"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.
> 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.
"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.
* 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.
> 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
Good news, Airbnb can't operate in NYC.
Here in Chicago, they're banned from certain wards
Not in NYC. Airbnb is effectively outlawed by regulation there.