New York's Cooperative and Condominium Community

Habitat Magazine October 2020 free digital issue

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LEGAL/FINANCIAL

HOW LEGAL/FINANCIAL PROBLEMS ARE SOLVED BY NYC CO-OPS AND CONDOS

New Jersey Passes Millionaires Tax. Is New York Next?

New York City

Tax the rich, millionaires tax, pied-a-terre tax, co-ops and condos, COVID-19.

In a stunning move to tax the rich, New Jersey has become one of the first states to adopt a so-called millionaires tax to alleviate shortfalls caused by the coronavirus pandemic, intensifying a national debate over whether to increase taxes on the rich to help address widening income gaps, The New York Times, reports. 

Gov. Philip Murphy, a Democrat, announced a deal with legislative leaders to increase state taxes on income over $1 million by nearly 2 percentage points, giving New Jersey one of the highest state tax rates on wealthy people in the country. The agreement also includes an annual rebate of as much as $500 for families making less than $150,000.

 “We do not hold any grudge at all against those who have been successful in life,” says Murphy, a former investment banker. “But in this unprecedented time, when so many middle-class families and others have sacrificed so much, now is the time to ensure that the wealthiest among us are also called to sacrifice.”

The tax deal comes at a moment when the country is enduring its worst economic crisis in decades and Washington has been unable to agree on a stimulus bill to provide more help to cities and states, which have resorted to cuts in services and other fiscal maneuvers to stay solvent in the face of mounting deficits.

Under a perennial proposal recently reintroduced in the New York State Legislature, Sen. Brad Hoylman, a Manhattan Democrat, proposes taxing pieds-à-terre in New York City, ranging from .5% to 13.5% depending on a few variables. Secondary-residence one- to three-family homes with a market value above $5 million would qualify, as would secondary-residence condos and co-ops whose assessed value exceeds $300,000.

In Washington, Democrats who control the House are standing firm on a goal of providing $2.2 trillion in aid to local and state governments, a figure rejected as too generous by President Trump and Senate Republicans, who have indicated that they do not want to send money to Democratic-run states and cities that they say have been mismanaged. With no signs of a breakthrough, state leaders, including Murphy and New York’s Gov. Andrew M. Cuomo, who is also a Democrat, have repeatedly stressed the urgent need for federal relief.

At least eight other states – including California, Massachusetts and New York – have considered proposals to increase taxes on high-income residents, according to the National Conference of State Legislatures.

In Albany, where Democrats also control all branches of government, progressives have been pushing Cuomo to consider a variety of bills, including one to raise the tax rate on those earning more than $100 million to almost 12%.

A fiscal moderate and third-term Democrat, Cuomo has largely resisted proposals to raise billions by taxing the wealthy, and has instead consistently called on the federal government to bail New York out, saying its state and local governments are facing $59 billion in budget shortfalls this year and next.

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