economy
The One Tax the Rich Can’t Escape
New York’s proposed pied-à-terre tax is unlikely to chase anyone away.
TL;DR
- The wealthy can easily relocate their tax residence to avoid income or wealth taxes, a trend exacerbated by digital technology and remote work.
- A pied-à-terre tax, a surcharge on second homes valued above $5 million, is a more effective way to tax the rich as it applies to a fixed asset that many are unwilling to sell.
- While some billionaires have moved to low-tax states like Florida, they often maintain their properties in expensive cities like New York due to professional, social, and philanthropic ties.
- The financial amounts from a pied-à-terre tax are significant but generally smaller than potential income or wealth taxes, making them more palatable to the wealthy.
- Cities struggling with budget deficits should focus on taxing immovable assets rather than trying to implement taxes that can be easily circumvented.