Bill de Blasio won an overwhelming victory in New York City’s mayor race. That may have some upper income and businesses nervous about his political views espoused on the campaign trail. But, those fears may be overblown.
His income tax plan, in particular, has drawn scrutiny. The Mayor-elect has stumped on raising income taxes for those making more than $500,000. But, this is not as onerous as it sounds. It is on incomes above that threshold, and the marginal rate would go up to 4.41% from 3.876%. If you make $650,000, you will pay the additional tax only on $150,000, or the amount above $500,000. This amounts to a grand total of $801 that you would have to shell out.
There is another point to consider, from an economic perspective. In particular, homeowners and potential homeowners should contemplate home values could actually increase. He has pledged to use the additional revenue to fund a universal pre-K program. For those on the hunt for homes, checking the schools is a priority. This should improve schools at the early learning point, and lead to better test scores. According to Realtor.com’s Back to School Survey, choice of a school district impacts the buying decision for more than 60% of home buyers. The survey also found buyers willing to give up features of a home to land in their desired school zone. It seems logical to assume potential homeowners would stay in the city if it produces the desired improvement. Moving to the Westchester, Connecticut, or New Jersey suburbs also entails higher property taxes, generally.
Nonetheless, if you are still worried about the economic impact, there is no guarantee the plan will become a law. It must pass the New York State Legislature, and then requires Governor Cuomo’s signature. This is not a certainty considering the Senate is controlled by Republicans.
Lastly, although de Blasio has been a vocal critic of luxury development, he has also stated his belief in increasing development to increase affordability. He claims his plan will create 50,000 new affordable housing units over the next decade. The idea is for developers to build affordable housing units in exchange for redevelopment, which increases a building’s square footage, and hence, its rental income for property owners. Here is one opinion that de Blasio will be the “most pro-development mayor in decades.” In order to have labor peace among unions that have not had a contract, as well as fund his ambitious plans, he will have to rely on development, goes the argument. The latter is especially important since the tax plan is not assured of passing. Lastly, it was noted he raised a fair share of funds from real estate developers.