[burlesona]

Property tax is the workable wealth tax. There's no such thing as a perfect policy, but in the context of NYC this seems worth trying. I'll be interested to see if it helps create some liquidity in the housing market (the goal), or if it only functions as revenue source.

One wrinkle I haven't heard much discussion of -- cities respond to incentives too. NYC is a global destination for the mega wealthy. If it turns out the uber-rich don't mind paying and this becomes a cash cow for the city, that creates incentives for the city to cater to them and try and get more uber-rich people to have second homes in the city.

[Aurornis]

> If it turns out the uber-rich don't mind paying and this becomes a cash cow for the city, that creates incentives for the city to cater to them and try and get more uber-rich people to have second homes in the city.

The tax is reasonably small enough that I wouldn't expect a lot of wealthy people from divesting from their properties, but it's probably going to make them think twice about buying new properties.

That second-order effect is the important balancing act for any locality-based wealth tax. If you make the tax too high it starts discouraging the behavior you're taxing, which can paradoxically reduce overall tax revenue.

France discovered this the hard way when they implemented their first wealth tax: Many ultra-wealthy people moved their capital out of France to avoid the tax, which was suspected to have had an overall decreasing effect on tax revenue from that demographic. They replaced the wealth tax with a property tax, which probably played a large role in inspiring this pied-à-terre policy.

[jamiequint]

"If you make the tax too high it starts discouraging the behavior you're taxing, which can paradoxically reduce overall tax revenue."

I am generally against more taxes, but the structure of this one is quite good in terms of the incentives. If wealthy people who only live in the city part-time stay in hotels instead of buying second homes, the net effect should be to increase the cost of hotel rooms and reduce the cost of owned-housing. NYC charges nearly 10% tax on hotel stays, so recoups some of the cost there. Having property in your city mostly being occupied by people who live their full time, particularly when property is already very expensive, seems like a good thing overall.

[apparent]

> increase the cost of hotel rooms and reduce the cost of owned-housing

Reducing the cost of $5M+ homes will slightly help some wealthy people who live in NYC, and there will be a modest trickle-down effect into less expensive properties. But I thought the goal was to generate tax revenue from the taxes, which wouldn't happen to the extent they end up in the hands of NYC residents.

EDIT: apparently it hits all homes over $1M, which means it will hit more homes but also won't generate revenue to the extent the homes end up being owned by New Yorkers.

[jamiequint]

"I thought the goal was to generate tax revenue from the taxes, which wouldn't happen to the extent they end up in the hands of NYC residents."

You're right, I'm saying I think it is a good tax for reasons secondary to revenue. We all know NYC is going to squander the money, at least they might make housing slightly cheaper for the average New Yorker in the process.

[ethbr1]

* Not to forget that most $5M NYC homes could also be a larger number of less valuable homes

So this is also a developer / market incentive, if it actually changes demand.

[8note]

> stay in hotels instead of buying second homes, the net effect should be to increase the cost of hotel rooms and reduce the cost of owned-housing.

airbnb begs to differ?

the conversion goes from owned/rented housing to airbnb conversions

however, the slack is absorbed, and the airbnbs are gonna about match the actual need for how many ultra-rich people are actually in NY at a time

[leephillips]

Not in NYC. Airbnb is effectively outlawed by regulation there.

[queenkjuul]

Good news, Airbnb can't operate in NYC.

Here in Chicago, they're banned from certain wards

[MSFT_Edging]

I'm not sure why if you or I were to expatriate and let go of our US citizenship, we'd still be on the hook for taxes for (iirc) 15 years, but the ultra wealthy can get away with tax havens while remaining citizenship and reaping the benefits of protection by X state.

What prevents the tax following the offshoring attempts? Is it simply that the IRS doesn't have the manpower? or is there a legal loophole for avoiding paying your share that only works for the ultra wealthy?

[throwaway2037]

    > we'd still be on the hook for taxes for (iirc) 15 years

This is defintely not true. I did some light Google searches and I cannot anything. There is an exit tax, but only applies if your net worth exceeds 2million USD.

[MSFT_Edging]

Turns out it's an old law, if you expatriated between 2004 and 2008, and spent 30+ days in the US within 10 years of expatriation.

> Further, expatriated individuals will be subject to U.S. tax on their worldwide income for any of the 10 years following expatriation in which they are present in the U.S. for more than 30 days, or 60 days in the case of individuals working in the U.S. for an unrelated employer.

[beagle3]

IIRC, this law was a result of Ted Arrison giving up his US citizenship very shortly before death, saving a few billions for his heirs.

The law was hastily passed to discourage copycats while working on the exit tax law without haste.

[queenkjuul]

I thought US citizens are taxed on income (but not capital gains) even when outside the US? I had friends who had to file US income tax returns while living overseas

[throwaway2037]

US citizens regardless of their residency are responsible to pay taxes on all global income and assets. Thus, if you live in the US, but have a brokerage account in Bermuda or Hongkong (where there are no local capital gains taxes) you are still required to pay US federal taxes on capital gains from your overseas brokerage account. The same would be true if you lived in Bermuda or Hongkong.

[sandeepkd]

I think its a good idea in general to tax the second property for any country where housing is a struggle. Its usage based taxation so fair in some sense. Housing is somewhat of a critical asset for a normal safe life. Commercialization of housing properties creates a circular effect on the pricing, thereby increasing the cost of almost everything else.

[blactuary]

The goal of this isn't simply to raise revenue, it's also to discourage parking money in empty properties when it's one of the most expensive cities to live in and doesn't have enough housing

[throwforfeds]

I'm also wondering what effect it'll have on all the people that have been declaring their primary residence in Florida for tax purposes yet actually live up here in NYC a good amount of the time. My neighborhood in Brooklyn is filled with cars registered in Florida. If all of a sudden your pied-a-terre condo in Williamsburg is getting hit with $40k+/year in property taxes it might no longer make sense to try and move your residence to Florida to avoid city/state income tax.

[gruez]

>it's also to discourage parking money in empty properties when it's one of the most expensive cities to live in and doesn't have enough housing

Is that really needed when the homeowner vacancy rate is 1.3% in the New York-Newark-Jersey City MSA?

https://www.census.gov/housing/hvs/data/rates.html

[lux-lux-lux]

The actual vacancy rate is many times that, as properties are kept off market for a variety of reasons (one of which this tax directly addresses)

[gruez]

Why wouldn't it be captured? This is from the census, so it presumably captures units that aren't on the market.

[queenkjuul]

Lots of the highest-value units are famously empty. The "pencil skyscrapers" in particular were called out in the media.

[cyberax]

Expensive cities will never have enough housing. The cure is to discourage investment in them and force it into less dense cities.

[janalsncm]

They are expensive largely because of housing so your statement is a bit of a tautology.

Historically NYC housing used to be a lot more affordable before they stopped building, reducing supply relative to demand and thereby raising prices.

[Jblx2]

Has anyone tried to study how much NYC housing demand is due to having a large foreign-born population (something like 37%)?

https://www.huffpost.com/entry/new-york-city-immigrants_n_44...

[queenkjuul]

Do foreigners require more houses than Americans?

[postflopclarity]

.. yes? this is studied.

studies typically conclude that immigrant populations do contribute to housing demand (duh), but the labor supply they bring to services market (e.g. childcare, retail) lowers the cost of those services by a more-than-commensurate amount. so the total cost of living goes down for "natives."

[cyberax]

> They are expensive largely because of housing so your statement is a bit of a tautology.

Yes. And that's impossible to fix.

> Historically NYC housing used to be a lot more affordable before they stopped building, reducing supply relative to demand and thereby raising prices.

Demand will _always_ outstrip supply. And there's no such thing as "affordable housing", it's a contradiction like "hot liquid helium". If housing sells, then it's affordable for _somebody_.

What you're talking about is subsidized housing in some form. Like rent control or housing projects.

[IAmBroom]

> Demand will _always_ outstrip supply.

Economics 101 would beg to disagree.

> And there's no such thing as "affordable housing", it's a contradiction like "hot liquid helium". If housing sells, then it's affordable for _somebody_.

Incorrect. Housing can be sold to a buyer that won't use it for housing. Like the dog protecting the manger full of food it can't eat, affordable housing can be removed from the market by investors, tax vehicles, and so forth.

[dirtikiti]

No, the goal is to overhaul the property tax system.

This is going to raise property taxes for everyone.

The ultra wealthy can just pack up and move. It doesn't affect them in the slightest.

But in two years when the property tax overhaul is complete, the middle class will foot the bill. As per usual.

[nkohari]

Can you explain how that would happen? This tax is limited to second homes only.

[dirtikiti]

this is literally a cover to overhaul the property tax assessment system in New York.

https://www.msn.com/en-us/money/companies/new-york-passes-ma...

"While the tax seems large, experts say the city's antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said.

Rather than overhaul the system immediately, the city will gradually update valuations – and the tax – according to the budget documents. Starting in the 2028-2029 tax year, the property values will be based on comparable sales. Since valuations will skyrocket, the tax rates will fall to compensate."

this is, at minimum, a 10% increase in ALL property taxes. And the people most affected will be the lower and middle class.

[ethbr1]

>> City valuations can often be 10% or less of the true market value

> this is, at minimum, a 10% increase in ALL property taxes

If they're ~10x'ing the erroneously low valuation to true them to market value, then that would be more than a 10% increase.

>> Since valuations will skyrocket, the tax rates will fall to compensate

But as the article points out, this is an expected outcome and will be blunted by subsequent tax rate decreases.

All things equal, undervaluing properties for tax purposes isn't fair, although it may be politically (corruptly) popular.

[queenkjuul]

That literally has nothing to do with the pied-a-terre tax. The assessment process is not related to taxing second homes. Each can be done with or without the other.

[iririririr]

it will just make rent higher.

[WalterBright]

> If you make the tax too high it starts discouraging the behavior you're taxing, which can paradoxically reduce overall tax revenue.

The Law of Supply and Demand is not a paradox.

[aerhardt]

You could maybe somehow relate it to supply and demand dynamics, but the idea that that higher taxes can start reducing receipts after a certain point is widely credited to Laffer (although apparently there are signals of others saying similar things throughout the history of economics). The Laffer model displays an inverted U curve.

[WalterBright]

The Laffer curve is a result of the Law of Supply and Demand.

It's no different than increasing the price of X causes the sales of X to go down.

[aerhardt]

Classical supply and demand models do not show that increasing the price of x causes quantities to first go up then down after a certain inflection point…

You could probably make the relationship through utility rather or a proxy model (you can model anything with enough imagination in economics) but to call it “the result of” as if it is immediately related is not accurate. It is apparent at first sight when you compare the curves…

[tekne]

Wait... yes they do.

If I raise the price of my product, less people will buy it but I'll make more profit per-unit -- so the amount of money I make is an inverted U with price on the x axis and money on the y axis, and I should set the price at the inflection point.

[pydry]

Land value taxes don't discourage desirable behavior when raised.

Property taxes might discourage construction but if land values are high enough then property taxes approximate land value taxes.

Raising income tax on the other hand discourages working even when it is set very low. This is one which ought to be lowered if anything.

tl;dr it doesnt work the same way for every tax.

[rileymat2]

Are there good sources on income tax discouraging working? My rudimentary google searches are mixed, between it being a disincentive, and forcing people to work more for the same income.

[cucumber3732842]

>Land value taxes don't discourage desirable behavior

Are you serious? LVTs expressly incentivizes landlords to kick out "grandfathered in" developments and uses in favor of redevelopment and sale for that purpose.

But those grandfathered in developments and uses are exactly what made the place valuable in the first place and you need some amount of them to remain.

[zozbot234]

Redevelopment often mitigates housing scarcity in general, including for existing residents. They may have to move to a slightly smaller apartment within a generally much improved area, which usually leaves them better off. This is especially true for LVT, which amounts to a decrease in property tax for the improvements to land.

[senordevnyc]

They may have to move to a slightly smaller apartment within a generally much improved area, which usually leaves them better off.

Good luck selling this to voters.

[pydry]

I mean, I guess if you're a NIMBY who wants to inhibit the construction of more affordable housing that's a bad thing.

[cucumber3732842]

Nothing inhibits construction like creating a system where all the existing land owners stand to get taxed more if they allow development.

[pydry]

And the land value tax does the exact opposite of that.

If you sit on an underdeveloped plot of land in a high value location your tax bill will exceed your rental income.

The land is worthless to you. So you'll sell up to somebody who will make something of it.

[selfhoster1312]

> France discovered this the hard way when they implemented their first wealth tax

Citation needed (for a solid study, not right-wing propaganda from CNews/Libération). From a quick cursory look, it appears the French government had no problem raising taxes when the taxes were higher, and that the previous governments who reduced taxes for the rich setting blame on public debt have in fact increased public debt over and over. (disclaimer: i'm not an economist)

[aerhardt]

France's government expenditure is 57% of its GDP according to th OECD. It's probably an all-time record in the annals of global economic history in peacetime. It's more than the late Soviet Union spent around 1985-1990 according to the IMF / World Bank.

The 2025 deficit ran at around ~150 billion euros. The Zucman wealth tax would raise 25 billion in the most optimistic projected scenario (so, one sixth of the deficit at most). This is the very best case as projected by its proponents - there's a decent chance receipts would be significantly lower than that.

You're absolutely right that right wing parties did not, and almost certainly will not, solve any of these issues. Neither will a wealth tax. In my opinion, this is only solved in a bang.

[steveBK123]

I agree a lot of these things end in a bang at some point.

Western rich world boomers have gotten a great deal - unusually stable & high growth economies, relative housing abundance, and peace during their peak working life during which all sorts of retirement related benefits were introduced.

Unfortunately many of those benefits only work in a higher population growth, higher economic growth, lower retired lifespans world that no longer exists.

[arw0n]

The fairest and easiest to realize wealth tax is on inheritance. It is great to want to give your kids a headstart in the world, it is terrible for them and the people around them to set them up for life.

[kjshsh123]

It's really not the easiest. You have to prevent gifting things at a lower tax rate while alive. That means it comes bundled with income tax or gift tax implications.

Fairest? I mean, land value tax is fair. So are Pigouvian taxes. In fact they're arguable more than fair. Not having these taxes is arguably unfair. Who deserves ownership of natural resources or to inflict negative externalities on others?

Taking things someone earned through labour and not letting them give it to who they want isn't very fair.

[hungryhobbit]

I think to everyone but a nepo baby it's clear that the children of the rich don't deserve their wealth.

[hungryhobbit]

Wow, someone downvoted me? The definition of the word "deserve" is:

> To deserve means to be worthy of, entitled to, or to have a valid claim to a reward, punishment, or treatment based on your actions, qualities, or circumstances

So you genuinely believe that nepo babies, despite not taking actions or creating any circumstances to earn their wealth .... nevertheless deserve to have it anyway?

[ycdeebs]

I flip that around. People who have worked, earned, invested, AND paid taxes their whole life “deserve” to be able to give it to whoever they want.

[kjshsh123]

It's less that about the recipient deserving to receive it, and more about the giver deserving to give it.

[Terr_]

> wealth tax is on inheritance

As a point on terminology: That's not a really a wealth tax on the accumulated assets at-rest own by the (now eternally-resting) owner, but an income tax on the wealth as it moves to the recipients who didn't have it and are getting a massive gift.

It just happens to be a kind of gift/transfer we've decided because of tradition to consider as a special case, where (A) it happens right after a given dies and (B) the giver is frequently but not necessarily related to the recipient.

[koliber]

The problems with inheritance tax is that they can be avoided through trust structures and insurance schemes. In theory it's a good tax, but in practice many wealthy people figured out how not to pay it.

[ryandrake]

Those schemes are also human-created though, and can be human-fixed. I've never really understood the arguments that go like: "This regulation won't work because the people it targets will avoid it through loopholes and other schemes." Well, get rid of the loopholes and schemes, then!

Granted, this requires lawmakers to explore more of the "exploit space" around their proposed regulations, but I don't think that's really asking a lot of them.

[ycdeebs]

The only way to get rid of tax avoidance is to simply tax transactions, every time, for every person, on every transaction.

“Oh, that’s regressive” they will say.

Make it small per transaction. A rich person spending 100x what a normal person spends will pay 100x as much tax. A billionaire spending 10000x what a normal person spends will pay 10000x as much. And they will also be taxed if they borrow money (that’s a transaction) against assets so they don’t have to sell them.

And when someone inherits, that’s also a transaction. Money moves from one person to another. So that same tax applies.

[abenga]

If your wealth/income increases x1000, their spending will not increase a thousand-fold. It's not like you can eat a thousand burgers in a day. All this leads to is poorer people paying a larger proportion of their income as taxes than the richer.

[bonsai_spool]

> And when someone inherits, that’s also a transaction. Money moves from one person to another. So that same tax applies.

This is a big one—we continually decrease the estate tax, which is already waived until you get to 'fuck-you-money' at the federal level (around $11 M)

[tekne]

Land value tax?

[ExoticPearTree]

> It is great to want to give your kids a head start in the world, it is terrible for them and the people around them to set them up for life.

How is it terrible for my kids to not have to break their back like I did to build the wealth I'm looking to pass on to them after I die? Why should they go through the same struggles that I did? It is up to them to squander it or transform it into even more wealth to pass it down to their children and so on. Ideally the former, but sometimes what parents dream for their children does not always come to pass.

[Galanwe]

Inheritance tax in practice is implemented above a certain threshold.

There is nothing wrong with striving to give a heads up in life to your kids, on the contrary, it's a core, visceral instinct of parents to do so, and removing that would be alienating.

There is a certain level of wealth though, where the "heads up" transforms to an unstoppable compounding lever.

France for instance has a progressive inheritance tax (starting at 5%, up to 45%), triggered for children inheriting at 100k€ per parent. In practice, 50% of the population inherits <70k€.

Also, the proposed Zucman tax in France for instance is triggered starting at 100M€ wealth. At these levels, a mere 2% risk free investment yields 2M€ annual income, this is enough to both compound and enjoy a very luxurious lifestyle. This level of wealth is unstoppably compounding, and that is why it is proposed to tax it.

If you don't, well you end up with a US situation, where disproportionate wealth (and thus power, influence) end up in the hands of random citizens with their own agendas, possibly (likely) orthogonal to the interests of the majority.

[selfhoster1312]

Unless i've misunderstood the text, the Zucman tax proposed a minimum 2% tax rate for the >100M€ rich bastards who don't already pay 2% of their income in taxes, not an additional 2% on top of existing taxes.

[irishcoffee]

My grandparents didn't pass away until my folks were in their 60s, my remaining parent most likely won't die until I'm in my 60s.

I also went to give my children the world, but giving them a few million when they're about to retire doesn't really do much.

parents wanting to support their kids should do things like pay for college or a trade school, cover their grandkids daycare costs, help them buy their first home. We charge young parents so much money they don't have, and, much like covid, only seem to cater to old people for whatever reason. I guess because they have the money.

[ExoticPearTree]

Well, you can just give them the money before you actually pass away…

[socalgal2]

Just curious what you think the correct solution is? You're rich, you have a kid, you die when the kid is 2yrs old. So they get nothing? 12? 22? 32?. Is there some "correct" number? If you're raising them in some $100m home do they get booted out and put in a tenement?

On the other hand, most people die closer to 75-80 and their kids are 50+. Leaving inheritance to them isn't really spoiling them as they are alread adults with established lives.

[Manuel_D]

In the US, the inheritance taxes don't kick in until $15M ($30M for married couples). Even at 2 years old, a child can inherit more money than most people will make in their lifetime before a dime is paid to the IRS.

[jandrewrogers]

Estate taxes kick in at much lower threshold in most States. Washington had to repeal their recently created 35% estate tax (for a combined 75% rate) due to overt capital flight to places like Idaho. The exemption in Washington is $3M.

I don't care about estate and inheritance taxes much but many people do and it empirically drives behavior.

[technothrasher]

Federal inheritance taxes. There are also state inheritance taxes in many states. NY, for example, kicks in at ~$7M. MA kicks in at $2M.

[ceejayoz]

> NY, for example, kicks in at ~$7M.

Won't someone think of the children? The very wealthy children paying a 3% marginal tax rate on some of their multi-million dollar inheritance?

[steveBK123]

Honestly my experience with most of these kids is they are so innumerate they won't even notice the tax

[buellerbueller]

poor little multimillionaire :( my heart breaks for their 90th percentile wealth.

[gopalv]

> It is great to want to give your kids a headstart in the world

I might live till 72, my kids will be my age right now when they hit inheritance instead.

That's not a headstart.

[SoftTalker]

I would disagree, I think income taxes and inheritance taxes are morally wrong. Earning money to support oneself and family instead of relying on public largesse should not be taxed. Passing the fruits of a lifetime of work to ones heirs so they can continue do productive work instead of relying on public largesse should not be taxed.

[ceejayoz]

> Earning…

Inheritance is, notably, not earning it.

> continue do productive work

That's a pretty bald assertion. Useless nepo babies abound.

> relying on public largesse

Any chance the existence of a stable, well-educated, high-trust society benefits the children of wealthy people at all?

[steveBK123]

Yes.. spend enough time amongst the inheritocracy and you'll see the wealth is as often as not wasted on them.

There's just too much fun to be had with 0.1% wealth that you didn't have to sacrifice your 20s, 30s (and maybe 40s) to build. Coast at some job with a top 25-50% income and 0.1% inheritance in NYC and live the life.

[SoftTalker]

So if you're spending your inheritance living the high life, that economic activity benefits a lot of other people. Still a net positive in my view.

I get the political power concern, and money = power at a certain point. But I'd rather work on getting money out of politics than putting limits on what people can decide will happen to their assets after they die.

[ElevenLathe]

I'm curious how you envision money ever leaving politics. I hear this phrase often and every time I do it feels more and more nonsensical. Politics is what we call the social aspect of resource management (it's often called "political economy" for this reason). The only way I can see to remove money from politics is to create a society that has no money at all. I assume that isn't what you mean?

[steveBK123]

The problem is that theres a lot of stuff in the tax code that allows those at the higher end to also defer taxes indefinitely. So not taxing estates/inheritance, and allowing these deferrals leaves assets untaxed at the high end forever.

For example, step up basis allows inherited assets to have their cost basis re-struck at the value at time of inheritance. So if there is no inheritance tax, the assets transfer to a new owner and a large chunk of value is forever untaxed, even when/if they eventually sell.

Similarly all sorts of interesting stuff that can be done with trusts. Again stuff that's only accessible / worth the hassle to 1%.

In a world with extreme outcomes due to scaling, we might accidentally be re-inventing the hereditary aristocracy if the assets can accumulate outside the tax system.

[ceejayoz]

Sure, and rape helps the therapy industry.

https://en.wikipedia.org/wiki/Parable_of_the_broken_window

[ycdeebs]

> Useless nepo babies abound.

Useless non-nepo babies abound. Useless rich people abound. Useless poor people abound. And?

[gruez]

>I would disagree, I think income taxes and inheritance taxes are morally wrong.

So what taxes aren't "morally wrong"?

[mikhailfranco]

Consumption taxes and sin taxes.

Consumption tax is sales/VAT tax excluding some necessities and capital goods. Yes, there are some awkward edge cases: in the UK the exclusions were food and children's clothes, which leads to battles over prepared cold food (e.g. sandwich), takeaway and restaurant dining.

Sin taxes are obviously things society might want to discourage, mainly for health reasons, like alcohol and smoking, but also gambling and externalities, like pollution. Some might stretch that to all carbon emissions to moderate climate change.

Don't tax things you want: working / income and investment / capital gains.

Inheritance tax is doubly wrong because the wealth is already taxed, and death is unavoidable (but emigration is possible, which might help in some countries).

[ceejayoz]

Consumption taxes disproportionately impact the less wealthy, who spend most of what they earn on consumption of necessities.

> Don't tax things you want: working / income and investment / capital gains.

What if I don't want hoarding of wealth?

[aianus]

Canada just gives you a fixed amount of cash every year for the sales tax that they estimate that you paid on a regular amount of consumption (HST credit) which solved that problem.

I don't think it's fair that someone who earns $400k and spends $400k is paying roughly the same taxes as someone earning $400k and spending $100k. You should pay more taxes the more luxurious your life is, not the more productive you are.

[ycdeebs]

In a world where you are the supreme ruler, then what you individually want matters. In our actual world, it’s more about what the society in general wants.

[WalterBright]

> So what taxes aren't "morally wrong"?

Taxes on somebody else.

[SoftTalker]

Property taxes on real property or possibly land value tax (it's a limited resource, at least in places where people want to live, and requires a lot of public infrastructure to support its value there).

Tariffs, various usage taxes and fees.

Need a mechanism to address the regressiveness of some of this but that's an implementation detail.

[sporadicism]

How is dynastic wealth not immoral?

[OkayPhysicist]

Their take on inheritance taxes is insane, but I tend to agree that income taxes are immoral. Corporations get taxed on profits: If OkayPhysicist, Inc. spends $200 to make $300, it would be taxed some fraction of $100. Individuals, on the other hand, get taxed on revenue. It doesn't matter if it costs me $4000 in rent, groceries, transportation, etc., to make $6000, I'm getting taxed on that full $6000.

Capital gains taxes, on the other hand, are completely moral, and should be much, much higher. Capital investment benefits enormously from the State protecting their property "rights" (you don't need to hire a private army to prevent the workers from just deciding to run your factory for their own benefit, that's what the cops are for), and at a minimum the state would be justified in collecting that dividend for itself. Bootlickers and profession bootlickers (i.e., economists) would complain that a high capital gains tax disincentives investment, but as long as the value of investment is positive, that is, outpacing inflation, it makes zero sense to let your money languish in a Scrooge McDuck pile rather than get some value out of it.

[gruez]

>It doesn't matter if it costs me $4000 in rent, groceries, transportation, etc., to make $6000, I'm getting taxed on that full $6000.

So if I spend $5000 on groceries because I'm eating wagyu steak and lobster everyday, is that a fair "expense" too? You might retort that's obviously a luxury and there should be some baseline that's tax free, but then you're just describing the standard deduction.

>but as long as the value of investment is positive, that is, outpacing inflation, it makes zero sense to let your money languish in a Scrooge McDuck pile rather than get some value out of it.

...or they take their money elsewhere instead.

[OkayPhysicist]

Businesses don't pay extra tax because they chose to met their needs at a greater-than-minimum cost. If my boss buys some reagents from Dave for $300 bucks instead of Bill's $200 offer, the company's not paying taxes based on a hypothetical $200 cost basis.

If we want to tax "luxury" expenses, we have excise taxes for that.

[lazide]

First one makes sense, second one I’m quizzical about.

Inheritance taxes tend to only kick in at the 8+ digit range.

If anything, taxing that should encourage descendents to do productive work, eh? Since not taxing it, but taxing other things actually discourages it?

I can’t imagine how it would result in anyone relying on public largesse either unless they are really terrible with money. In which case a few extra zeros is unlikely to help any?

[SoftTalker]

I suppose like with many things it's a question of scale. A little is good, more is better, but at some point it may start to have negative consequences.

[kelseyfrog]

And I think that inheritance, while a natural desire, is morally wrong. It's an example that desires aren't always congruent with morality. People will go to great lengths to justify their conclusion.

[orangecat]

Are gifts morally wrong? If I'm near death is it wrong for to give my assets to my children beforehand, or does it only become immoral if done via a will?

[Terr_]

> Are gifts morally wrong?

If we're going to talk about morality, I think we need to talk about the government as one of the moral actors.

Imagine this scenario, exaggerated to make a point:

1. Alice receives $X. It's from her boss, for laboring in the mines every day. Government man says: "Give me 20% to pay for the shared roads, or you go to jail."

2. Bob receives $X. It's from his parents, for doing nothing other than being born related to them. Government man says: "Gee, I just can't do anything here, I guess I'll have to shake down Alice even harder next time."

Isn't there something off about the morality of Government Man's choices?

[kelseyfrog]

Yes. I get the desire, but gifts of wealth when done at scale contribute to the destruction of society. Quantity is a quality all its own.

[Terr_]

> while a natural desire

Or look at monarchies and titles of nobility. In the past direct inheritance of political assets was common, and acting on that natural desire, the people involve claimed that parents deserved to direct what they (and their ancestors) had accumulated on to the next generation of their own family.

Yet nowadays most countries and people have decided it is immoral, and they also took steps to make common forms of it extremely illegal.

My point is that economic inheritance today is just as much a social-construct as political inheritance was then. It exists because we permit it to exist, don't be fooled by anyone claiming it's an intrinsic law of the universe or a divine mandate by god that must be obeyed.

[SoftTalker]

I think if we're saying inheritance (at least beyond some point) is morally wrong, then we're really just saying that achieving a certain level of wealth is morally wrong. So deal with that directly, rather than putting your hand in someone's wallet after he dies.

[kelseyfrog]

That is dealing with it directly.

If I had diabetes, taking insulin is an acceptable remedy even if there is no cure for diabetes.

[arw0n]

There's a difference in thought here so fundamental that it is hard to argue about details without addressing it first: You believe the individual comes first, what it produces is taxes hy the external construct of the state, which takes from what the individual truly earns.

But the individual would be a subsistence farmer at best without society supporting it, hardly worth taxing. In reality millionaires are only possible with a large state and societal network around them. Wealth is societies gift, and its right to take back.

[selfhoster1312]

I would disagree. How else would you pay for the schools, roads and hospitals so that you and your heirs can "do productive work"? I mean i could imagine alternatives, but none that's compatible with a capitalist system.

[InsideOutSanta]

Not taxing inheritance is morally wrong because it supports generational wealth and inequality.

[WalterBright]

The federal estate tax is 40%. NYC adds in another 16%.

[Terr_]

> The federal estate tax is 40%

It's misleading to cite that since it basically never happens.

The tax doesn't even come into the picture for fortunes below $30 million dollars (for two parents), and the rest of the time it averages ~14%.

https://www.cbpp.org/research/federal-tax/the-federal-estate...

[WalterBright]

Why not repeal it, then?

[Terr_]

Is this perhaps some sort of badly-signaled satire, or a comment mis-submitted to the wrong thread?

I cannot understand what though-process led you to suggest repealing "it", whether that means the entire tax or whether it means reducing the number of brackets.

[WalterBright]

> it basically never happens

Why have a tax that never happens?

[evan_]

16% on the portion over $10M

[WalterBright]

Sure, but we're talking about rich people.

[dirtikiti]

So you want to tax something that has already been taxed throughout the course of someone's life, just because they want to give it to their kids?

The only tax that is fair to everyone is a sales tax.

[jonathanlydall]

I live in South Africa where we have 15% VAT.

When I was little and playing SimCity 2000 I looked at the tax rates for the city and noticed that the sales tax rate was like 2%, and based on our 14% VAT at the time, it seemed super low to me so I upped it to 12% and was surprised at how unhappy the citizens were.

This gave me the impression that Americans wouldn’t be happy with a significant sales tax, or perhaps this was a city sales tax on an existing state sales tax, which yes, would be outrageous, or maybe Americans get taxed in some other way which makes up for our VAT.

Anyway, I look back and chuckle at my own lack of knowledge at the time.

[dirtikiti]

I would love a VAT tax instead of the never ending stream of taxes we pay on everything else.

Americans are stupid. They see a higher tax on an iPhone they don't need, they will cry about it.

But they pay more at the end of the year on income tax, property tax, car registration, etc., they could care less.

Most Americans don't even look at their pay stub, and are more than happy to overpay their income taxes every paycheck so they get a bigger tax return at the end of the year.

They don't realize that money was theirs to begin with.

They complain about not being able to become wealthy while they give the government an interest free loan, when they could be investing that money and earning on it.

[InsideOutSanta]

All of the money has already been taxed countless times.

[pkulak]

Yup, very "Georgist", which I'm a huge fan of. You can move your money to another country, or hide it entirely in stocks that you borrow against until you die. But, you gotta live somewhere. Land is the only thing the state really has, and it's limited; it's the best thing to tax.

[robocat]

You might enjoy: https://americanaffairsjournal.org/2026/05/the-appreciation-...

A book review, but contains enough information to be an interesting read.

[apparent]

> helps create some liquidity in the housing market (the goal)

Is that the stated goal? I thought the goal was to generate revenue from the tax. It's true that triggering sales will create a one-time boost in sales-related taxes, but that's just temporary.

[eli]

Seems like disincentivizing people from owning mostly vacant homes should free them up for someone who does intend to live there

[throw0101c]

> Property tax is the workable wealth tax.

There is a difference between property-as-primary-residence and property-as-secondary/tertiary-residence or property-as-proxy-for-parking-money.

Property taxes handle the first scenario, wealth taxes handle the latter.

[rrrrrrrrrrrryan]

In San Diego we're voting on a new property tax that only applies to nonprimary residences.

The landed gentry want you to believe that they can't be touched unless you're willing to kick your grandmother to the street, but we can absolutely write taxes that apply more narrowly, and sensible tax policy leads to better outcomes and fewer market distortions than hamfisted regulation.

[throw0101c]

Toronto has had a vacancy tax for a couple of years now:

* https://www.toronto.ca/services-payments/property-taxes-util...

[steveBK123]

This also closes some loopholes/arbitrages around declaration of primary residence for purposes of NYC income tax. There are C-suite execs who declare residence in CT/NJ while spending < 180 nights/year in NYC in their huge apartment, allowing them to avoid NYC income tax.

Anyway, NYC real estate taxes are a mess and in some cases regressive.

For example, taxes are based on values set by the city which for the ultra high end, the are understated by an ORDER OF MAGNITUDE..

See: > Griffin purchased his 24,000-square-foot penthouse at 220 Central Park South in 2019 for $238 million. ..t he city values the apartment at just $15.5 million .. property tax bill for the 2026-2027 tax year is $858,332

.. Griffin’s property tax bill would more than double to $1.87 million .. in the 2028-2029 tax year, it would increase to just under $4 million

I don't feel terribly about someone paying $4M on property probably worth close to $400M at the moment. Normal high income NYers already pay $10-20k/year on properties worth $1.5M by comparison.

Another regressive aspect there was a proposal to change was a purchase tax for cash purchases. Currently one of the closing costs in NYC/NYS is a mortgage recording tax of nearly 2% of mortgage amount. This means if you are rich enough to buy in cash, you can avoid this tax. And if you are a rich cash buyer you are probably buying a higher end property so.. doubly regressive in a sense.

[carlosjobim]

Who benefits most of a city being improved by tax dollar spending? Property owners. They benefit in the range of hundreds of thousands of dollars to millions of dollars each. Thus it makes sense they contribute the most tax dollars.

Or show me a worker who benefits the same amount of money from the city being improved.

[apparent]

It depends on how the $ is spent. If it's spent on "free preschool" then it benefits parents who use the free preschool. These are by definition not the people paying this non-resident-only tax.

[MyHonestOpinon]

Property taxes have the added benefit to lower property prices, and the money can go on improving the city. (Which make properties prices go higher)

[postflopclarity]

> I'll be interested to see if it helps create some liquidity in the housing market

lol. why would it? if you tax something, you get less of it.

there is not even close to any kind of shortage of demand for housing in NYC. there is an enormous shortage of supply; it is in fact _illegal_ in most places to build more supply.

[eli]

The tax is only on non-primary residences - one person owning multiple homes. I don't expect it to have a significant effect on housing supply, but I think it logically could.

[postflopclarity]

I also don't expect it to have a significant effect. but any effect it does have will be in the direction of less supply.

[eli]

How does a tax on SECOND homes decrease supply? Wouldn't it incentivize sales of mostly vacant properties to someone looking for buy a first home?

[postflopclarity]

when you tax things you get less of it.

when you tax supply, you get less supply

many of these second homes are currently on the rental market. if there is less supply of these coming into the rental market, rent prices rise.

I don't know why everybody's brains are so broken when it comes to housing policy.

let's say you own an uninhabitable 2 family home in Brooklyn that was built in 1910 but would require serious renovation to be able to rent it out (not at all a strawman; this is incredibly common). now imagine your incentives as the property owner:

* without the pied-a-terre tax: some risk & upfront cost to renovate, but future cash flows from rental income make this incentivized

* with the tax: same risk & upfront cost, but now the future cash flows are decreased by the amount of the tax (since the assessed value will have increased)

anywhere that difference tips the scales from "renovating" to "not renovating," there is one fewer home on the market.

[eli]

Getting fewer people owning homes that nobody lives in is a good thing.

Where are you getting the idea that these homes are on the rental market? Why aren’t they being rented?

I also don’t actually think this applies to buildings that are uninhabitable.

[csomar]

No, a tax will always reduce demand \saying otherwise basically ignores decades of established economics.

> that creates incentives for the city to cater to them

What does that even mean? If catering to the wealthy was profitable, everyone would do it. Just look at Dubai, it's built entirely around that model, and it's a brutally competitive space. NYC attracts the mega-wealthy for a different reason: network effects. Meta-wealthy come to be around other mega-wealthy people.

[dirtikiti]

Property tax is not a workable wealth tax.

It's a barrier for low income people to buy homes.

Sales tax is a workable wealth tax.