For some of New York’s rich, a tax that’s more of an insult than a hardship

some-new-yorks-rich-tax-thats-more-insult-hardship
Corridor of power. ()
Tweet Share on Facebook Share on Tumblr Print

"We aren't threatening anyone's success," he said. "We are asking those who've done very well to insure that every child has the same opportunity to do just as well as they have. That's how we all rise together!"

That's how our new mayor, Bill de Blasio, put it last night in his victory speech. But "all rising together" is a complicated thing, especially if it means exacting an increased tax on the very wealthy.

It was a linchpin of de Blasio's progressive agenda: The new tax amounts to a half a percent, an amount that might scarcely be noticed among the very rich (with the proviso that many of the very rich notice every penny; that's how they got that way). It would be imposed on city residents who make more than $500,000 a year; the cash would be funneled directly to funding a universal pre-Kindergarten program. It would require a highly unlikely approval from Albany, though de Blasio's huge win might make it a bit embarrassing for Cuomo to frustrate him.

His opponent, and many others, said the new tax would deplete the city's overall tax base as the superrich fled for the hills.

MORE ON CAPITAL

ADVERTISEMENT

So I talked to a few of Manhattan's most successful who might feel threatened, and asked them what they thought. Some seemed to take it personally.

“De Blasio is demonizing successful people,” Judith Regan, who brought in $120 million a year while publisher of ReganBooks at Harper Collins and who reportedly got an eight-figure payout from Rupert Murdoch, told me outside her studio at Sirius XM Radio. “There are plenty of highly accomplished and talented people in the arts and business in New York who’ve done well, and to go after these individuals, creates a division. It’s class warfare, and it’s unproductive. He should tax banks, corporations, developers to make this city more affordable for all the talented young people now making $30,000 a year here.”

Steve Forbes, who ran for president in 1996 and 2000 in Republican primaries on a flat-tax platform, told me during a telephone interview last week, “Mr. de Blasio should not be picking pockets. He should not raise any taxes. Taxes are a burden that hurts the city’s economy. Wall Street is not going to be the money fountain that it has been in the past. If he really wants to help New York City, he should create an environment where new entities rise up.

“As the late [Citicorp chair] Walter Wriston put it so well, ‘Capital goes where it is welcome, and stays where it is well-treated.”

Forbes’ words resonated with Michael Tolkin, the 28-year-old co-founder of MerchantExchange.com, a multi-retailer coupon and rewards-points portal who chose to launch in Silicon Alley.

“When we were starting up, we asked ourselves, ‘Do we move out to San Francisco, or to one of the newer tech hubs like Austin, or Boulder?’” Tolkin mused in a call with Capital New York last week. “But Mayor Bloomberg has been really committed to the entrepreneurial community here, and he’s developed an ecosystem that’s been really great to be a part of. He’s attracted Google and Facebook and Tumblr and the new Cornell - Technion university, which will all attract talent to the city more broadly.

“I support education, but I’m not a big fan of raising taxes on high earners. These are the job creators. They employ a big part of the city. And high earners have a lot of mobility. They can go anywhere. ”

Henry Buhl certainly can. Buhl spent decades in finance on Wall Street and in Switzerland and now, as he puts it, in “social work.” Buhl could leave the city, but he won’t. And it’s not because he has one of the most fabulous lofts in Soho, where he started the Association of Community Employment Programs for the Homeless [ACE] in 1992, the folks who, among other things, sweep the streets of New York.

“I wouldn’t consider leaving New York,” Buhl told me in a phone interview last week. “I’ll pay my taxes and do whatever I have to do. But I think [tax hikes are] a terrible idea and I think it will drive individuals out, and corporations eventually. They will go to Connecticut and New Jersey and Pennsylvania. It will hurt business over the long run, and that hurts our homeless people. If business is good, tax revenues will increase, and that will support things like job training and affordable housing.”

Tax hikes targeting the wealthy have caused famous flights before. When France’s current Socialist president Francois Hollande proposed a 75 percent tax of citizens earning over 1 million euros a year, the country’s biggest movie star, Gerard Depardieu, simply moved one mile over the border into Belgium. In the 1970s, when the tax rate in the U.K. was raised to 90 percent for some individuals, members of the Rolling Stones fled to France and then to America. We were only too happy to welcome the huddled masses of Mick Jagger, Keith Richards, and Ron Wood. Presumably they’ve paid taxes here at a lower rate, and we did get “Exile on Main Street,” dedicated to their tax exodus, out of it.

At a party last month for Mayor Bloomberg’s girlfriend Diana Taylor at billionaire Stephen Schwarzman’s Park Avenue apartment, socialite Muffie Potter Aston told Women’s Wear Daily’s Erik Maza, “I fear for New York City if Mr. de Blasio gets elected. He just wants to tax everyone to smithereens.”

De Blasio has his friends among New York's elites, though. And why not, in a city as blue as New York?

“Of course I’m willing to pay it,” Alec Baldwin, who gave de Blasio a full hour on his new MSNBC talk show, told Capital New York. As he dashed into the premiere of “Seduced and Abandoned,” James Toback’s documentary on their frustrated efforts to make an art film, he shouted over his shoulder, “Without a doubt!”

Broadway producer Judy Gordon, who choreographed a conga line of $25,000 donors to meet Hillary Clinton at de Blasio’s Roosevelt Hotel benefit Oct. 21st, told me on Sunday that it was surely not about the money.

"Oh, please: It’s such a small amount," she said. "Are [one percenters] even going to feel it?”