All apartments selling for more than $1 million are already subject to a 1 percent “mansion tax,” and all apartment sellers incur a 2 percent transfer tax no matter the price. If the pied-a-terre tax were enacted, some apartments would sell for just below $5 million to avoid the tax altogether, resulting in less revenue for those sales, Lustbader said.
“It makes the city look very unfair,” Lustbader said. “These people don’t take the subway.”
But to James Parrott, the economist whose proposal is the basis for the legislation, the subway benefits those who ride it as well as those who deal with the above-ground traffic it alleviates. Plus, he said, it’s a matter of fairness, not just to everyday New Yorkers but to full-time residents of the most exclusive neighborhoods, from the Upper East Side to Central Park South. Besides, even if demand from non-residents stalls, something he thinks is unlikely, full-time residents will, literally, fill in the gaps. And they’ll pay income tax.
“Empty units mean less income tax coming in and fewer locals walking the streets and frequenting the stores that bring vitality to New York City," said Parrott, of the New School’s Center for New York City Affairs. “Pied-a-terre owners are not good for the city’s economy.”
This article was provided by Bloomberg News.