Note: As a resident of the state with the highest tax burden in the United States and as the owner of a title insurance company reliant on a healthy environment for both the commercial and residential real estate markets, the subjects of affordability and quality of life in New York State are extremely important to me. And to millions of others living in both NYS and states with tax structures similar to ours.
Mike Haltman, CEO
Hallmark Abstract Service
Some states offer businesses and residents alike an affordable lifestyle that includes a reasonable tax structure…And then there’s New York, California, Illinois, New Jersey and others!
In many cases, and for a variety of reasons, the budgets of some states have become increasingly bloated necessitating that choices be made by the powers that be. One is to cut spending, a difficult and politically unpopular thing to do, while the other is to raise taxes to bring in the money to support the spending habit.
While the latter strategy of tax hikes is all well and good for the politician residing in a taxpayer-funded mansion, the reality on the ground is that real people and real companies have choices, and many are now beginning to vote with their feet.
And while there are certainly many benefits to living in locales such as New York City or Silicon Valley, there comes a time when a tipping point is reached and the choice to move to other more tax-friendly parts of the country becomes unavoidable!
Political leaders, however, seem to feel that the wealthy individual taxpayers and corporations are captive and will remain the geese who laid the golden tax revenue eggs ad-infinitum. Revenue sources they seem to believe that can continually be tapped for more and more money.
These ‘geese’ it should be remembered are a small constituency, as in New York City the top 1% of earners pay 43% of NYC income taxes, and 51% of New York State’s (2016).
The decision-making powers that be constantly (or conveniently) seem to forget that famous quote by the ‘Iron Lady’ Margaret Thatcher who said, “The problem with socialism is that you eventually run out of other people’s money.”
Flash forward to the news from over the past week, indicating that for some high profile names the taxing tipping point has been reached. Businesses and individuals have been pushed to the point of no return by politicians too blind to see or too expedient to care.
And, in actuality, these entities have been pushed to the point of exodus!
A couple of the most recent high profile examples will be provided below in addition to another proposed money grab by New York State, but think about this as we toil every day to pay a greater percentage of earnings in taxes to a variety of government entities.
As more and more people and businesses leave these high-tax states, as pandemic costs rise, as deficits continue to grow that require filling and overall government spending does not get cut, there will be fewer and fewer taxpayers remaining to pay what’s due. This can only mean that each of our pro rata shares will rise.
Sad, and frightening at the same time!
New Proposed New York State Tax For Cities Over 1MM Residents (aka New York City)
A projected $3.75 billion New York City budget gap, New York State shortfall at more than $10 billion along with Democrats in-charge in Albany, means that all bets are off in terms of a money grab from taxpayers!
The target here with an idea that would generate about $390MM, are the wealthy taxpayers from in and outside New York State who have a 2nd home, or pied-a-terre, in New York City.
Such an annual tax, if implemented, would drive property values down and inspire taxpayers who are already on the cusp of moving out of New York to more favorable tax environments, to do so.
It would likely also inhibit wealthy ‘out-of-towners’ from buying, further limiting the pool of buyers in addition to the trickledown impact on all businesses in the city!
And while few will have sympathy for the uber-rich impacted by this tax, remember that all taxpayers are within reach of the legislators.
Goldman Sachs Asset Management Heading To Florida
Yet another shot has been fired across-the-bow of New York politicians who are unfortunately either too blind, too incapable of leadership, too in love with spending that requires a heavy tax burden or, maybe, who are simply doing their best three wise monkeys imitation, and are unable to acknowledge the crisis sitting in front of their collective faces!
Goldman Sachs Asset Management , on top of all of the other companies considering an exodus to more business-friendly pastures, is reportedly taking a look at Florida as a future destination for its asset management business.
Oracle Is Leaving Silicon Valley or, Another One Bites The Dust!
‘The coronavirus pandemic has given a number of tech companies and prominent Silicon Valley figures an excuse to exit California. Hewlett Packard Enterprise announced earlier this month that it will relocate its headquarters from San Jose, California, to Houston, Texas. Data analytics software company Palantir Technologies also moved its headquarters to Denver, Colorado from Palo Alto, California, earlier this year.’ (CNBC)
Hallmark Abstract Service…You Buy, We Protect!
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Real Estate in New York State and the Impact of Companies Migrating Away!
July 1, 2019 New York State and New York City Real Estate Transfer Taxes Slated to Rise!
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We received the excellent question below based on the proposed New York City pied-a-terre tax discussed in the article:
‘…I have a client that is asking about effect of such tax on them (if it is passed).
Parents live abroad. They bought a co-op in NYC in the wife’s name and the son lives there full time. Does the current discussion on possible pied a terre tax consider this scenario and would it likely apply or be excepted if pied a terre tax is passed.
Also – how do you determine assessed value of a co-op (since I can’t go online to department of finance to get tax notices for individual co-op unit…’?
Our answer is…
The proposed legislation has suggested exemptions, and the links to two articles below will hopefully help clarify the Bill and determining of assessed value.
This is a proposed exemption:
‘…The proposed legislation does provide for certain exemptions, including for dwelling units that are (i) the primary residence of at least one owner of the property or dwelling unit, (ii) the primary residence of a parent or child of at least one owner of the property or dwelling unit, or (iii) rented on a full-time basis to a tenant or tenants for whom the property or dwelling unit is their primary residence. If an owner believes one of the aforementioned qualifications for the tax exemption applies, the owner must provide proof of eligibility as required by applicable state or local law….’
These are the two articles and if you have any questions let me know.
The Revival of the New York Pied-à-Terre Tax
https://www.law.com/newyorklawjournal/2020/10/15/the-revival-of-the-new-york-pied-a-terre-tax/
What is assessed value and how is it used to calculate a pied-à-terre tax?
https://www.brickunderground.com/buy/bricktionary-what-is-assessed-value-property-tax-pied-a-terre-condo-co-op-townhouse-apartment-nyc
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