Hacker News Reader

Comment by Kadin | Hacker News Reader

Good luck selling that to the rest of the residents; property taxes are pretty unpopular even compared to income taxes.

And really, the better way to look at it is that the property tax paid by some multi-billionaire who only drops into town for a few weekends a year is all profit for the city. They're not using services. They're not sending their kids to public school or generating garbage or calling the police ... whatever they pay to the city each year is just gravy. They're subsidizing people who actually do live there, and would otherwise have to pay more taxes (of one form or another) for the actual services that NYC provides.

View on HN

> They're not using services.

Government services are not something that are "used" in the normal sense of the word. Central Park needs to get mowed, street lights need to be lit, police and fire protection needs to be provided, etc. regardless of whether residents are there or not.

Given that the people in question are there for just days/weeks per year, their "use" of the services seems in line with the taxes they pay. Without knowing specific numbers it's hard to get exact math, but if someone pays property tax on a multi-million dollar condo purchase and is only in the city for 3 weeks per year, surely they aren't overusing the services?

If they can afford a crash pad in new york city, then a little extra in property taxes is probably not gonna break the bank.

Another way to look at the issue, is to evaluate the 'tax collection opportunity costs' of the absentee owners. For every condo that gets bought by an absentee owner (as opposed to a local owner), NYC loses income tax, sales tax, and general economic activity (these are wealthy individuals, there spending is a boost to the local economy). By increasing the property taxes, NYC would shift the cost-benefit ratio towards those that are actually going to utilize the property (thus resulting in more income and sales taxes), while also bringing in more property taxes

Finally, if these wealthy individuals were so concerned about only paying for what they "use", then it would make a lot more sense if they just got a nice hotel room for the days/weeks per year that they are in NYC, rather than buying a condo that sits empty most of the time.

The "probably not gonna break the bank meme" is how class warfare propagates; it offers nothing useful in terms of creating progressive and fair tax rates.

And your hotel idea is exactly what will happen if property tax rates go up. Think through what the effects of that would be...

"it offers nothing useful in terms of creating progressive and fair tax rates." Neither does accusing people of propagating class warfare.

Regardless of how long they're there, they still probably don't want NYC to burn down all year long, right?

Forget looking at this from a moral perspective and try the utilitarian approach. It is not socially desirable to have underutilized real estate in a place as crowded as NYC. Put it this way: Renting out an empty space is effectively the equivalent of building a new space!

I normally disapprove of using tax policy to modify behavior, but in this case it makes sense. Property tax is like the "rent" citizens pay to the government for using land. If the rent is too low, people overconsume the scarce resource.

Doesn't property tax raise the rent for everyone?

Possibly. But so does underused real estate, by reducing supply. And housing is a fairly inelastic good, so even a 5-10% increase in supply could have a significant impact.

They can just focus on really high tax rates for homes that aren't primary residences.

Not necessarily. Rent is decided by supply, and demand. Property taxes may encourage smaller homes, which increases supply (as you can build more of them); and demand won't change at all (since people will still spend 1/3rd of their income on rent, or more if they live in NY).

Property taxes are relatively low but they do exist. So that billionaire is probably still paying for a cop or a Sanitation worker, even if he steps in NY once a year. NYC takes almost 4% in tax, in addition to what the NY (state) takes.

The article notes that the properties are seen as a safe place to store money. Surely government services directly contribute to the increasing or at least stable value of these properties? Or do you believe that those condos would hold their value just as well if there were no police force in NYC?

> The article notes that the properties are seen as a safe place to store money.

But that isn't true. Real estate isn't that safe in the first place, and they are also throwing money away by not renting it. They'd do better in buying a commercial property and renting it out.

Why do you feel real estate in Manhattan (especially at the locations mentioned) isn't that safe? Some of those places have been premium properties for almost 100 years.

There is a phenomena of buying real estate in stable countries as a complicated bank account for wealthy people from unstable countries. It's like buying a pile of gold to them, except a house is harder to steal.

Vancouver is suffering from this with wealthy mainland chinese, leading to the second worst affordability ratio (housing price : average annual income) in the world. You see similar behaviors in condos in china itself.

It has very bad effects for the people who already live there, especially for the young and newly established. Younger people with better opportunities go away once they do the math and the cities eventually suffer brain drain. I would suggest a high long term unoccupied residence tax to avoid the problems of unused property in cities. Hopefully it will prod these people just a little bit to hire property management companies to avoid the tax and rent the places out.

Reply on news.ycombinator.com