I’m not a protectionist when it comes to international trade, because a trade—where each side gets something it would otherwise cost more to have—enriches both sides. But what about a trade that wastes something in extremely limited supply?
The New York Times reported this week that huge numbers of Manhattan condos remain unoccupied for all but a few days or weeks per year. Affluent condo owners “come from all over, whether Monaco, Moscow or Texas, looking for a safe place to put their money, as well as a trophy, and perhaps a second—or third or fourth or fifth—home while they’re at it.”
The article examines five buildings on or near Central Park with largely vacant floors, 30 percent occupancy, etc. As those who have lived in Manhattan know, living space is in such short supply that occupants of small apartments put pantries in their bathroom and use ovens as storage space—and many have no apartments at all.
New York City is raising real estate taxes across the board now, even on homes damaged by Superstorm Sandy, but I’d suggest varying levels of taxation depending on usage, and much higher taxes on those from abroad who use Manhattan space as their piggy bank. Globalization has its limits.
Nationally, the picture isn’t as Manhattan-extreme, but at a time when Washington is abuzz with some harmful reduce-tax-deduction proposals, such as one that would restrict deductions for giving to charities, can we all agree on eliminating the mortgage deduction for second homes?
The bipartisan 2010 debt reduction commission President Barack Obama established and then largely ignored proposed that. Folks who own second homes and rent them out part of the year could still use the deduction, because that’s a business expense. It’s fine for people in cold climates to have winter homes, etc.—often, they’ve earned them—but taxpayers should not subsidize them.