New York plans to tax away even more jobs and investments

Gov.Kathy Hochul pitched her proposed pied-a-terre tax as a silver bullet for New York City’s budget woes — but instead, it appears to be a tangled gordian knot.As private job creation slows in a state ranking last for tax competitiveness, New York’s political operatives are sparring over a new tax on luxury second homes instead of focusing on investments and growth.On Thursday, Hochul unveiled the workings of a tax that she initially said would apply to secondary properties worth more than $5 million.Now she says that for the first two years, all second homes with a “market value” north of $1 million will be hit by the charge, further compounding its destructive effects.Under New York’s current labyrinthine property-tax formula, levies on co-ops and condominiums are assessed not on the sale price of a unit, but on a “market value” arrived at by examining what units in buildings of a similar age and size would rent for.But because comparable buildings might include rent-stabilized units, and adjustments to a unit’s property taxes must be phased in gradually, the assessed value of an apartment for tax purposes sometimes differs wildly from that apartment’s actual sale price.Hence Hochul lowering her threshold to $1 millionShe claims that a $1 million “market value” is “equivalent” to a $5 million sale price — which of course can’t be verified unless and until the property is actually sold.For example, a condo that sold for $18.6 million in 2021 has a “market value” of $2.2 million on which its taxes are calculated.In two years, her office says, the state will transition to an entirely new system, deploying a yet-to-be-developed additional assessment of pricey condos and co-ops to determine their “potential sale value.”Those owners would then be hit with a 6% tax hit — every year.The convoluted process would complicate an already confusing tax system — and would doubtless require hundreds of additional bureaucrats to run.Ev...