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4 Nov, 2019 23:16

‘Class war for the rich?’ Wealthy New Yorkers slam bid to crack down on inequality & they aren’t the only ones

‘Class war for the rich?’ Wealthy New Yorkers slam bid to crack down on inequality & they aren’t the only ones

New York real estate developers are piling on a state proposal to tax “pied-a-terres," second (or third, or fourth) homes bought by non-full-time residents, accusing legislators of conducting “class warfare on the rich.”

The proposal, initially floated in March and recently resurrected, would tax the purchase of any second home worth over $5 million and use the proceeds to fund public transportation and other services used by low-income residents. And the rich aren’t keen on this trickle-down idea.

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“It’s a sin tax,” William Zeckendorf, proprietor of the firm that has built some of the most expensive apartments in the city, lamented on Monday to Bloomberg  - an outlet ironically founded by the city’s former mayor, who rolled out the red carpet for luxury developers as the city reinvented itself from gritty to glitzy.

It’s a tax meant to discourage economic behavior. And does the city really want to discourage pied-a-terre owners from coming to New York?

The city’s public transportation system is literally crumbling, and recently-passed taxes on the wealthy - including the “mansion tax” that took effect in July - will toss about $365 million every year toward a subway system that has been dropping chunks of track on unsuspecting motorists for months.

The mansion tax requires properties sold for over $25 million to kick 3.9 percent of the sales price toward the maintenance of trains it is unlikely the buyers will ever use, while lower-priced homes pay lower penalties. The pied-à-terre tax will continue this redistribution of wealth to the needy. This, the rich say, is unfair.

The very rich really hate taxes,” former property developer Barry Hersh told Bloomberg when the levy was first proposed. Olshan Realty president Donna Olshan was more blunt, calling it “class warfare for the rich.”

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But the disgruntled wealthy aren’t taking this incursion on their dominance lying down. Former Starbucks CEO (and rumored presidential candidate) Howard Schultz insisted that “billionaire” had become a “catchphrase” and suggested the commoners substitute “people of means” instead - even has he acknowledged that billionaires might have too much power in the US. And upscale developers are fighting further incursions on billionaires’ control of New York, even if it means leaving their buildings empty.

Despite Big Apple’s generally low apartment vacancy rate, its luxury homes sit largely empty. New York trails behind cities like Vancouver and Hong Kong that have realized there are heaps of money to be made in taxing non-resident homeowners, but even the New York Times has been remarking upon the large swaths of real estate owned by non-residents for close to a decade. It’s hard to ignore when neighborhoods full of residential buildings remain dead silent at night.

Foreign home purchases in the US are declining across the board. Even if New York were somehow to cut down on the oversupply of luxury homes, it’s unlikely the city would be able to lure in non-residents with big money to spend in the aftermath of a trade war that has spooked Chinese investors. Meanwhile, regular folks are fleeing the city in droves, unable to afford prices driven up by years of foreign investment. Wealthy developers insist they can hold out, even if the population staffing the service industry they depend on to fill their building evaporates.

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