Karen (not that kind)

The @NYCMayor Mamdani pied a terre tax (the PAT tax) will likely reduce overall tax revenues for NY and that’s before considering the capital flight it will cause. When a NYC home is burdened with an additional annual tax, the home value will decline by the capitalized value of that new tax. While the PAT tax is set at 5%, it is 5% of the assessed value of the home, which is generally substantially less than its market value. Assessed values are typically a fraction, let’s say 6%-15%, of the market value of a home and/or apartment so economically the PAT tax should be approximately 0.3%-0.75% of the market value of the home. Using a 4% cap rate, a 0.3%-0.75% PAT tax should reduce market values and annual real estate tax collections by 7.5%-18.75% assuming people believe the tax will be payable annually over the long term. The impact on current real estate values is not just on owners whose primary residence is elsewhere. As such, the value of all NYC residential real estate is going to decline. This will lead to substantially reduced assessed values and lower overall real estate tax collections. And all of the above is before considering capital flight as more wealthy NYers leave the city and the desirability of NYC residential real estate declines. Tell me why I am wrong.