A-Rod's Big, Fat, Upper West Side Condo Tax Break

gothamist ^ | Feb 2011 | Jen Chung

[doug from upland]

A-Rod's Big, Fat, Upper West Side Condo Tax Break

You know what rich people like? Staying rich! While it's unclear why exactly super-rich Yankees slugger and serial house hunter Alex Rodriguez finally decided to buy a $6 million place at the Rushmore condo, here's one factor that probably didn't hurt: The 421a tax break that will turn what could have been an annual $60,000+ tax bill into one that's just $1200 a year.

Daily News columnist Juan Gonzalez blasts the tax abatement program, "It grants as much as a 98% percent tax abatement for up to 25 years to condo owners in newly built housing. The bulk of the 421A benefit has gone to luxury housing in Manhattan, though a few reforms by City Hall and the Legislature in 2007 at least required developers to build 20% affordable housing to qualify for the tax abatement. This year alone, the 421A program will cost our city more than $900 million in lost revenues, the Independent Budget Office says. That's money that could prevent layoffs of firefighters and teachers. That could fund senior citizen centers and pay for after-school programs."

The 421a program was created in 1971, to spur real estate development at a low point in the city's real estate market (the NYU student website, PlaNYC.org, has a thorough history of the program), but it ended last December. Naturally, the real estate industry wants it reinstated (PDF).

In the meantime, it's unclear when the baseball fields, slated for public use, will be turned over by the Rushmore's developer.

[econjack]

The next time that NYC comes begging for Federal funds to bail out their budget, perhaps it’s time to tell them to stick their tax abatements where the sun never shines.

[Frantzie]

Hilarious how idiots support steroid idiots like A-Roid. Fools.

[org.whodat]

Next time someone says there is no welfare for the rich, puke on their shoes.

[vpintheak]

Criminal in my book. Not A-rods fault, but the rat politicians who put this crap in the books.

[Glenn]

Anyone who avoids any tax legally is fine by me.

[BenKenobi]

At least with a flat tax, everybody pays the same.

[Truth is a Weapon]

It is weak to criticize a taxpayer for a benefit granted by corrupt politicians. The abatement was most likely put in place at the behest of developers, contractors and their complicit trade unions. A misguided attempt to increase or maintain employment in the short term for a multiple year cost. Politicians are the worst long-term planners in the universe. Every decision made is centered on the next election.

Every individual knows that borrowing money to buy groceries is financial suicide. It can be done to avoid starvation but must quickly be repaid. But politicians borrow year after year after year to spend on things that are gone as soon as the money is spent.

[oldbrowser]

I can understand this. A-Rod just spent 6 million dollars in New York. This stimulates housing, jobs, furniture stores, etc. Let's get that easy money in circulation in New York instead of Florida. Now A-Rod can pay property and other taxes. He will throw more money around in a year that what most people will earn in a lifetime.

[CommerceComet]

Hilarious how idiots support steroid idiots like A-Roid. Fools.

Since steroids appear to be bright on your radar screen, you must have caught the reporter's name: Juan Gonzalez. Ironic.

Personally, I'm convinced that the last great non-juiced homerun hitter was Mike Schmidt.

This might get me classified as an "idiot" but I have no problem with A-Rod or anyone else (whether they use steroids or not) taking advantage of a tax break.

[nutmeg]

bookmark

[TankerKC]

Please folks, don’t fall for the inflammatory title. The tax break is to incentivize new buildings. It’s not just a tax break for A-Rod.

[Tupelo]

I am sorry, but Alex Rodriguez did not write the tax laws. In my opinion, it would have been criminal if his money manager(s) did not help him take advantage of this and any other tax loopholes.
As usual the left is blaming the doer for what the graft taking politician does.

[wtc911]

Do you take any deductions on your tax forms? Sure you do. This is no different.

[ridesthemiles]

I pay over $1200 annually in property tax for 1350 sq ft Manufactured home in rural high desert N Nevada!!!!!

I would never be able to even tour a condo like the one described.

[Polybius]

Next time someone says there is no welfare for the rich, puke on their shoes.

So, if A-Rod were keeping his own money (actually, he is not), instead of handing it over to the Government, that would be "welfare"?

Are you one of those who believes that the money that someone else earns automatically belongs to the Government and that, if the Government does not take it, that is "welfare"?

Do you really belive that, in the Real World, "housing for the poor" gets built and A-Rod gets a tax break because the Money Fairy waved her Magic Wand?

Wise up.

Some liberal politicians came up with the idea that they would acquire "housing for the poor" by not charging $900 million in taxes they could legally charge in return for the builder constructing such housing.

Did it ever occur to you that the cost to the builder of constructing that unprofitable low income housing is recouped by the builder by charging a higher price to the buyers of his high end condos and that the higher price to that buyer is then offset by lower taxes to that buyer?

Did it ever occur to you that, therefore, in the end, the higher real estate purchase price paid by the buyer paid for the low income housing that the liberal politicians wanted built?

Why would a buyer be dumb enough to buy a property that is more expensive than another similar property if the cost were not offset by a rebate, a tax break, a free boat, whatever?

Did it ever occur to you that, financially, in the end, it is a wash and an example of the finacial fungibility of the higher purchase price and the lower tax burden?

If you have a problem with the deal that liberal politicians made with builders, blame the liberal politicians who wrote the law and not the real estate buyer that is affected by the law.

Once you egg on the Government to "soak the rich" that make more money than you do, the Government will then define you as "the rich" and start soaking you too.

If everybody had your mentality, the Democrats would always be in power by simply defining "the rich" as anybody that makes one dollar more than the 50.1% of the voters that are required to get them elected.

"If you rob Peter to pay Paul, you will always be assured of Paul's vote."

[Polybius]

At least with a flat tax, everybody pays the same.

Except for retired folks who were frugal during their working lives and saved a considerable amount of money in personal savings.

Those frugal savers will have been gouged by the Income Tax when they earned the money to put in savings and then they would be gouged AGAIN by the Falt Tax when they spend their savings.

[BenKenobi]

Eliminating the income tax would mean that the prices on everything would go down. Substantially.

So their money would go further.

[newfrpr04]

Criminal in my book. Not A-rods fault, but the rat politicians who put this crap in the books.

I know we are a republic but act like a democracy - We are the most corrupt democracy on earth (from the top to the bottom & all in between)

[doug from upland]

For those who are seeming to criticize me, I made no comments on the article. I simply heard about it on radio news and thought it would be interesting to post. I’m enjoying your comments.

Among the things I do is commercial real estate broker. I taught RE law and econ in college for 10 years and understand the reasoning for the tax breaks. How this program has worked, I cannot make a judgment, but I do understand the complaints from those who own far lesser houses and are paying much more in taxes. If a builder constructed a product and priced it where the market would absorb it, he will sell his product.

[wmileo]

This is nothing compared to the tax breaks given to the thugs who are building a certain MOSQUE in Manhattan.

[wmileo]

NYC would rather get tax revenue from Rush Limbaugh than A_ROD.

[Polybius]

Eliminating the income tax would mean that the prices on everything would go down. Substantially. So their money would go further.

So, I should not mind having been taxed at up to a 40% tax rate when I earned the money that I saved and then being taxed AGAIN at a 23% tax rate when I spend those same dollars that I saved because prices will drop like a rock.

Yeah, right. I'll buy that.

Here's the bottom line:

If you lived from paycheck to paycheck, spending like a drunken sailor, not saving a dime and being up to your eyeballs in debt, you will make out like a bandit as you will keep the stuff you bought on credit and then pay off the resulting debt with income tax-free dollars.

If you were frugal, lived debt-free and saved serious money, you will be royally screwed by being TAXED TWICE on your savings: Once when you earned it (at up to a 40% rate) and then taxed AGAIN when you spend your savings (at a 23% rate).

[BenKenobi]

“So, I should not mind having been taxed at up to a 40% tax rate when I earned the money that I saved and then being taxed AGAIN at a 23% tax rate when I spend those same dollars that I saved because prices will drop like a rock.”

I don’t see how your math works when you eliminate income taxes. It costs money to hire and pay workers and when the workers take home all of their pay you don’t have to pay them and the government at the same time.

This means that the labour costs to produce goods go down, rather than up. Even with a flat tax, you’ll be paying less than you would to buy what you buy.

How do you explain your taxes going up 15 percent with a flat tax? I want to see your math.

[Polybius]

“So, I should not mind having been taxed at up to a 40% tax rate when I earned the money that I saved and then being taxed AGAIN at a 23% tax rate when I spend those same dollars that I saved because prices will drop like a rock.” ...... Polybius

I don’t see how your math works when you eliminate income taxes. It costs money to hire and pay workers and when the workers take home all of their pay you don’t have to pay them and the government at the same time. .... BenKenobi

How my math works ..... "when".....?

The way "my math" HAS worked is that, since the days when Richard Nixon was President, I earned money and the Government had a math equation that determined how much of my earned money the Government would take away from me AND ALREADY HAS taken away from me.

After busting my butt for four decades, my savings are substantial and that money has ALREADY been taxed.

There is no longer any "math" involved in the cold, hard fact that "That money has ALREADY been taxed."

It is not Rocket Science to understand "That money has ALREADY been taxed."

Doing away with the Income Tax this very minute does not change the fact that "That money has ALREADY been taxed."

Do you understand now? My entire life's savings, well into the seven figures, "has ALREADY been taxed."

Now, you want me to be taxed AGAIN when I spend my life's savings at a rate of 23% so that I can subsidize the Government AGAIN so that you can live your life at a much lower tax rate than I lived mine.

You want ME to be taxed TWICE on the same money (up to 40% when I earned it and then 23% when I spend it) so that the Government can afford to give YOU a much better deal (only 23% when you spend the money that was Income Tax-free).

Sorry, I am not playing that game.

That's just a game of "Robbing Peter to pay Paul" with you starring in the role of Paul.

As far as all the smoke and mirrors about "It costs money to hire and pay workers and when the workers take home all of their pay you don’t have to pay them and the government at the same time" .....

Fine. So you don't have to cut checks for the worker plus the U.S. Government plus the State (excise taxes) plus the City (B & O taxes). You get to skip writing one check and, instead you put that money into the worker's check.

That is not an earth-shaking economic savings.

The cheapest $400 computer with a 2.3GHz processor that you can now buy at Dell can, with blinding speed, do all those calculations for the entire company faster than you can pour yourself a cup of coffee and the have the computer printer print out the checks or make an electronic deposit.

In labor costs, the changes "saves" nothing.

But what about all the savings from not having Income Tax avccounting?

If you think that Income Taxes were an accounting pain in the butt for businessmen, wait until they have to collect a 23% surcharge on all their sales on behalf of the U.S. Government and then be responsible for the accounting of and the handling of all that money as well as dealing with the Government agents who will be asking them to prove that they did not steal any of it.