r/NYCInsider

At this point, it’s getting harder to argue that outmigration is just a theory.

For a while the line was that higher taxes wouldn’t really change behavior, but the way the budget is shaping up now tells a different story. Hochul leaning into more of a “no new taxes” stance feels like Albany is finally starting to worry about how mobile that tax base actually is.

A big part of the problem is how concentrated things are. When a relatively small group is responsible for such a large share of revenue, even a small shift to places like Florida or Texas can hit the rest of us pretty hard.

And when you factor in the current budget gap - plus the reliance on one-time fixes like rainy-day funds - it’s not that surprising the Governor is being more cautious. This dynamic is a central theme in the book Red Mayor, Green Money, which argues that losing even part of that top-end revenue would create a bigger problem than anything these new taxes are supposed to fix.

That’s really the tension: you want more revenue, but you’re going after the most mobile part of the system.

Mamdani and Hochul just rolled out a proposed pied-à-terre tax aimed at foreign buyers and people who keep NYC apartments as second homes. Politically, it’s a strong headline. Economically… I’m not so sure it plays out the way they think.

Quick rundown:

- Right now: There’s basically no penalty for a second home. Someone using a $20M apartment a few weeks a year pays the same base property tax rate as a full-time resident.

- Proposed change: For non-primary homes over $5M, there’d be an extra tax starting around 0.5% and going up to 4% for properties above $25M.

- Expected revenue: Around $500M a year.

On paper, that sounds like easy money. But zoom out a bit:

First, $500M isn’t nothing, but NYC is staring at a $10B+ budget gap next year. This barely moves the needle.

Second - and this is the bigger issue - it assumes those buyers will just sit there and pay it. That’s not how this part of the market works.

People who actually live here are “sticky.” You can raise taxes and they’ll complain, but they’re tied to jobs, schools, family, etc.

Luxury second-home owners? Not sticky at all. If holding a $10–20M apartment suddenly costs a lot more every year, they can just sell and park that money somewhere else like Miami, London, Aspen, wherever.

If enough of them head for the exits, you could see prices at the top of the market drop. And if that happens, the city’s existing property tax base drops too… which kind of defeats the purpose.

TL;DR: Great politics, but as a revenue strategy it’s shaky. It targets a group that can actually leave, and the upside ($500M) is small compared to the risk if the high-end market softens.

If you’re into this kind of policy/econ breakdown, I go deeper into it in Red Mayor, Green Money.

Link: https://a.co/d/0bpIC1Us

I feel like a lot of the conversation around the budget cuts is missing a piece of the puzzle.

The City Council response actually points out that DOE spending isn’t just about funding levels, it’s also about how the money is being used. There are a lot of contracts that aren’t competitively bid, and some of them look pretty redundant.

For example, they’re talking about potentially $175M in savings just from cleaning up office equipment and tech contracts that don’t really make it into classrooms.

Another issue is how often “emergency” procurement gets used. It’s supposed to be the exception, but it sounds like it’s become pretty routine, which means less oversight and no real bidding process.

So when City Hall talks about a budget crisis, part of me wonders how much of that gap is actually structural vs. how much is just inefficient spending.

Not saying cuts aren’t real, but it seems like there’s a procurement angle that isn’t getting much attention.

Also, if you're interested, there’s a book called "Red Mayor, Green Money" by Stephen J. Darwin that gets into how city contracts and these “green” initiatives can get tied up in politics. It’s a pretty interesting breakdown of how this stuff actually plays out behind the scenes.

Curious what people think… should DOE be pushed harder on competitive bidding, or is this just how a system this big ends up working?

Kind of wild timing here.

While Albany and City Hall are pushing this pied-à-terre tax aimed at second homes and “global elites,” Hochul just crossed into millionaire territory after selling her condo, according to her latest disclosures.

Nothing wrong with making money, obviously. But it does raise an interesting point.

Right now the pitch from policymakers is basically:

– high-end real estate is an easy place to pull revenue from

– taxing $5M+ second homes won’t really impact the market

– and profits at the top should be “shared” more

At the same time, the people making those decisions clearly understand how this market works—and when to exit it.

That’s something Stephen J. Darwin brings up in Red Mayor, Green Money too—the idea of “sticky” vs. mobile capital. The luxury segment is about as mobile as it gets.

So I guess the real question is:

does it change how people see this policy when the same people pushing it are also benefiting from the market they’re targeting? Or is that just how NYC politics always works?

Link: https://a.co/d/0bpIC1Us