The proposed pied-à-terre tax has generated plenty of controversy. But at this point, it remains unclear how much money the tax would actually raise.
City agencies, real estate executives and the Fiscal Policy Institute — the group that proposed the tax — are trying to determine the impact of the tax, including the amount of revenues the levy would raise and to what extent it would boost the local economy, according to the Wall Street Journal.
While the Fiscal Policy Institute projected that 445 units would bring in $551 million annually if the tax was implemented, actual sales data seem to indicate that that number might be less, according to the newspaper.
The current proposal would add up to a 4 percent tax on co-ops, condos and houses that have a market value that’s higher than $5 million and aren’t being used as primary residences. The top 4 percent rate, the newspaper reported, would be applied to properties worth more than $25 million.
Before the tax can be implemented, the State Senate would have to approve it. That scenario seems unlikely with a Republican majority in the state house.
In addition, developers and brokers have said the tax would stifle the luxury market.
“Taxes aren’t supposed to be a punishment, they are supposed to be for paying for city services,” Urban Compass President Leonard Steinberg told the newspaper. Those who buy expensive second homes in New York, he continued, use less than half of the services full time residents use. [WSJ] — Claire Moses