A Daily Dirt reader proposed raising income taxes on high-income people in rent-stabilized units.
“That would create more revenue and could create enough of a disincentive for those high-earners to move out into better quality housing, thus freeing up those apartments for people who really need them,” he wrote.
My kneejerk reaction was to dismiss this as legislatively impossible in New York, where rent stabilization and tenants’ rights are nearly bulletproof — and politics typically prevails over logic.
But on second thought, this deserves consideration, given the Democratic Socialists of America’s campaign to “tax the rich.”
By the way, the DSA should really be saying “tax the rich more,” because obviously New York already taxes the rich. The top income-tax rate for New York City residents is the highest in the U.S. at 14.776 percent. (Californians pay up to 14.4 percent.)
But I digress.
The idea of an income-tax surcharge on high-earning, rent-stabilized tenants would set two DSA ideologies against each other: “tax the rich” versus “freeze the rent.”
The DSA would call this a false choice because the latest “tax the rich” campaign is targeting people with seven-figure incomes, very few of whom live in rent-stabilized apartments.
But DSA’s rent freeze would apply to rich and poor tenants alike. There are tens of thousands of tenants earning well into the six figures and paying regulated rents well below market rate. That’s not fair to struggling New Yorkers paying market-rate rents or living doubled-up or in shelters.
Is the idea enforceable? Yes. The state’s Division of Homes and Community Renewal could send its list of rent-stabilized apartments to the Department of Taxation and Finance to cross-check with addresses on tax returns.
This would be easier than asking landlords to prove a tenant’s income exceeded the legal limit for rent-stabilized units, as the state did until ditching the limit in June 2019.
The surcharge could also be applied to rent-stabilized owners whose tax returns indicate ownership of a second residence. Rent stabilization was never intended to allow people to buy weekend homes.
It might also work politically because unlike industry proposals for rent increases, the money wouldn’t go directly to landlords. However, it could go to them indirectly by being used to fund rental vouchers or other means of eviction prevention.
What we’re thinking about: Artistic rugmaker BravinLee Programs’ email signature gives an unusual explanation of why it moved to an undisclosed location: “After 35 years of serving the unmerciful shop-keeper gods of self flagellation, we have closed our space in Chelsea and spit-the-bit on ritualistic performative gladhanding accessibility. We didn’t go out of business — we went out for business. We are proud of our record as an art gallery — but enough is enough already.” What does BravinLee mean? Send thoughts to eengquist@therealdeal.com.
A thing we’ve learned: At least two people running New York City real estate firms played Ivy League tennis: Chu Enterprises’ Jonathan Chu (Harvard, class of 2005) and A & E Real Estate’s Douglas Eisenberg (Cornell, class of 1994). Chu also played professionally for two years, winning five tournaments (one singles, four doubles) on the Futures level from 2005 to 2006 and four Davis Cup matches for Hong Kong in 2011. Both executives are now under attack, Chu by propagandists and Eisenberg by the mayor.
Elsewhere…
A buildings expert is trying to construct low-cost houses on 18 acres that he and a business partner bought in Hillsdale, New York, a bucolic town between the Hudson Valley and the Berkshires.
But an invisible boundary stands in their way: the state border.
“Lots of contractors just across the border in Massachusetts tell us the attractive numbers they build for, but refuse to even bid in New York state because of the labor laws and the related insurance costs,” said the would-be developer, Henry Gifford, after reading a Daily Dirt item on Labor Law 240.
The statute, unique to New York and informally known as the scaffold law, “applies primarily, but not exclusively, when a worker falls from a height or an object falls onto a worker,” one law firm explains. “An owner or contractor is absolutely and 100 percent liable for all the injuries and financial damages suffered by the injured worker.”
Closing time
Residential: The largest residential sale on Tuesday was $14 million for a duplex penthouse at 895 Park Avenue on the Upper East Side. Cathy Franklin, Alexis Bodenheimer and Shannon Suydam with The Corcoran Group had the listing.
Commercial: On the Upper East Side, the largest commercial sale was $13.2 million for 1133 Lexington Ave, one of five adjacent properties that Chinese developer Zhang Xin purchased for a development project. The Real Deal reported on this project in October.
New to the Market: The highest price for a residential property hitting the market was $24.5 million for a 12,500-square-foot single-family house at 34-36 East 70th Street in Lenox Hill. The Modlin Group has the listing.
Breaking Ground: The largest new building permit was for a proposed 11,820-square-foot, 12-unit residential project at 504 West 141st Street in Hamilton Heights. Bojidar Kadiev filed the permit on behalf of Giuseppe Galvano.
— Matthew Elo