New York’s newest scheme to tax the rich is an economic disaster



New York Gov. Kathy Hochul (D) is going all in on taxing the rich.

The governor recently proposed a new pied-à-terre tax as a matter of “fairness.” The tax, which would affect nonresident owners of high-end New York City properties, is a surprising reversal in support of a tax proposal by New York City Mayor Zohran Mamdani (D). Hochul had previously rejected the proposal.

While the rhetoric around this tax may resonate politically, the policy itself is a textbook case of how populist tax schemes can undermine investment, distort housing markets, and ultimately leave the city worse off.

Albany’s ingenuity in thinking up new modes of taxation is unparalleled.

"Those who benefit from the city without living in a full-time capacity should contribute to the costs that it takes to run the city: public safety, world-class parks, amenities, the roads, the subway system,” Hochul says in the video.

She continues, "I believe it will protect working New Yorkers and ensure that everyone who has an address in New York City is investing in its continued success."

Hochul may be well attuned to the clamor of politics, but she is tone-deaf to sound economics.

Nonresident owners of New York City real estate already pay taxes — roughly $45,000 to $65,000 on a pied-à-terre with a market value of $5 million — while hardly benefiting from the public services their tax dollars fund. They also pay consumption-based taxes and fees when in New York City.

Nonresidents who own a business in the city also contribute revenue to the city budget.

The pied-à-terre tax has obvious defects in that it is arbitrary, distortionary, and status-dependent. It will likely lead to valuation challenges and maneuvers to keep properties below the $5 million threshold.

Applied only to nonresidents, it would create strong incentives to avoid the tax by altering residency status or otherwise manipulating the property title to obscure de facto property ownership.

For the most expensive real estate, the tax will lower property values — and thus property-tax liability — even though, certainly, “that effect gets distorted when the future tax burden on the property depends on the identity of the purchaser,” notes City Journal.

Taxing these nonresidents into calling New York City home is a poor welcome from the governor. Nevertheless, it suggests that her zeal to tax “New Yorkers,” unlike Mamdani’s, has subsided.

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kena betancur/AFP/Getty Images

New York State already has the least competitive tax structure in the nation and the nation’s highest state and local tax collections per capita. From its “tax benefit recapture” provision to taxing many remote nonresidents under its “convenience of the employer” rule, Albany’s ingenuity in thinking up new modes of taxation is unparalleled.

The latest data shows that New York lost $9.9 billion in adjusted gross income (AGI) between 2022 and 2023 — a net loss of taxable income not readily evident from migration trends. Specifically, Manhattan, while gaining tax filers on net, lost $922 million in AGI.

In 2023, the top 1% (about 93,000 people) contributed roughly one-third of state tax revenue, supporting 20 million residents, according to Empire Center. With the nation’s third most progressive state tax system, New York has paved its own road to insolvency by chasing out high-net-worth taxpayers.

Sobered by plain budget facts, Hochul has begun pleading with wealthy New Yorkers to “go down to Palm Beach and see who you can bring back home.” She has opposed Mamdani’s “tax the rich” surtaxes on high-earning city residents and corporations, but not the city’s fiscal indulgence.

New York City spending has grown by more than 50% over the past decade — roughly 12% to 14% after inflation — even as the city’s population has declined slightly. This year, New York City’s spending is about $10 billion higher than that of the entire state of Florida.

Gov. Hochul misunderstands the core problem underlying the city’s fiscal plight. Rhetoric alone will not convince current and former wealthy New Yorkers that the state’s political leadership recognizes they have paid their fair share after all.

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'Bye': Seattle mayor laughs off wealth exodus from her flagging, crime-ridden city



Katie Wilson, the 43-year-old leftist blogger elected mayor of Seattle last year, apparently finds it amusing that deep-pocketed residents and businesses are fleeing her crime-ridden city.

During a recent event at Seattle University, lecturer Joni Balter raised the matter of downtown Seattle's apparent inability to "grow job these days," noting that "the city has lost 25,000 jobs over four years, and the thinking is — the data folks say — that if you extend that out five years, it could be as high as 37,000 jobs."

'We still have the very regressive tax system.'

According to a recent report from the the Downtown Seattle Association, the Emerald City's downtown has seen a 14% decrease in brick-and-mortar retail jobs since 2010 and lost an estimated 13,000 jobs just last year, amounting to the biggest decrease in jobs since the pandemic.

The report noted further that Seattle's downtown office vacancy remained at a post-pandemic high of 25%; the central business district experienced an office vacancy rate of 32% last year, nearly double the previous high point during the Great Recession in 2009; and the combined taxable value of the 20 highest-valued properties in Seattle's downtown has declined from over $10 billion in 2021 to roughly $5.1 billion this year.

When asked about her plan to "turn that around," Wilson — who appeared on stage alongside fellow radical Girmay Zahilay, the newly elected King County executive — attributed Seattle's exodus of jobs and businesses to a number of factors including potential workers' apparent inability to afford living in or near the downtown; homelessness and public safety issues; and the "tax environment."

While apparently interested in tackling the affordability, homelessness, and public safety issues, Wilson signaled that her city's crushing taxes won't soon be changed.

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David Ryder/Bloomberg/Getty Images

Wilson, who co-founded the Transit Riders Union in 2011 and endeavored in years past to "Trump-proof Seattle," was later asked about the "taxing climate" and whether progressive taxes were an "easy and promising solution."

After noting that she found it "very exciting" that state Democrats passed a 9.9% tax on annual taxable income exceeding $1 million for individuals or households and recalling her efforts to push similar taxes in Seattle, Wilson said that claims that wealthy residents will flee the state are "super overblown."

But to those beleaguered residents who have chosen to leave or might do so in the near future, the mayor waved, said, "Bye," and laughed in concert with fellow travelers in the sparsely populated audience.

"In general, we still have the very regressive tax system, and my office is doing a lot of work to look at what our options are in terms of progressive taxation," continued Wilson. "We do have more flexibility at the city than the county, in terms of our taxing authority."

Despite Wilson's casual dismissal, high taxes in Seattle appear to be chasing jobs to cities like Bellevue.

Jon Scholes, president of the Downtown Seattle Association, suggested that Amazon's decision to relocate thousands of employees from Seattle to other King County locations was the direct result of Seattle's overwhelming tax burden, reported the Center Square. Starbucks, which is headquartered in Seattle, also appears to be angling for greener pastures.

Among the taxes the city has implemented is the Social Housing Tax, a 5% levy on employee compensation exceeding $1 million, and the JumpStart Payroll Expense Tax, which the city slapped on companies with employees making more than $150,000 annually.

"What we need is more businesses in Seattle paying taxes," said Scholes. "That's how we strengthen the tax base."

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White House requests $1.5 trillion for Pentagon's 2027 budget. Here's what the administration has in mind.



The Trump White House has proposed that Congress increase the Pentagon's budget by nearly 44% compared to last year to roughly $1.5 trillion and reduce non-defense spending by $73 billion, or 10%.

"This is a $441 billion or 44-percent increase from the 2026 enacted level in combination with the $151.5 billion in mandatory funding provided through the Working Families Tax Cut Act," the budget request says.

While nearly $1.2 trillion of the total would reportedly come from the regular appropriations process, $350 billion would alternatively come through a budget reconciliation bill.

'I'm very wary.'

This request is in addition to the $200 billion supplemental package requested by the Department of War to sustain the U.S.-Israeli conflict with Iran.

According to the White House, the requested sum — which would reportedly raise U.S. military spending to its highest level in modern history — would help restore "the readiness and lethality of the force by ensuring America's warfighters are trained, equipped, and medically ready to fight and win."

In addition to funding a pay raise of 7% for all Pentagon military personnel ranked E-5 and below, of 6% for E-6 to O-3, and of 5% for O-4 and above, the requested budget would help:

  • Fund the "next-generation missile defense shield" outlined in President Donald Trump's executive order titled "The Iron Dome for America";
  • "Secure and defend America's vital national and economic security interests in, from, and to space";
  • Fund the procurement of 18 battle force ships and 16 non-battle force ships;
  • Fund the procurement of 12 unspecified "critical" munitions at a time of dwindling stores of Patriot missiles, Standard Missile-3s, and Terminal High Altitude Area Defense interceptors;
  • "Fix longstanding shortfalls in the National Defense Stockpile" of critical minerals;
  • Secure 85 F-35 jets;
  • Prioritize the development and production of the F-47, a sixth-generation combat aircraft Boeing won the contract to develop last year;
  • Boost America's drone manufacturing base; and
  • Scale the Armed Forces' "AI ecosystem," among other initiatives.

The White House further proposed that Congress continue to "eliminate millions of wasteful and egregious spending related to diversity, equity, and inclusion programs and other 'woke' policies" at the Pentagon.

RELATED: America First means taking care of our own, not another war

Will Oliver/EPA/Bloomberg/Getty Images

Numerous Democratic lawmakers rushed to criticize the White House's budget request.

Rep. Mike Thompson (Calif.), for instance, stated, "Trump wants $1.5 trillion for the Pentagon while eliminating the programs that help you pay your heating bill, fund your child's education, and keep your family healthy. This isn't a budget. It's a betrayal of the American people."

Sen. Patty Murray (D-Wash.) said that "the only responsible thing to do with a budget this morally bankrupt is to toss it in the trash."

There may also be some resistance on the right.

"I'm very wary of voting for excessive spending in defense," said Tennessee Rep. Tim Burchett (R), Politico reported.

'It is the most robust increase in defense spending in many years.'

Sen. John Curtis (R-Utah) said in an op-ed on Friday that while he supports maintaining America's stockpiles, strengthening the defense industrial base, and maintaining "the capabilities needed to deter China," he "cannot support funding for further military operations without a formal declaration of war."

The budget request has, however, found a number of staunch supporters in the GOP.

Sen. Roger Wicker (R-Miss.), chairman of the Senate Armed Services Committee, and Rep. Mike Rogers (R-Ala.), chairman of the House Armed Services Committee, said in a joint statement, "This funding will ensure our military remains the most advanced in the world, supporting an unparalleled force capable of defending our interests in the 21st century."

"America is facing the most dangerous global environment since World War II. Growing threats from adversaries such as China, Russia, Iran, North Korea, Islamic radicals, and narco-terrorists require decisive action and renewed urgency to reinvest in our defenses," the duo continued. "This bold commitment provides the resources needed to rebuild American military capability and confront those challenges head-on."

South Carolina Sen. Lindsey Graham (R.) celebrated the budget request, stating, "It is the most robust increase in defense spending in many years, and it is more than justified by the threats we face throughout the world."

Russell Vought, director of the Office of Management and Budget, said in a note to Congress appended to the budget request, "President Trump promised to reinvest in America's national security infrastructure, to make sure our Nation is safe in a dangerous world. The 2027 Budget upholds this promise and would ensure that the United States continues to maintain the world's most powerful and capable military."

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