For Immediate Release: March 26, 2019
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Fiscal Policy Institute Releases Analysis in Support of Proposed Pied-à-Terre Tax
Report and Analysis here.
A PIED-À-TERRE TAX IS A TAX ON HIGH-VALUE LUXURY RESIDENTIAL PROPERTY that is not used by its owners as a primary residence. This type of tax has become increasingly common around the world as a way to ensure that wealthy non-residents pay their fair share of local taxes, and as a way to re-orient the local real estate market around housing for full-time residents.
The new pied-à-terre tax, structured as FPI originally proposed in 2014, can be expected to yield between $490 and $650 million in new revenue. This new analysis from the Fiscal Policy Institute is roughly in line with other recent projections.
“The pied-a-terre tax on the city’s most high-valued properties is a no brainer. It will generate the revenue New York needs to fund its public services. And while we expect it likely to have a small impact on the market overall, the impact that it does have will actually be positive for the city,” said Ron Deutsch, Executive Director of the Fiscal Policy Institute.
“Thousands of elite pied-a-terre owners have been benefitting greatly from the public services New York provides without paying their fair share to fund them. This situation is both inequitable and inadequate. The small new tax on high-value second- and third- homes valued at $5 million or more will unlock a new revenue stream, encourage more efficient use of housing resources, and tilt the market slightly more toward full-time rather than part-time residents. These market reactions, to the extent that they occur, are added benefits of the tax,” according to the author of the study Jonas J.N. Shaende PhD, Chief Economist at the Fiscal Policy Institute. “From Paris to Singapore, policy makers have come to the realization that nonresident property owners contribute inadequately to the support of local services. New York should do that, too, as a matter of basic tax fairness”
“New York City’s real estate market has been distorted by extremely pricey luxury residences which are not occupied much of the year. While New Yorkers find it harder to afford living in the city they call home, this tax requires a modest contribution to a city some people only pass through for their own convenience,” said Assembly member Deborah J. Glick.
Senator Brad Hoylman stated, “With pressing needs to fix our subways, fully fund our schools, build affordable housing, and make our state work for all New Yorkers, we need all the revenue we can get in New York State. As the Fiscal Policy Institute’s latest report shows, the pied-a-terre tax would raise up to $650 million by asking some of the richest people in the world, who own second homes in New York City worth more than $5 million but don’t live here, to pay their fair share. Anyone who can afford to buy a $238 million second home in New York City can afford to pay a little more to keep our subways and our schools running. Our city depends on that infrastructure—and so does their investment. It’s time for Albany to reject the special interests and stand with working people.