On Property Taxes in New York

From an interesting NYTimes article on different plans to tax those with high incomes in New York:

The idea that nonresidents should pay little or no tax has long rested both on notions of fairness, since they’re not around much to use city services, and pragmatism, because of the fear that higher taxes will drive them away. Fred Feingold, a founder and tax expert at the New York law firm Feingold & Alpert, who successfully represented Mr. Robertson, said that higher property taxes on luxury residences might depress real estate values, discourage construction and have a ripple effect throughout the local economy. And “the so-called rich have the resources and means to go elsewhere and are more likely to do so if they thought the rules to be less than fair,” he said, adding that many of his wealthy clients are extremely tax-sensitive.

But no one knows for sure how many billionaires would leave, especially if tax increases were relatively modest. “I’ve always been skeptical of the assertion that higher taxes might cause the victims of those levies to flee the locality in which the higher taxes are imposed,” Mr. Willens said. “I think there are many other factors of surpassing importance, which do not involve taxes, that go into the decision of where to live and, except at the margin, my experience as a tax practitioner tells me that the imposition of higher taxes would not cause a noticeable exodus of wealthy people from the city or from the state.”

Professor Shaviro, of N.Y.U., agreed. “Look at how they’re bidding up real estate prices,” he said. “They’re obviously willing to pay a very high premium to live in New York City. That suggests that New York has some leeway to tax the very wealthy. If you could figure out exactly how much they’d be willing to pay without leaving, it could be an incredible bonanza for New York City. And if they’re willing to pay so much for those empty apartments, maybe they should also do something to help make everyone else better off.”

Full NYTimes article here.

About ozidar

I'm an Assistant Professor of Economics at the University of Chicago Booth School of Business and a Faculty Research Fellow at National Bureau of Economic Research. You can follow me on twitter @omzidar. http://faculty.chicagobooth.edu/owen.zidar/index.html
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