Mamdani heading towards raising property taxes

He wants rent freeze, increase the cost to rent regulated owners, and wants govt takeover when the value goes to zero. Perhaps he will carve out rent regulated owners from property tax rate increases.

Is anybody really surprised?

I am but only a little as property tax rate rate increase hits every one including NYC middle class (call it less than $250k income) if they own. And he ran for them. Perhaps he will have carve out for lower assessment / market value properties or incomes.

I wonder if he'll end up applying higher rates to 'richer, whiter' neighborhoods.

Not sure what the law is about applying different tax rates on properties in the same tax class (essentially progressive property taxation).

Perhaps he can create a new tax class and tax it based on the highest possible observed market value. The simplest will be : valuation of all residential properties including condos say >$1mm market value has two components. One is existing. The second is additional tax based on difference of actual market value and assessed market as per the current system. This additional tax essentially adjusts for the estimation error in the current system.

In addition, there are some rebates available on property taxes NYC. He may just add a rebate based on income.

Here is a novel concept practiced by yours truly and millions of hard working Americans, live within your means! Mamdani and other progressives like him, always resort to increasing taxes as a “last resort”. What about cutting spending? Hell, what about keeping spending FLAT! But that wouldn’t work in this case because what NYC really needs is free buses, universal and free childcare, and city run grocery stores. And let’s not forget rent freezes. Can’t wait….

Ha. Sociliasm is about equality even if the average comes down. That is what New Yorkers voted for. Basically, jealousy is weighted heavily in Mamdani's world.

“Ha. Sociliasm is about equality even if the average comes down. That is what New Yorkers voted for. “

Could not agree more…the only good thing about a 10% property tax increase is my annual tax bill will go up about $1000 and i can use that as ammunition to convince my partner to flee NYC for SoCal. She always makes funny of me when I rant about our new Mayor, saying his proposed tax increases will only affect the very wealthy and rich, which she loves to remind me, I am not. But here is a potentially concrete example of the middle class being affected. If that, and this winter doesn’t convince her to leave the city for LA county, nothing will!

Taxes are already high in Calif as well plus insurance costs.

Taxes are already high in Calif as well plus insurance costs.

Very true. But if I am going to be subjected to a high cost of living and progressive politics, I would at least like to have much better weather. Plus in certain parts of LA country, one can buy a real single family home for the price of a one bedroom condo in Manhatten. Having lived for so long in condos, I yearn from a real house and not have to deal with assessments, rules, and noisy neighbors. And as opposed to Texas or Florida, my partner does not dislike SoCal. She has already vetoed my choices in red states

@300 - Something income based would make that pill a little easier to swallow. I don't see many politically easy ways to restrain spending without offending unions. And he ran talking about how great unions are.

MTH, Public spending is a national problem. As to income based property tax rabates, I don't know whether the rebates have to approved as per some new law at the state level or at the city level. But bottom line is that Mamdani wants to spend and at least 50% voted for it.

@300 as has been pointed out here before (maybe by you?), owners = source of revenue, renters = constituency. AI thinks the mayor can/could issue income-based rebates funded from the budget.

I can't remember but it is true.

We have high income disparity nationwide. So as long as there are many rich people, emotional reaction of many non-rich is take it from them but give me benefits. No one has a solution to this.

There even seems to be precedent for income based property tax refunds. Even though only $150. But these is not reason it can't be $1000. But market rate renters will be screwed as the landlords eventually have to pass-on the increase.

https://www.nyc.gov/site/finance/property/property-tax-rebate.page#:~:text=New%20York%20City%20is%20issuing%20$150%20property,they%20may%20qualify%20can%20submit%20an%20application.

Interesting catch.

Re market rate renters. Oh well. Somebody else's money so who cares? That's the prevailing sentiment among voters.

>> But market rate renters will be screwed as the landlords eventually have to pass-on the increase.

This is a dubious conjecture to me. LLS will charge as much as they can regardless of taxes and other costs. Why wouldn’t they? Higher prices reduce demand, and renters don’t give a damn about LL cost structure. We could just as well postulate that LLs will pay the full cost by a reduction in the values of the property, or whatever.

The reality will likely fall somewhere in the middle. Studies say something like 37% of the 2025 tariff increases were borne by consumers. I imagine something similar here. Higher taxes increase the cost of the main alternative for renters — buying. But these things rarely end up 100% / 0% between the constituents.

Nada,
Higher taxes / same rent pressure on new supply of rentals. So the effect may not be immediate but over time, most of it flows into rents. Of course, one can make the case the rental market is oversupplied as it is in Austin but vacancy rate is rather low vs the rest of the country.

"but NYC vacancy rate is rather low vs the rest of the country."

Making things income-based hits W-2 working middle class. The wealthy and the fraudsters don't have income if they can help it, but they are the ones that hold a large number of Manhattan property.

At what price point can Mamdani avoid hitting W-2 workers? Maybe focus on raising taxes for properties in that cohort? No idea, but maybe $6M and above?

An annual mansion tax with the threshold for what constitutes a "mansion" calibrated to hit those single family dwellings (to include coops where avg apartment trades at the threshhold) at or above whatever threshhold avoids those who actually work.

Such taxes have historically been politically impossible, but let's see what kind of mandate Mamdani actually has.

Krolik,
Any data on this?

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The wealthy and the fraudsters don't have income if they can help it, but they are the ones that hold a large number of Manhattan property.

This is anecdata from facebook mom groups (including the infamous "Moms of Upper East Side"). There were a few threads lately asking how people afford the lifestyle ($8m apartment on single income / stay at home mom, private school, nanny), all at a tender age of under 35, it turned out in every single case, the answer was parents/grandparents/trust fund. There were a few people bragging about being actually self made, but upon further inspection, these folks had apartments that cost *only* $4m or were over 35...
In the same thread, multiple moms recalled having a neighbor who ended up in jail. Few of such persons were recently all over the news (Epstein, Maxwell).

Separately, if you remember, I previously found some data on rapid graying of Manhattan and NYC in general. What I also intuitively know is that seniors tend to be high assets/low income. Also, when we were applying to some coops, broker reactions were that our income was much higher than other applicants, but assets are too low for building's comfort.

Krolik, You are high income and pay too little in property taxes. Mamdani coming for you.

Not that high income, just 6 figures. And my property is an old coop under $1mm. And I already pay almost 20k taxes on it per year. But yeah, Mamdani is coming for me because I am a w-2 worker. Plenty of rich folks on UES with technically smaller income and $8mm gifted apartments, grandparents covering private school tuition or sometimes even nanny, etc.

At least I'll get a free 3k and a free bus, right?

Food for thought
- Commercial pays 44% of total revenue already. Taxing more is deterimental to job growth.
- Market Value for Class II/IV is rental equivalent market value and can't be compared to Class I market value.
- New condos in Manhattan are certainly not being under-taxed except at the very high-end but tranfer taxes / mansion taxes are crazy high on those. Almost 4% at the top-end.
- There is clearly a case of high $ per sq ft condos being undertaxed as rental equivalent using rent data leads to lower valuation for high $ per sq ft vs using actual market value.
- Then there are undertaxed townhouses mostly in BK.
- Coops in Queens and BK may be undertaxed.
- But I don't see any undertaxation of wealthy anecdotally except in company founders via unsold shares against which they may be borrowing. NYS/C taxes capital gains and W2 income the same.
- I am sure people have read in a few places that NYC has a spending problem and DOE results are not commensurate with per child spending.

https://www.nyc.gov/assets/finance/downloads/pdf/reports/reports-property-tax/nyc_property_fy25.pdf

I happen to know many "rich" people on UES via private school. 80% plus W2 and K1 income.

And don't root for free stuff as you will pay much more than what you get due to two high income professionals. Six figures is a very wide range. They are many who will rail agains people like you due to the industry you work in and agains any family making more than $250k. Jealousy is a very powerful thing.

Another example, I knew someone working in finance, making high six figures and married to a heiress from a Jewish family that owns lots of rental property in Manhattan. The heiress had a real estate license, and using her family's millions, the couple purchased a multifamily townhome in UES. They managed to use depreciation on this property as a tax shield (using the clever loophole that a real estate professional can use depreciation to offset ordinary income), reducing his w-2 income to almost nothing. Not technically fraud, but an example of a very very wealthy couple paying very little taxes, comparing to me for example (I just take a standard deduction). We had the same gross income, but he kept twice as much after taxes. And I suspect property taxes on his townhouse are not any higher in $ or % terms, than on my apartment.

"heiress from a Jewish family that owns lots of rental property in Manhattan"

Nada will tell you that this family would have been far better off investing in stocks. Effectively, they are subsidizing a lot of renters in NYC (vs being invested in stocks) even if they are market rate due to low cap rates in NYC. Or you can look it it another way. The family pays a lot in real estate taxes via their investment properties which don't generate enough returns. A part of the reason for this type of investment is tax shield.

>>>I happen to know many "rich" people on UES via private school. 80% plus W2 and K1 income.

Yes, most of these folks work and are very successful. But they often don't afford their lifestyle on their w-2 income alone. Many have serious generational wealth.

The spending in NYC is insane. I do think free buses and free childcare are good things. But something needs to be done about construction costs, aging infrastructure, Medicaid fraud, and some other wasteful spending.

Krolik,
Did someone tell you that you can't have a high-paying job (vs other industries) at a bank and be jealous of the wealthy. You are making high $ income due to serving the wealthy / low-tax paying entrepreneurs as that is really what high paid bankers do.

Big cities always have a lot of wealthy and income disparity and they pay the largest percentage of taxes including real estate taxes. Sure there are exceptions but it is not the norm.

>>>Nada will tell you that this family would have been far better off investing in stocks.

Nada seems to like tax efficiencies, and there is nothing efficient about selling property and paying cap gains taxes only to invest into an overpriced (by historical standards) stock market.

The couple bought a personal use property with someone else's money and is now using the depreciation of that property to completely shield earned W-2 income from taxes. That's an infinite money glitch.

Not true in my estimate. May be max 10% such folks with generational inherited wealth (let us put a low min $ amount of $3mm already tranferred to them; hardly generational wealth). Many invested wisely.
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Yes, most of these folks work and are very successful. But they often don't afford their lifestyle on their w-2 income alone. Many have serious generational wealth.

Krolik, This is illegal. You can't depreciate a personal use property for income tax purposes. Only investment property.

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The couple bought a personal use property with someone else's money and is now using the depreciation of that property to completely shield earned W-2 income from taxes. That's an infinite money glitch

I think you are missing the point I am making. The wealthiest people in the city don't have the highest income on paper. They have generational wealth, and are highly optimized from tax perspective.

Vs me and similar professional class. I might have a similar job and a similar w-2 income, but none of the tax shields (or grandparents money).

It is an important perspective to keep in mind outside of the tax discussion too, so you know you couldn't possibly keep up with the Joneses who technically have a similar job, but in practice have a LOT more money. For example, I have now nearly ruled out private school. According to those mom facebook groups you need family money or 7 figures income to comfortably afford it.

I think it was a multifamily property, with the plan of renting out most of it now, and taking over the rest of the property as it gets renovated and the family grows.

>>>let us put a low min $ amount of $3mm already transferred to them; hardly generational wealth.

That's $3mm more than I got from transfers, and more than most people's lifetime income (average lifetime income stands at $2.3mm *before* tax for a person with a university degree). Also depending when $3mm is transferred to you, this wealth compounds and could be very significant. For example, compare someone graduating with no loans and immediately buying a $2mm apartment with cash to someone graduating with 6 figure loans, spending 3 years paying them off, and only after that starting to save up for a down payment or invest in stocks. 10 years after school you will have very different financial pictures for these two people.

Krolik, I am just disagreeing with your thinking about % of such people in NYC which is why I gave you my estimate limited to private school. And private schools in NYC are expensive. I can tell you that not every one sending their kid to private school paying full tuition without inherited wealth in NYC is making a $1mm or even $750k. It is how they choose to spend their money.
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The wealthiest people in the city don't have the highest income on paper. They have generational wealth, and are highly optimized from tax perspective.

Krolik>> Nada seems to like tax efficiencies, and there is nothing efficient about selling property and paying cap gains taxes only to invest into an overpriced (by historical standards) stock market.

I would characterize myself as focusing on after-tax rates of compounding. As 300 says, if the tax-efficient benefit comes with the trade off of lower returns, it’s not as shiny to me.

I have generally found that RE investors / families / people fall into one of a few traps.

One is “avoid taxes no matter what”. I remember talking to one NYC RE acquaintance, and he said his RE investor friends & associates all understood that in 2007/2008 they were buying overpriced and low-yielding properties, but they were all in a rush to close *something* to flip their profits into before the 1031 exchange window expired. They couldn’t bear to pay the tax on the long-compounding gains that had been decades in the making.

Really, paying 25% or 50% tax after 30 years of tax-free compounding does not hurt your after-tax rate of compounding that much. But people see the absolute number and think avoiding it is the most important thing. So much so that they end up spending the subsequent 20 years earning 0% after-tax (so compounds to nowhere, still with a 25-50% tax liability) instead of paying the taxes and then doing another 8x on what remains after-tax.

The other trap RE investors fall into is non-compounding gains and non-compounding tax benefits. If I tell you that you can amortize depreciation a $100 investment at $5 per year for 20 years, and that the investment otherwise yields $2.5, many would view that as a $2.5 benefit plus a $2.5 ($5 * 50%) tax benefit. So $5 per year, or 5%/yr, would be the typical view. But that’s not quite right. The tax benefit is fixed. It doesn’t compound. It’s not the same thing as 5%/yr after-tax compounding at all. But that is swept under the rug. As is the fact that that at the end, you have to pay recapture taxes on the $100 amortized. “We’ll just wave the magic of 1031 exchange and all will be fine buying the next property!” Sure, the one with low after-tax rates of return.

I’m not saying all RE investors fall into these traps, just that the investor class often misses the tax forest for the tax trees.

>>>I can tell you that not every one sending their kid to private school paying full tuition without inherited wealth in NYC is making a $1mm or even $750k. It is how they choose to spend their money.

Great (although I am not sure you can really know that). And these folks are probably paying quite a bit of taxes on their W-2 incomes already, and don't buy an $8mm property, so they won't be hit as hard by Mamdani property tax increase.

Whereas people buying $8mm property could be not "high income" on paper, but rather high generational wealth, and having them pay more property taxes would in fact be progressive taxation and would spare some of the NY "middle class".

In general I think most economists agree that property taxes are the "least bad" tax.

>>>Krolik, I am just disagreeing with your thinking about % of such people in NYC which is why I gave you my estimate limited to private school.

The number I think is much larger than it appears. Of course the generational wealth people are going to hold respectable jobs (that daddy's connections, or legacy status at Ivys helped them attain in some cases), they are not trying to advertise that they are spending parent's money. They are just spending a bit more than is justified by their incomes. I think that is what partially explains why property values and even rents in New York are so high compared to incomes. I don't mind entrepreneurs rewarded with a windfall, but a hereditary wealth class causes unwanted distortions in my opinion.

>>>I have generally found that RE investors / families / people fall into one of a few traps.

Aside from the tax aversion trap, I am wondering what other reasons these NY landlords have to continue to stay invested and "subsidize" tenants via abnormally low cap rates. Maybe they are very worried about the stock/index picking ability? Maybe their outlook is that cap rates will improve going forward and we are at an abnormally low point?

"I am wondering what other reasons these NY landlords have to continue to stay invested..."

You've answered it earlier: Generational wealth. I'll suggest that generations of Milsteins, Rudins, Dursts, and Musses have a key philosophy in common: Build a business and leave more for the next generation, and preferably of a tangible nature rather than stocks and bonds.

As in, this is their family identity, and they look to pass on to kids the business along with the identity?

Krolik, There is no end to forced equality conversation as it is just driven in large part by jealousy.

Inheritance comes in many forms, not just money. To list a few:
Correlation between IQ of parents and children, correlation between EQ og parents and children, good parenting - good values (who is to define that), physical traits, social skills, business skills, craft skills, parental teaching at home; social/business/public resources exposure difference based on where you live, country and location of birth/upbringing within the country, emphasis on education, societal values, more resources available during childhood, parental social and family network, and of couse transfer of wealth.

Any one who has a high paying job is highly likely a beneficiary of one of the above or similar. Sure there are some exceptions and I salute to such people for rising against all odds.

Who am I to pick and choose which inheritance is better and control in which country a child a born? I am just thankful to my parents, this society and this country for what it gave me and don't begrudge anyone inheritance or success. And I have zero wealth inheritance.

Inheritance in different forms is fundametal to the human society and parent child relationship. Try to say a blonde hair high IQ, athletic, Scandinavian parents living with good public schools country can't have children as that may lead to a natural advantage ....... Or Norway can't have a wealth fund as it is disadvantaging other countries.

Forgot to mention that there is negative inheritance as well: Genetic diseases, addiction, violent behavior, unhealthy eating habits, inability to postpone gratification, a lack of believe in your own ability to make a difference to your life, culture of underachievement..... which may get passed on to a child. I don't know any way to successfully control such negative inheritances.

And real estate always has had a significant inheritance component. Farm land being passed down the generations. It is the fundamental of capitalism.

Taxes are jealousy? In that case I think someone is feeling very jealous primarily of W-2 workers (especially ones with no spouse in real estate).

Farm land being passed down the generations is the fundamental of feudalism.

>> Aside from the tax aversion trap, I am wondering what other reasons these NY landlords have to continue to stay invested and "subsidize" tenants via abnormally low cap rates.

I am not sure, I don’t know what’s in their heads. Aaron’s suggestion sounds compelling.

I also have increasing appreciation for “Just because you’re good at X doesn’t mean you’ll be good at Y, even if it seems related. In fact, the characteristics that made you good at X might make you bad at Y.”

A good NY landlord might start out scouring the street for deals, handling operational details at first, then going through a bevy of managers of varying competence. It’s a hands-on business. 40 years of falling interest rates were a tailwind to your leverage, and you cannot fathom the idea of selling or even considering real marks when prices are down. Imagine living in a world where you have never considered yourself down 10% or even 1% (because you and the rest of the industry engages in pretend and extend), and now you’re in a world where being down 1% is a twice-a-week occurrence, to say nothing of a 10% drop in a single day every now & then. Does not compute.

Works in the other direction too. You might not bat an eye to market volatility, but if I removed you from the confines of your Ivy-league colleagues and asked you to get productive work from 10 working-class managers with limited education, why would you be able to handle it?

I get it. Its hard enough for me to manage one nanny.

The Mandami property tax proposal was simply agitating his base, as the constant manipulator that he is, much like his fellow politicians. Lighting a fire under middle to upper class property owners, which were not a significant part of his support but key to Hochul, is a naked political ploy to Albany. More spending is the only option, so the money has to come from somewhere, while the NYC budget exceeds by a wide margin the budget for the entire state of Florida.

“More spending is the only option, so the money has to come from somewhere, while the NYC budget exceeds by a wide margin the budget for the entire state of Florida.”

Let’s not forget to mention the population of Florida exceeds New York, yet they seem to manage with a smaller budget and no state income tax.

It is a funny thing where progressives leverage the languge of virtue (equality, compassion, community) to practice a politics of envy. It amounts to the top decile againts the top 1% - or in some cases the top 99-99.9% against the top .1%. Similar to 18c France or 19c Russia. Working people who by and large just want to live in safe neighborhoods, hold down a job, educate their kids are left holding the bag.

MTH, Why not take aways rich retirees real estate in NYC and give them public housing in lieu?

https://www.youtube.com/watch?v=NHCo6MaNvJ0

+1
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Politics of envy. It amounts to the top decile againts the top 1% - or in some cases the top 99-99.9% against the top .1%.

The problem is defining the 1%. The tax code is focused on defining and taxing income, especially W-2 income, instead of wealth/assets. And while there is some logic to this (income easier to measure, and wealth might have already been taxed), too much accumulated generational wealth creates various negative externalities, distorted incentives, and unstable conditions like in 19C Russia or 18C France. Also, incredible amounts of wealth seem to corrupt humans (see Epstein, Maxwell, prince Andrew and rest of the client list).

Property tax would be a wealth tax in a way, with a side advantage that properties cannot move to Florida.

I would probably pay more under property tax proposal, but think it is just a lesser evil.

>> Inheritance comes in many forms, not just money.

This is a interesting perspective and a good observation. I have a lot of exceptionally smart people in my social circle. The kids usually don’t pop out as smart as the parent. They’re plenty smart, but just not as smart. Sometimes they do, but more often than not, they don’t. The parent is just too far in the right tail of the distribution for even blessed genes to overcome anywhere close to half the time. I sense this can be hard on both the kid and the parent.

You, my friend, however, have no such issue. Your kid popped out smarter than you! (I am reminded of an ex-girlfriend’s mom who once said to me that a child is the only person in the world that you want to do better than you.)

If all one was solving for is unearned wealth, that is easily solved by an inheritance tax, and avoidance schemes can to thwarted by a tax upon receipt rather than (or in addition to) a tax on the gift. It also has the salutary benefit of encouraging lifetime spending/giving rather than hoarding. Oddly, the vociferous opposition to death taxes is the one thing that unifies party lines, and causes most parents to lose their mind if little Johnnie is deprived of one dime of their estate. The fact that the federal estate tax exemption is now effectively $30MM means Krolik has barely seen a speck of sand of the ocean of generational wealth transfer coming down the pike, and Americans for the most part witnessing for the first time generations that are less well off than their ancestors (at least until backfilled by grandma's estate).

I wonder how much of these proclamations of "Boomers have all the money" are overblown. The statistics I'd be most interested in is fraction of wealth held per-capita at a specific age. Sure, there are more Boomers than prior generations. And they live longer than prior generations, which typically allows more compounding and therefore wealth accumulation.

But how exactly do you think it should go? If you live in a larger cohort, the fruits of your individual labor (productivity & income) should be reduced, because labor is a finite resource?!??!?! And if you live longer, you should not benefit from allocating your capital for more years?

Sport, The limit of $30mm is nuts when combined with step-up basis on assets upon death. I can understand some exemption for farm land still cultivated by the heir or business still being actively run by the heirs employing people. At least eliminate the step up basis for the exemption.

Germany has rules of inheritance transfer for business owners where the heir pays over time on the increases value.

https://www.pplaw.com/sites/default/files/2020-07/ari-2011-treatment-business-assets.pdf#:~:text=Therefore%2C%20for%20basic%20relief%20the%20total%20sum,of%20the%20allowed%20tax%20deduction%20is%20lost.

Ha. I think my wife's genes and many hours a week tutoring our daughter may also have something to do with that. May be I will get reverse inheritance.

Agree with you on the far on the right tail IQ correlation not being high. I also know some fine kids with very smart parents but parents think their kid is not smart as they are applying their own standards.

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You, my friend, however, have no such issue. Your kid popped out smarter than you! (I am reminded of an ex-girlfriend’s mom who once said to me that a child is the only person in the world that you want to do better than you.)

And I don't mean software kind of reverse inheritance. I mean it as a child taking care of parents monetarily - I realize it is not common to call is "reverse inheritance".

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Reverse inheritance is an object-oriented programming mechanism where a common superclass (foster class) is created after subclasses already exist, allowing for the generalization and factorization of shared features. It improves class library reusability by enabling developers to retrospectively restructure existing class hierarchies without modifying original code, primarily implemented in Eiffel.

https://www.wsj.com/real-estate/luxury-homes/millennial-genx-inherit-real-estate-wealth-d78b4454?st=vAZNGL&reflink=desktopwebshare_permalink

Sport, Thanks. If buying expensive / ultra-luxury in NYC, they are filling city coffers with all the transfer taxes and real estate taxes already. Not to mention boost to the construction industry and services associate with the building. But the city spending has no limits. It is never enough spending.

And those new condo taxes are through the nose in Manhattan.

Look at this as an example. Not the best location but $2+ per sq ft per month. 1.15% of market value at ask.

That is in line with Single Family true market value based taxation - 6% of market value appx 20% tax rate.

True, that is why grandma needs to leave a pile of cash along with the condo, because the grandkids can't afford the maintenance on a free home.

https://www.kiplinger.com/taxes/many-heirs-cant-afford-an-inherited-home

Love it. Then they will vote for Mamdani as they will think life is too hard and rigged against them by all other rich people making a lot of money.

>>> the city spending has no limits. It is never enough spending.

That's the real problem, but it does pre-date Mamdani. Budget has been ballooning for years.
And free childcare is not the issue since the governor got funding for that.
The real problem is corruption, fraud, inefficiencies, and some overly generous entitlements.

“The real problem is corruption, fraud, inefficiencies, and some overly generous entitlements.”

Absolutely…below is a recent example from San Francisco. The problem is for every example they find, for every individual or organization that is charged, there are probably only scratching the surface, as there are probably many more examples of fraud and corruption that go undetected and unpunished. My theory is that the ones who get caught are just ridiculously, out-of-this-world greedy, I suspect if you stopped the fraud at just plain old greedy and making a nice sum for yourself, you’re probably not going to get busted

https://abc7news.com/post/gwendolyn-westbrook-former-ceo-sf-homeless-services-nonprofit-charged-misspending-12-million-public-funds/18645230/

Turbo, U think Mamdani will do something about it? He along with his voters just want to throw more money at the problem. Many high-school graduates can only perform at a 8th grade level if so. Just add 3k as a solution as the problem has nothing to do with parenting (or a lack of it) but schooling.

Nada,

There is clearly a case to be made that boomer didn't contribute enough to the medicare and social security driven by increase in life expentancy and new medical treatments now available, which are expensive in addition to prolonging life further. Once you factor in those benefits, boomers have "all the money" is even more true. So not only they get the benefit from compounding but also collecting increased benefits. I don't know what is the NPV of shortfall or underpayment but gotta be at least $100k per person (3 year of benefits). Then there is NPV of defined benefit pensions which is not included in wealth figures.

https://taxpolicycenter.org/taxvox/lifetime-social-security-benefits-and-taxes-2023-update

For the data below, ideally one would like to see a similar chart by age say 10/20/30 years back but market and housing performance can skew the numbers greatly.

https://www.visualcapitalist.com/americas-wealth-distriution-by-generation/
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I wonder how much of these proclamations of "Boomers have all the money" are overblown. The statistics I'd be most interested in is fraction of wealth held per-capita at a specific age. Sure, there are more Boomers than prior generations. And they live longer than prior generations, which typically allows more compounding and therefore wealth accumulation.

But how exactly do you think it should go? If you live in a larger cohort, the fruits of your individual labor (productivity & income) should be reduced, because labor is a finite resource?!??!?! And if you live longer, you should not benefit from allocating your capital for more years?

Population 65+ has increased by 1.5x since 1990:

https://fred.stlouisfed.org/series/SPPOP65UPTOZSUSA

Fraction of wealth held by 65+ has increase by (wait for it…) 1.5x since 1990:

https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#range:1989.3,2025.3;quarter:144;series:Net%20worth;demographic:age;population:all;units:shares

>> There is clearly a case to be made that boomer didn't contribute enough to the medicare and social security

I think people push out drivel narratives, because it suits their worldview, that can be refuted by simple numbers. See example above about “Boomers have all the monies, it’s so unfair!”

On Social Security (and Medicare), people really like the narrative that it’s a pension. They paid money into it while working, it got invested over the years, and then they get a cut of the investment at the end. A simple look at the numbers shows it’s nothing like that. The SS trust fund size (what “should” be the pension assets) peaked at $3T in 2020. In that year, SS paid out $1T.

Hint: having of 33% of a pension plan’s assets each year as benefits does not work. Actual pensions pay 5-6%. Even that is supported by investing the pension in assets in higher-return assets than Treasuries, which the SS trust fund does not do.

It’s more accurate to think of SS as welfare for old people, despite the narrative drivel we’re all fed. Current workers (young and old) are taxed, and those taxes are paid out to the old. It is a transfer of income from those working to older people, most of whom are not working. Same as public education. Working people, mostly aged 20-65, send some of their income to people aged 5-20, who are mostly not working.

>>>If all one was solving for is unearned wealth, that is easily solved by an inheritance tax

It is the best way but must be done on the federal level, because people have legs and can just as easily run away to a different state

Cannot run away from property taxes...

Nada,

1. Supporting your argument for Social Securtity and Medicare being welfare are:

Social Security contributions are legally called "Payroll Tax". And it is "Medicare Tax".
Social Security system started as unfunded as people were given benefits initially without having contributed.
Then there are disability benefits etc.

2. Thanks for the link to the data. Aren't people supposed to deplete some of their wealth as they get older and older?

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On Social Security (and Medicare), people really like the narrative that it’s a pension.

>>>I think people push out drivel narratives, because it suits their worldview, that can be refuted by simple numbers.

Well, I think the simple numbers you've given don't tell the whole story.

There are the millionaires and billionaires, and wealth is fairly concentrated with this group
The majority of old people are poor, and they are entitled to Medicare, Medicaid, long term care, SS, rent control apartments, half price bus, etc. and if you take PV of that, assuming elongated life spans, that's a very hefty sum, it's just not captured in a lot of the data.

Both the wealth and the entitlements mean that what younger generations are squeezed as larger and larger chunks of what they produce doesn't go to them. There is a lack of childcare subsidies, and rising eldercare responsibilities, which make this problem worse.

>>>Fraction of wealth held by 65+ has increase by (wait for it…) 1.5x since 1990

Consistent with the size of generation, but does not capture entitlements which I think have grown a lot. Also does not properly illustrate the burden on a working person.

You cannot eat dollar bills, you have to eat what others produce. A smaller generation of younger people that have proportionally less wealth, produce all the goods and services that a larger older generation "eats", paying for it with savings as well as entitlements (which inflate national debt, which at some point younger generations will need to pay for). Also, grandparents are working longer and cannot help with childcare. The younger generation can "eat" a smaller fraction of what they produce than boomers did. It's kind of a Ponzi scheme and Millennials and future generations are holding the bag.

There are other related issues / questions that I have:
1) why is there such high unemployment among young people, don't we need workers?
2) what is driving down labor participation (probably eldercare and childcare responsibilities have a lot to do with it)
3) effects of deglobalization and AI productivity gains
4) sustainable fertility rates
5) prior generations are leave us with a lot of knowledge (how to build chips or treat diabetes) and infrastructure (Empire state building, JFK airport, Panama canal etc) that we don't have to work for (at least not from scratch), as well as nature debt, such as garbage and pollution
6) how much of the pain is simply due to lifestyle inflation/keeping up with the Joneses. I grew up in an apartment half the size of the one I have now; average American house is twice the size of what it used to be, 30-40 years ago boomers did not have iphones, etc

>>>Sure, there are more Boomers than prior generations. And they live longer than prior generations, which typically allows more compounding and therefore wealth accumulation.

I think this allows for a lot more more consumption than prior generation. With some consuming a lot more than they have contributed during their lifetime, paid for by various types of entitlements and defined benefit pensions, which will be bankrupting governments for many years to come.

“There are the millionaires and billionaires, and wealth is fairly concentrated with this group
The majority of old people are poor, and they are entitled to Medicare, Medicaid, long term care, SS, rent control apartments, half price bus, etc. and if you take PV of that, assuming elongated life spans, that's a very hefty sum, it's just not captured in a lot of the data.”

Why are old people entitled to all that? I didn’t realize I was living in Sweden or a Communist country. People need to manage their money diligently and prepare for retirement. Or rely on family help. Sorry if this sounds unsympathetic. I’m a millionaire on paper and nothing was handed to me, I grew up in a middle class neighborhood, busted my ass to get good grades, got into MIT, and used my hard work ethic and intelligent to make a pile of money from real estate investing. I have paid a TON of taxes over my lifetime. I’ve paid WAY more than I’ve ever gotten back. Now it’s up to me to subsidize random old poor people. Fu%$ that. I pay enough taxes. If you want more government entitlements, move to Sweden or Norway.

“why is there such high unemployment among young people, don't we need workers? “

Maybe because they are a spoiled, picky bunch who think that a minimum wage job is beneath them. Maybe they are living off government subsidies. Maybe they have moved back in with Mommy and Daddy who continue to subsidize them and not kick them out and tell them to get a job. There are plenty of jobs out there. But too many young people don’t want to work hard for a minimum wage. But that’s where you start.

People need to take more responsibility. It’s not our government’s job to take care of you and provide you with a nice, comfy retirement. But increasingly young and old people have their hand out for more freebies from government and our politicians oblige them. Our deficit grows daily. It’s just not sustainable long term.

I think Krolik is talking about current entitlements as approved by duly electred congress..

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Why are old people entitled to all that?

I think Krolik is talking about current entitlements as approved by duly elected congress ** and city/state elected representatives **.

When there is wealth concentration, entitlements (call it welfare) grow as voters can always point to some one very rich to take the money from. Of course in practice, it has just resulted in increased deficits at the federal level.

@Krolik - Property taxes are hard to evade, especially for middle- and working-class households. But difficulty of avoidance is not the same thing as justice or efficiency. A tax can be inescapable and still poorly designed.

In much of Europe, where the social safety net is significantly more expansive—some would say profligate—the fiscal burden is carried largely by VAT and income taxes. Consumption and earnings are taxed directly and broadly to fund that system.

In New York, however, the deeper problem is not just the tax structure but chronic overregulation and bureaucratic sclerosis. Government payrolls grow, rules multiply, and yet accountability remains weak. It is extraordinarily difficult to dismiss public employees for negligence, incompetence, or chronic underperformance. The result is a system that extracts heavily but struggles to reform itself. It breeds corruption.

There's an article today in the WSJ weighing in on the topic of cities and taxation.

https://www.wsj.com/real-estate/miami-property-taxes-billionaires-future-cities-a9bdda45?st=eneyME&reflink=desktopwebshare_permalink

It's easy for rich people to sell and move to another city - the transaction costs are pocket change for them, their kids can go to boarding school - more difficult for working/middle class people to do that. Working/middle jobs are more likely to be local and service oriented. They can't send the kids off to boarding school.

>> Consistent with the size of generation, but does not capture entitlements which I think have grown a lot.

Maybe they have, maybe they haven’t. I don’t know. But can you back up what you “think” with some actual numbers? On wealth, it clearly doesn’t seem to be anything more than the size of the generation. For SS, I took a cursory look at the maximum full retirement age monthly benefit. It was ~$1000/mo in 1990 and is now ~$4000/mo. GDP per capita is up (in nominal terms) by that same ~4x factor.

>> Also does not properly illustrate the burden on a working person.

This is certainly the case with entitlements. SS is not a pension program, it is a redistribution program. And the size of people providing the current dollars has shrunk relative to before, with the recipient base growing. In theory, a competent government should balance these ebbs and flows via its giant balance sheet. In practice, people tend not to elect competent governors who would hold the spending back in appropriate times. So governments balloon obvious impending crises to the point where they burst. Then, the electorate is shocked by the incompetence, things get fixed so they “never” happen again… until they do. Rinse & repeat. This is Democracy 101.

>> Why are old people entitled to all that? ... I’m a millionaire on paper and nothing was handed to me, I grew up in a middle class neighborhood, busted my ass to get good grades, got into MIT, and used my hard work ethic and intelligent to make a pile of money from real estate investing.

I find the side-by-side contrast between what Krolik said and this interesting. Basically, Krolik talked about the burden working people (22-67, say) bear in producing stuff for non-working people (ages 0-22 and 67-80, say). So a normie is, across their lifetimes, a net producer of stuff for others 55% of the time and a net consumer of stuff from others 45% of the time.

From what I can tell, you were a net consumer of others' productivity ages 0-22. You became a net producer of productivity ages 22-40. You stopped working at age 40 but nevertheless can lead a 95th-percentile upper middle class life, returning you to being a net consumer of others' productivity ages 40-90, and a pretty good one at that. This is a kinda magic, if you think about it, coming from capitalism and the ability to substitute your capital for your labor. You're living a 95th-percentile life, despite spending only 18% of your life as a producer. The rest of the time, people are producing stuff for you with you doing nothing in return! The normie is ~50th percentile life against ~50% of lifetime spent working. But rather than look at glass-half-full, you look at it as glass-half-empty.

>> I have paid a TON of taxes over my lifetime. I’ve paid WAY more than I’ve ever gotten back. Now it’s up to me to subsidize random old poor people.

I am skeptical. Federal expenditures per capita are $20K/yr. NY state & city are another $15-20K/yr. While the exact amount of benefits accruing to each person is imprecise, the order-of-magnitude question is whether you're paying $35-40K/yr in taxes each year... for 80-90 years. Something like $3M over a lifetime, in current dollars. A 95th-percentile income of $250K/yr pays something like $60K/yr in taxes (after 401K, etc.) If you do that for 40 years, that's $2.4M over a lifetime. Throw in some RE taxes, sales tax, etc., and you get to the ballpark of $3M (in current dollars) over a lifetime. Enough to pay for 1 person roughly, no more. To me, paying WAY more would involve something like 10x that.

It's not that random old poor people aren't being subsidized. It's just that the mere affluent aren't really the ones doing the subsidizing; it's the rich. Such is the nature of highly-skewed income/wealth distributions, another thing that goes hand-in-hand with capitalism.

Note that I'm not saying anything about what policy should be. I'm just pointing out where the actual money must really be coming from.

>> I think Krolik is talking about current entitlements as approved by duly elected congress ** and city/state elected representatives **.

If people want to elect a congress and city/state reps who back those sorts of entitlements, they should move to Sweden or Norway and take their voting there dammit! This is the god damn United States of America, and here people here should vote the way I say they should.

These numbers are mind-boggling. NYC alone is $15k per person. Very expensive to have non-productive (productivity being all inclusive not just monetary) members in the society.

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Federal expenditures per capita are $20K/yr. NY state & city are another $15-20K/yr.

In general, this is a good point even though the numbers may need some refinement. Perhaps the breakeven number will come down at $100-150k per person income.

Federal rev source ~15% outside of income tax/SS/Medicate etc. So assume the benefit goes to the people who pay. American corporations benefiting from US/Local miliary, education/ infrastructure spending not paying proportianally - ignore.

City budget portion funded by business taxes, real estate taxes paid by businesses, and federal govt (double counting of spending). Almost 50% - assume the people paying are getting benefit to a large externt not individuals.

Real estate and sales taxes paid post retirement.

Then there is question of who will eventually pay for deficits. What proportion of deficits should be attributed to American corporations - ignore.

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Federal expenditures per capita are $20K/yr. NY state & city are another $15-20K/yr. While the exact amount of benefits accruing to each person is imprecise, the order-of-magnitude question is whether you're paying $35-40K/yr in taxes each year... for 80-90 years. Something like $3M over a lifetime, in current dollars. A 95th-percentile income of $250K/yr pays something like $60K/yr in taxes (after 401K, etc.) If you do that for 40 years, that's $2.4M over a lifetime. Throw in some RE taxes, sales tax, etc., and you get to the ballpark of $3M (in current dollars) over a lifetime. Enough to pay for 1 person roughly, no more. To me, paying WAY more would involve something like 10x that.

You’re right, 300. There are non-income sources of revenue.

Maybe it’s cleanest to look at federal only, where 50% of revenue comes from income tax and 35% from payroll tax. I guess that means we should attribute $14K/yr to each individual as their share?

$150K/yr of income has you paying $26.5K/yr in those taxes. After 45 years, $1.2M. Divided by an 80 year lifetime puts it at $15K/yr, around break even.

To get to break-even with 18 years of work, you need $300K/yr on average. To subsidize a single “random poor person” who never pays a single cent in taxes takes $475K/yr. To get to the bare minimum of meeting the words “random poor people” — meaning two such individuals — takes $650K/yr.

Indeed. Middle income people pay too little taxes in America vs other developed countries. There is no substitute of more people working longer and paying into the system given the entitlements in place.

At least, USA didn't pay for Turbo till he was 18. And he may go back to Canada.

Tsk, tsk... think of all those hardworking Canadian taxpayers subsidizing him all those years, and he never contributed a dime. Enough to make even a Swede blush!

I was thinking about the hypothetical person who made the GDP-adjusted equivalent of $650K/yr for 18 years, enough to minimally say they've subsidized (two) "random poor people". If they worked for those 18 years and then retired for 11, how much could they have spent (after-tax) and been plenty rich enough to continue spending indefinitely if they also "intelligently made a pile of money from investing"? I'll use "buy S&P 500 index fund" as the proxy for "intelligent".

The answer is they could have been spending the GDP-adjusted equivalent of $230K/yr after-tax every year since 1997, and their net worth would be $10M today. More than enough to continue spending the GDP-adjusted equivalent of $230K/yr indefinitely. That's the amount they were spending when earning $650K/yr for 18 years, a ~99th percentile income level, with GDP-adjusted spending increases each year. Indefinitely.

I dunno. Different people are different. But I'd look at that and feel blessed, when the typical person is working 45 years (2.5 times longer) to achieve a spend that is 1/4th the amount. You're 10x ahead. Not only was there an economy to support your achievements, there was an economy to support your investments. And for better or for worse, the fact that others did a less good job of saving and investing goes hand-in-hand with providing better opportunities for your own capital invested. Dirty little secret: if everyone saved more and invested better, your investment returns would suffer -- not only because they're not buying as much of whatever your capital is selling, but also because they would compete with their dollars for the same investment opportunities, driving down returns.

People have zero sense for how much tailwind there is in the developed countries supported by collection of ~33% of GDP in taxes, that helps them sail so far ahead. It would do them good to consider their alternate fate had they been born and lived in an undeveloped country, with their nirvana of only ~12% of GDP in taxes and an entitlement policy of "No work => no soup for you!" Really good stuff for getting an economy off their lazy asses.

Now you talking about how I broadly define "inheritance". I have always believes where you are born and grow up makes a huge difference. Chinese despite all their growth are still lining up to have an anchor child in USA. A child born in most places Africa is disadvantaged right away.

That said, I acknowledge that entitlement spending in the USA/NYC has been a bit too much. Medicare fraud, disability fraud, DOE in NYC without commensurate results, general above inflation increase in medical costs per person. Any on the other side, not enough taxation of capital gains and middle income W2.

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People have zero sense for how much tailwind there is in the developed countries supported by collection of ~33% of GDP in taxes, that helps them sail so far ahead. It would do them good to consider their alternate fate had they been born and lived in an undeveloped country, with their nirvana of only ~12% of GDP in taxes and an entitlement policy of "No work => no soup for you!" Really good stuff for getting an economy off their lazy asses.

>> That said, I acknowledge that entitlement spending in the USA/NYC has been a bit too much. Medicare fraud, disability fraud, DOE in NYC without commensurate results, general above inflation increase in medical costs per person. Any on the other side, not enough taxation of capital gains and middle income W2.

Sure, I don’t particularly disagree or have a horse in the race. The real cost is the actual entitlements; the fraud is a side-show cost-wise. But the current administration is pro-fraud, more or less, via their pardons and treating of white-collar shenanigans as normal business.

Unrealized capital gains taxation is a tough nut to crack, as is middle income taxation. Even the 95th percentile earners feel they’re simultaneously subsidizing all the poor people yet taxation should be directed at the real rich people.

Look at the healthcare cost vs other developed countries. There is both fraud and inefficiency on top on America being fatter (more of a cultural issue in my opinion). What percentage attributable to each, no one knows. So it is reasonable to complain about increasing entitlement costs and putting the tax $ (DOE NYC) to an efficient use. Of course, now the Govt recommends more beef and protein.

https://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_per_capita

>> Look at the healthcare cost vs other developed countries. There is both fraud and inefficiency on top on America being fatter (more of a cultural issue in my opinion). What percentage attributable to each, no one knows.

I don’t know either. But if figured *someone* studies this and has a sense. So I asked Google/Gemini. Turns out the answer is “none of the above”.

>> Why are healthcare costs per capita in the US so much higher than anywhere else?

Healthcare costs per capita are higher in the U.S. primarily because of significantly higher prices for services, drugs, and administrative overhead, rather than higher utilization of care. A fragmented, largely private, non-universal insurance system allows for higher provider salaries, lack of centralized price negotiations, and high administrative waste compared to other wealthy nations.

Key Reasons for High Costs:

Higher Prices for Services: The main driver is the cost of care itself. For example, a heart bypass surgery costs over $75,000 in the U.S. compared to around $15,700 in the Netherlands.

Pharmaceutical Costs: The U.S. pays significantly higher prices for prescription drugs—often double or more—compared to other high-income countries.

Administrative Waste: The complexity of the U.S. system, with thousands of different insurance plans and payment systems, results in excessive administrative costs.

Lack of Price Regulation: Unlike other nations, the U.S. government does not directly negotiate or heavily regulate prices for most medical services or drugs.

Hospital Consolidation: Reduced competition due to hospital mergers allows providers to charge higher prices.

Lower Utilization Rates: Ironically, Americans often use fewer services (fewer doctor visits and shorter hospital stays) but pay much more for them.

While factors like high rates of obesity and chronic illness contribute to overall health spending, the primary differentiator is that the U.S. pays more for the same, or even fewer, services than other countries.

So basically, “This is what we voted for!” Try running for office on a single-payer platform to bring healthcare costs in line with other countries, and see what happens.

And to see whether this higher spend has anything to do with entitlements, we can ask about 65+ spending (mostly Medicare entitlements) versus pre-65 (mostly private insurance). It turns out the situation is somewhat less inefficient with entitlements.

>> Why are healthcare costs per capita in the US so much higher than anywhere else?

Spending on the 65+ population in the U.S. remains an outlier, though the relative gap between the U.S. and other wealthy nations is slightly narrower for this group than it is for working-age adults.

While Medicare provides nearly universal coverage, older Americans still face significantly higher costs and more barriers to care than their international peers.

How 65+ Spending Compares

The Spending Gap: The U.S. spends roughly 2.0 times more per capita on adults 65+ than the average of other high-income countries ($24,665 vs. $12,309). In contrast, the gap for working-age adults (20–64) is wider, with the U.S. spending 2.3 times more than peer nations.

…

Why isn’t Medicare much better? Well, it turns out we vote for that too!

>> Medicare’s negotiating power has historically been restricted by law, which is a major reason why the U.S. pays significantly more for healthcare than other countries. Until recently, a "non-interference" clause prevented Medicare from negotiating drug prices directly, forcing it to pay rates much closer to list prices than those found in peer nations.