed because my employees and customers will be!"
Folks, we've found it! Pure, distilled, refined, 100.0%, 200-proof trickle down economics!
Just one teeny tiny itty bitty problem: r>g
Oops.
You're getting confused because you are failing to recognize that the owners wealth is being taxed when those other taxes are paid.
If the company had a magical exemption from all taxes, the owner would have a substantially high net worth. The gap between that hypothetical value, and the real value, is the tax being paid.
This is not only self-serving and/or bootlicking drivel, it's economically illiterate at a level that shouldn't exist outside econ 101 class. Taxes on a transaction are paid by the party with less elasticity / bargaining power, which is, in aggregate, the worker.
Also, you didn't address the r>g elephant in the room.
From the governments POV, they don't care, businesses are farms where tax money grows. The corn may claim full ownership of it's kernels, but the farmer and the broker know that the farmer is the one who took the risk and provided all the needs for the corn to safely divide cells all day. The larger the farm, the more money tax revenue harvested.
Thankfully we are not corn, and every one of us is free to break off and make our own farm (or go to another one). However for the last few hundred years, people have flocked away from having their own farms into just safely dividing cells all day on someone else's farm. It's not surprising that capital concentrates when everyone would rather work for someone else than work for themselves. But at least we have a lifeline, where pretty much anyone can sign up with a broker and buy capital assets in a day.
Gotta love "I don't need to show my work! It's self-evident!"
It's not self-evident, or the person wouldn't have asked for a source.
And you have numbers that you're pulling from "somewhere" without sharing a source for them, which means it's even further not self-evident.
Do you wanna get an endoscope test? I think there is koolaid in your gut.
Yes, "collateralization counts as realization" is the bare basement minimum of what we should do to fixed up the tax code, but I'm less offended by the scenario you described -- which involves skin-in-the-game capital allocation decisions, the whole point of capitalism -- than I am by the far more common situation where the assets just sit and grow and are rewarded for their sloth by a complete absence of tax on the one activity billionaires are best at: sitting back and getting paid for being rich.
Property tax on stock is a better place to aim.
This post makes the mistake of assuming that everyone is on board with the "unrealized gains are totally different from income and should never ever be taxed a penny because that would be communism and implode the economy and kill kittens" hustle. It's a good hustle, because it takes precision to argue against and it's built around a kernel or two of truth, but these two kernels are firmly planted in a gigantic monumental turd of tax avoidance by the obscenely wealthy.
Would you rather they hoard the money under their mattress or invest it back into the economy? Like I explained, the reason unrealized gains are not taxed is because they generate more tax revenue than if the individuals pulled out the money, made a 1 time lump sum tax payment, and hoarded the rest. Its not tax avoidance at all. Its a way to multiply tax revenue as that capital is used through numerous transactions that all generate federal and state income and sales taxes.
id rather some portion go to taxes and also result in diluting the ownership and control over the biggest more important industries.
then have the government spend that tax money on services and infrastructure that also increase overall money circulating in the economy
It's exactly the other way around. The USA is not a developing economy, we do not suffer from a lack of capital and abundance of investment opportunity, we suffer from an abundance of capital and lack of investment opportunity. The average American billionaire has no idea what to do with a marginal dollar, so he just bids up assets with it and maybe punts on spaceships or something. The average American, in stark contrast, spends the dollar satisfying very real as-yet-unsatisfied consumptive wants and needs, at which point the dollar gets spent and taxed and spent and taxed again and again and again. That's understatement: the velocity factors are 0.7x and 5x, last I recall.
You can read the balance of explanations off interest rates, you can read it off of valuation metrics, you can read it off of judgement calls about the quality of the marginal investment opportunity. You can't read it off the anus of a billionaire or the turd of self-serving think tank propaganda it pinched out, though, and that's where you are clearly looking for it.
Top 10% is the upper middle class, not the ultra rich. A successful surgeon making $1M per year is paying well over 40% a year in taxes, while Bezos is paying 1%.
Do you have the data for that? I was wondering about tax paid (as dollars not effective rate- I know effective tends to me lower for HNW individuals due to accountants and other financial professionals they can afford).
> I thought looking at the aggregates that the top 10% pay something like 1/3rd of all income/cap gain taxes.
If we're bringing receipts, how about you start? Do you have the data for this initial statement of yours?
Here is one source (with 2022 data):
https://taxfoundation.org/data/all/federal/latest-federal-in...
...of course that doesn't include payroll taxes (Social Security).Focusing on a single tax is silly. We should look at all taxes paid across all levels of government. Federal income tax is one of the most progressive taxes out there, so of course that's what people focus on when they want to make the point that wealthy people are being sacrificed to the altar of taxation.
If you look at all taxes, the share paid is remarkably close to the share earned. According to https://itep.org/who-pays-taxes-in-america-in-2024/, in 2024, the top 1% earned 20.1% of income while paying 23.9% of taxes. The bottom 20% paid 1.5% of taxes while earning 2.6% of income.
> in 2024, the top 1% earned 20.1% of income while paying 23.9% of taxes.
Within that group, the share is not evenly distributed, though.
Most who are in the 1% club are people who are earning wage income, like doctors, and are getting absolutely reamed with taxes. The vast majority of the 1% are not rich enough to be doing elaborate schemes to avoid taxes.
Billionaires, who are in the top 0.0002%, are an entirely whole different story. There are many figures that show they generally do not pay their fair share in taxes.
How do I sign up for this magical 25% “effective tax rate”? Last year mine was 46% and that’s only counting income tax (state + federal).
By being somewhere around the 40th percentile of income, according to that link.
This seems to show the same gradation but with less magnitude. Was there some other point you were making?
It’s way less, is the point. Top earners pay just a little more than their share of income. The tax system as a whole is nearly flat.
And for reference, here's what kind of incomes those percentiles are:
Top 50%: $53k/year
Top 25%: $93k/year
Top 10%: $155k/year
Top 5%: $210k/year
Top 1%: $450k/year
I think these numbers are not suited to say anything substantial about the position of ultra rich people in society.
I agree which was why I included the context.
Please delete this comment before it bankrupts half of click-bait driven media outlets.
This is close enough (posted here by another).
https://news.ycombinator.com/item?id=48185123
The top 10% is not even upper middle class in high COL areas.
$155k is a top 10% income.
Bezos pays 40% too.
His assets are not income. Just like your assets are not taxed.
Ok, but he does that loan-against-assets hack!
Well the fact is that those loans eventually need to be paid, so at some point he will pay that 40% (unless he does the step-up basis hack when he dies)
Ok, but he should be paying annually like everyone else!
Well, technically he is, his assets, the company Amazon, pays a lot of taxes annually. The government views Amazon as a money printer, states get their sales taxes, and the federal government gets their income taxes. All of which originate with Amazon.
All of which is to say, that the uppe-middle/upper-class, the successful surgeon, is the one that needs to be paying more taxes to equilibriate society.
[flagged]
If you can convince people that Amazon is a bad value proposition (i.e. stop giving amazon money for stuff), then you will effectively accomplish that.
But you probably couldn't even count the number of people with Prime subscriptions that show up to an "Eat the 1%!" march...
"It's just so convenient!"
> unless he does the step-up basis hack when he dies
I'm sure we can count that as a given.
> The government views Amazon as a money printer, states get their sales taxes, and the federal government gets their income taxes.
Except when states fall all over themselves to give Amazon a massive tax break to build their second HQ.
>I'm sure we can count that as a given.
It's very unlikely, he has pledged to give away most of his wealth in his lifetime, but there are a variety of factors that will always add space for detractors to make fair points. Bill Gates is still worth billions despite being an endless waterfall of charity money for decades.
Either way, the step-up thing is way way way more common in the upper class, where people with ~$24M want their kids to get $6M each. These people are nobodies with no public image, and light years away from "Billionaire Class" status.
>Except when states fall all over themselves to give Amazon a massive tax break to build their second HQ.
All the employees will pay income tax, and they will mostly spend their money in the state, generating sales tax. Then there is the second order effect of businesses that pop-up to feed off the money that the employees make.
What's often missed, and never explained, is that the government loves businesses, because businesses convert people into tax revenue, on almost all levels. Don't miss that.
> >I'm sure we can count that as a given.
> It's very unlikely, he has pledged to give away most of his wealth in his lifetime,
The ultra rich give away donations in the form of stock, so they never sell it, just transfer it. So no tax to them and they get a tax deduction for the donation fair market value.
He can't give away the securities he has used as collateral for his loans.
The businesses that are laying off employees because of competition from Amazon were less efficient and this employed far more people than Amazon does, thus paying more in taxes.
The ultra rich make up only a tiny minority of the top 10%. The majority is much closer to the top 90% than to the top 1%.
taxing the rich is a how the fuck do we afford to take care of society thing, plain and simple. a poor government can’t provide services and infrastructure. anything else is framing and optics
Texting the rich when they’ve managed to get into the position of paying far less tax than almost everyone else is also the obviously right thing to do.
^ taxing
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I assume this will be challenged in court immediately. Does anyone understand whether it is likely to survive those legal challenges?
EDIT: Here is a list reported by Google search but I really do not understand or know how reasonable these challenges are.
Equal Protection: Owners may argue the tax unfairly treats similar properties differently based on second-home status, value threshold, or owner residence. This is likely a weaker challenge because tax classifications usually receive deferential rational-basis review.
Nonresident Discrimination: A challenge could claim the tax targets out-of-city, out-of-state, or foreign owners rather than property use. The law is safer if written as a tax on non-primary luxury residences, not on nonresidents as a class.
Assessment Inequality: Owners may challenge how the city values condos, co-ops, townhouses, and mixed-use properties. This could be significant if the $5 million threshold is applied inconsistently or without reliable valuation rules.
Due Process: Owners may argue the law lacks clear notice, proof, exemption, and appeal procedures. This would be especially relevant for disputes over whether a home is truly a second home.
Residency Conflicts: Taxpayers may challenge inconsistent treatment if the city treats them as NYC residents for income tax but non-primary homeowners for this tax. Clear coordination between residency rules would reduce this risk.
Home Rule Authority: Opponents may argue NYC lacks authority unless the state clearly authorizes the tax. This challenge is less likely to succeed if Albany passes valid enabling legislation and NYC follows required procedures.
Property taxes already exist. There is no obvious reason why this particular property tax would be legally problematic.
The tax is also likely politically difficult to counter. Consider how limited in scope these taxes are, how the tax revenue benefits residents who live in NYC through providing more revenue for services without taxing residents at all, and how the only constituent the taxes negatively affects are non-residents (aka it’s non-trivial to argue that these people should even be considered constituents) who benefit from the services the city offers through stable apartment prices that nicely store their wealth yet provide little value in return.
The only rebuttal one could conceive is the value these high-net-worth individuals altruistically provide the city through developing office space and giving jobs to the city is not worth risking, but that is like saying the tail wags the dog. The reason these CEOs go to NYC is because that is where the talent and economic clustering is: if these high-net-worth individuals could get the talent they need to run their firms in Miami and Austin, they would have done so already. They have tried and they have failed up until this point.
Regardless, a claim into the future in such a complex system such as the markets and the judicial system (especially a common law system) always relies on induction which is never going to be deterministic. However, this tax is just another property tax meaning it likely will stand in court. Additionally, given that the opposition has very weak rebuttals against a well-versed counterparty implies the legislature or other political machinery won’t have a strong enough incentive to fight this tax.
>The reason these CEOs go to NYC is because that is where the talent and economic clustering is: if these high-net-worth individuals could get the talent they need to run their firms in Miami and Austin, they would have done so already. They have tried and they have failed up until this point.
This needs to be shouted from the rooftops.
I am from NYC and live in Miami.
I have seen hedge funds try and fail to bring talent down here, and paying talent through the nose to convince them. It has failed, because 1. local private schools won't let Ken Griffin buy his way to the front of the line; and 2. there's no local talent pipelines to recruit from that come even remotely close to what is found in the Northeast, or in the Bay Area.
UM pales in comparison to the fact that almost every Ivy League school is within a 3 hour drive of NYC, not counting other strong school (NYU, NEASC colleges, MIT, etc). FIU or UF isn't even in the same stratosphere.
Taxes pay for the establishment of a strong educational foundation so that even local public schools can send kids to Ivies or top colleges. Taxes pay to keep that going.
NYS already has tax breaks for one's primary residence which varies by income and a tax on the sale of homes >$1Mil. Given how entrenched those are, I have trouble imagining a way in which this new tax is incongruous with existing rules.
Tax them to oblivion, the goal should be for them to sell! Let them go to Dubai if they don't like it.
send them to the moon. ah wait, they’d actually love that for their egos looking down on humanity wouldn’t they?
They'll go to Florida.
They already are that's why it's the second home.
Good, let them slowly sink into the ocean.
Pedal to the metal please. Saw it off and tow it out to sea and actively sink it.
Before long Mamdani will provide yet another proof of Thatcher's well-known dictum on socialism:
The problem with socialism is that you eventually run out of other peoples' money
How close are we to all of the richest people being out of money?
Also, in 2008 it was terrific to bail out private banks, right? Socialisation of problems seem to be allowed only for the super rich - interesting.
Nope, bailing out banks is a bad idea, why would I think otherwise? Two things can be bad at the same time: socialism is a dysfunctional ideology just like crony capitalism is a bad idea.
Depends on the alternatives. The real alternative is technofeudalism and eventual coming revolutions where you won't get constructive reformists anymore.
Given that a number of modern social and economic problems can be traced back to Thatcher and Reagan policies, anybody quoting Thatcher unironically should not be taken seriously.
What specific “modern social and economic problems” can be attributed to them? The 90s was a period of economic growth after their policies proved to be effective.
Given that Socialism has shown time and time again to lead to economical and societal disaster, anyone supporting it unironically should not be taken seriously.
Show me the proof of a working Socialist system [1] and I might change my mind. Otherwise you're just deflecting through misplaced ad-hominems.
[1] No, the Scandinavian countries are not socialist countries - I live in one of then. Neither is the Netherlands, nor France nor any other European country.
A lot of things in USSR did not work - but they did educate masses upon masses of people in reading, writing and stem.
Similarly, it's still unheard of in Europe to go bankrupt because of healthcare.
Whatever Mamdani is implementing is also not USSR-style socialism. It’s at best similar to the system you live in Europe.
Indeed, a cursory check suggests that these kinds of tax schemes are common in Europe.
there is no "other" people, there's only we the people
Taxes are not socialism.
...bub Mamdani is a socialist and he will run into these problems.
Isn’t he a democratic socialist? I.e. European style social democracy? We don’t see many honest-to-god actual Socialists in the US.
democratic socialist isn't inherently interchangeable with social democracy. the DSA defines democratic socialism as explicitly at odds with capitalism, and aims to achieve socialism by going through and past social democracy (where european social democracy is plenty capitalist). Mamdani himself has actively disavowed capitalism.
> Capitalism is a system designed by the owning class to exploit the rest of us for their own profit. We must replace it with democratic socialism, a system where ordinary people have a real voice in our workplaces, neighborhoods, and society.
> We believe there are many avenues that feed into the democratic road to socialism. Our vision pushes further than historic social democracy and leaves behind authoritarian visions of socialism in the dustbin of history.
> [...] We want to win “radical” reforms like single-payer Medicare for All, defunding the police/refunding communities, the Green New Deal, and more as a transition to a freer, more just life.
1: https://www.dsausa.org/about-us/what-is-democratic-socialism...
I dunno why anyone thinks this matters. https://comptroller.nyc.gov/reports/the-pied-a-terre-tax-and...
"We find that, before adjusting for these factors, our choice of tax rates and brackets could raise almost exactly $500 million from a little over 11,200 properties. However, revenues could be reduced to between roughly $340 million and $380 million based on assumptions on exclusions for rented units and behavioral changes following the imposition of the tax."
It's all media feel goodsies but not actually do anything substantive.
So it'll still raise at least 300 million? Sounds like a great thing to me. I dunno why you think it doesn't matter.
Unlocking extra housing is the real boon, the tax revenue is the bonus.
I think that this has the benefit of both raising a non trivial amount of money as well as reducing housing demand from the wealthy in a supply constrained market
So, in addition to doing something very popular, meaning gaining political capital, it is ALSO expected to get hundreds of millions from this? That’s very substantial in my book
From what I know this is going to be challenged in the court and it probably it is not going to pass the legal challenge (renting part is one interesting loophole - I think that one caused similar tax law in SF to be struck down).
If I was a rich dude in nyc I would set up a shell company, transfer ownership to that, and then rent it back from the shell.
So then the rich guy is an NYC resident and pays taxes there, that's a great outcome for the city.
Huh.
That's disappointing.
I was wondering about trusts. people put houses in family trusts.
California next please! If you aren’t in your home 9 months of the year you can stay in a hotel. Thanks!
Edit: lol -4 nice! What are y’all upset about?
Not all of California, but San Diego has Measure A[1] on the upcoming primary to tax non-primary homes.
1. https://www.kpbs.org/news/politics/2026/04/20/2026-primary-e...
Let’s go baby!! We love a vibrant local community.
guarantee you those people that are salty are not in your tax bracket
How does enforcement work? The article does not say.
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I strongly doubt that this is going to have the effect that they want it to. It won't raise the taxes that they expect it to. It won't free up inventory. It will halt construction.
Taxing second homes would halt construction? Plenty of people out there wish to own a first home, myself included.
How will that tax result in more houses existing?
It will result in fewer second homes existing, therefore more first homes.
Perhaps. Homes are not zero sum though so it’s also possible there will be fewer first homes.
How will this tax result in less houses available for people with no primary home existing?
It’s a tax on second homes. If a single person sells due to the tax and someone who had 0 homes previously, it’s spread the scarce housing stock.
Not to say we shouldn’t build more but acting like a tax on multiple homes is going to make houses less available to everyone is ludicrous.
The cost of construction in _New York City_ generally sets a floor as far as who can afford to pay for it.
The per-apartment cost of construction in Manhattan is more than the retail price of my 3500sq ft house in near-rural South Carolina.
This guy thinks a tax on second homes in fucking NYC is going to disproportionately harm the middle class.
He is economically illiterate.
Edit: scratch that, he also mentioned leaving a rent controlled apartment because of a crabs in a bucket mentality. I think he’s lying to push his own political agenda which appears to be that of the rich never paying taxes.
I’ll lol if he’s some pleb like most of us and is just running defense for his “betters”
Or economically literate and malicious. Many such cases.
many people are convinced on some level that things are the way they have to be for a reason. lots of people internalise capitalism. it’s a way to rectify the cognitive dissonance
It’s nothing to do about capitalism. It’s just being deceitful or ignorant to reality. It’s one of the most expensive areas for land and homes on the planet. Owning multiple units means you are definitionally not in the middle class.
You can be in that cohort and not necessarily be the 1%, 0.1%, etc but you are not the middle.
While rent control and exclusionary zoning do have measurable negative impacts on building, a vacancy tax on second homes is unlikely to have side effects beyond raising revenue. If a price-sensitive owner of a pied-à-terre is forced to sell or rent out the unit, then the policy is successful: the residence will be occupied.
Ideally no second home tax would be implemented, and we could treat housing as an export. But due to intense local planning constraints, housing is scarce.
New York City rent exists at an equilibrium.
The draw for people to move there is so intense, that any draw downs in rent are met with upticks in immigration.
Adding housing stock in NYC is not like adding housing stock in Lawnsdale Ohio. Almost by definition you cannot out build the demand for housing.
> Almost by definition you cannot out build the demand for housing.
Would love to see some justification for this claim, which tacitly suggests that adding, say, 2M extra apartments over baseline would have zero effect on our housing market.
2 million new apartments is doubling the number of apartments in NYC.
I call water safe, but you may say it's a tacit admission that you could drink 5 gallons in an hour an experience zero effects. I wouldn't call that an honest rebuttal
There are 3.7M existing units in NYC, and I meant it as a 54% increase in overall housing units([0]), but that's on me for not clarifying that I did not mean "apartments" specifically and intended instead to say "housing units". It's still a very large number of units, and I think filtering effects from adding these in whatever configuration—studio apartments, large apartments, houses, mixed stock, etc.—would increase affordability across the market.
> I call water safe, but you may say it's a tacit admission that you could drink 5 gallons in an hour an experience zero effects. I wouldn't call that an honest rebuttal
I meant it as an honest rebuttal, and I largely disagree that your analogy applies.
Humans obviously die from hyponatremia if they drink massive amounts of water: in your example, 5 gallons of water, which is 5X-10X someone's daily consumption in a short period of time. OK, I agree.
I don't think the theoretical example of increasing the housing stock in NYC by 54% is likely to lead to serious negative effects, especially if it happens over a period of several years, because the city has astronomically high rents and even higher house prices [1]. I believe the culprit is primarily zoning and other restrictions on building, which I defended in another comment upthread.
I do think radically relaxing zoning laws and regulations could theoretically lead to such an increase in supply within a period of, say, ten years. It is politically infeasible and would require basically every voter to understand that supply and demand pricing works in the housing market, which they don't.
The reason I used that exact number—which was deliberately chosen to be large—is that I simply disagree with your claim, if I am understanding it correctly, and I felt a larger number would drive the point home more.
I interpreted your claim as: adding marginal units to the housing market in NYC will not change the price of housing, relative to the universe in which we do not add more units, because there is alway a marginal person waiting in the wings who would like to move to NYC but hasn't yet.
The thing is, what is actually preventing that marginal person from moving here? There is some vacancy here in NYC, even if it's low at 1.4%. Just adding one more unit with no change in price anywhere should not affect anything. In order for that person to actually go from "I am staying where I am" to "I am moving to NYC," the thing that has to change is the value of that apartment: it must breach the threshold at which point they'd move to NYC. I claim this predominantly happens through increased supply driving down price for a given unit compared to the universe where supply is held constant, which happens with basically any additional housing (via the filtering effect). If the increased supply held rents steady, there is no reason for that in-migration. This is the underlying mechanism by which all supply and demand works from my understanding; I don't see a reason why it should be different solely for housing in exactly one metropolitan area.
Obviously individual decision making for a given person is not this simplistic, but at a population level I think the desirability vs. price calculation holds and the increase in supply decreasing price holds, which is why metro areas that have built a lot (e.g. Tokyo, Austin, Nashville) have even seen falling housing prices, while NYC and SF see rising rents.
I picked a large number of units in my initial claim, but I basically do not think the logic changes for a small number of units either. Adding 100 units relative to baseline would nudge it down a smaller, but still meaningful amount.
[0] https://rentguidelinesboard.cityofnewyork.us/wp-content/uplo...
[1] https://www.apartments.com/rent-market-trends/new-york-ny/#:...
It’ll halt construction on luxury second homes? Wonderful!
Seriously. Instead of using that land to build a $250 million penthouse Ken Griffin only spends 10 days a year in, they could probably build enough housing for 500+ middle class families.
Who will build those homes? Who will pay for them? If it were a lucrative business to build those homes I'd assume someone would be building them but that does not seem to be the case. Why is this?
Upvoting you for a great question! Not everything has to be lucrative amigo. The city could build multifamily housing and finance it through municipal bonds that pay a reasonable rate (tax free, booyakasha).
hey better to keep new homes out of the rich than to have new homes at all! it’s still a win
I'm not sure it's that clear, and the taxes might not be the point. If this halts construction of second homes in the higher price ranges, then those construction crews will still need to do something. So, that might make it possible to find construction capacity for higher-density construction that otherwise wasn't available. Whether or not such a trickle-down effect will happen isn't guaranteed, but it's possible. It's also possible that no construction happens and we see a loss of jobs in the process.
It's a complex market and this is definitely a risk.
I don't think the demand for second homes worth over $5 million is a major driver of construction of new units in NYC.
Are you sure?
https://en.wikipedia.org/wiki/Billionaires%27_Row
Those homes are built for money laundering anyway. Good riddance.
> It will halt construction.
Why would that be the case?