Brokers of luxury real estate in New York City are now playing the “class warfare” card in an attempt to discourage the state legislature from passing a suddenly popular pied-a-terre tax on absentee owners of apartments worth more than $5 million, Bloomberg reports. Translation: keep your hands off our commissions.
Donna Olshan, president of Olshan Realty brokerage, likens the proposed tax to “class warfare” that casts some of her best clients as villains. Why punish them, she asks, for being rich and living most of the time somewhere else? “This whole idea of get out the pitchfork and burn the palace down leads to bad decision making,” Olshan says.
Rachel Ostow Lustbader, a broker with Warburg Realty, says pied-a-terre buyers may not pay income taxes here, but they pay plenty. “They don’t just buy a hotdog,” she says, “they go to all the high-end restaurants, Gucci and Chanel, and are paying millions of dollars in sales tax.”
In addition to not buying hot dogs, the owners of multimillion-dollar condos tend not to ride the city’s execrable subways, which is where the revenue from the pied-a-terre tax – anywhere from $372 million to $665 million a year – would go. Tax the rich to fix infrastructure they don’t even use? Class warfare is so unfair!
Even so, some people see its upside. The tax may slow sales at the upper end of New York’s housing market, but it could also bring benefits that go beyond fixing the subway, including encouraging developers to focus on units that are more affordable to permanent residents, says Moses Gates, a vice president at the Regional Plan Association. “We have a housing emergency. Every unit of housing taken away for part-time use is not available for people living here full time.”
And New York City is not exactly on the cutting edge when it comes to taxing the absentee rich. Cities with such levies now in place range from Paris to London, Vancouver, and Hong Kong.
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