Shouldn't Rich People Be Able to Afford Better Anti-Tax Arguments? (New York City edition)
When I come across a particularly inane news article, I save the link and jot down a few words to remind myself what I was thinking when I flagged it. For this column, the offending piece is from The New York Times (of course) on April 25, 2026: "New Taxes Helped Cool London’s Housing Market. Could That Happen in New York?" And here is my "note to self": "Unbelievable BS re NYC taxes." In my Dorf on Law column last weekend, I wrote that the editors at The Times "often ... push anti-progressive-tax narratives, as I will discuss in a column in the next week or so." This is that column.
Before picking apart that particular example of bad economic journalism, it is important to remember that the wealthiest people in the world have used sheer repetition to convince far too many of us that taxes are the root of all evil. You know that taxes always destroy everything, right? Every time we tax anything, anything at all, the world ends. Which is odd, because taxes have existed for millennia, and they have often been increased, yet the world continues to exist in a way that allows anti-tax propagandists to say that the only way to save the world is to cut taxes and never to allow any taxes to go up. The first George Bush repeated ad nauseam, "Read my lips, no new taxes," but his political party thinks it has a better idea: no taxes, full stop. And certainly no taxes on the rich.
Of course, rich people are in the interesting position of having enough money to buy pseudo-intellectual analyses to "prove" that they should not be taxed. They could simply not spend the money that they pour into buying politicians and lobbying groups (the latter of which are sometimes mislabeled "think" tanks), but they have apparently concluded that they can get more than one hundred cents on the dollar by poisoning the public's opinion about taxes. And even if the numbers worked the other way -- that is, if the tax savings turned out to be swamped by the cost of buying the political process -- I cannot help but conclude from all of the evidence that the world's richest people today are like the client in the movie "The Firm," who paid Gene Hackman's law firm ungodly sums of money to get his tax rate down to 1 percent but was still angry not to have reached zero.
But my point here is that "the best anti-tax arguments money can buy" ought to be better -- or at least less stale -- than they are. In a forthcoming column on Jotwell, I will discuss the current fight in California over a tax on the hyperrich. Here, using the article in The Times noted at the beginning of this column, I will focus on a similar fight in New York City over a very popular "pied-a-terre tax" that Mayor Zohran Mamdani is trying to enact. It is almost comical to see how weak the anti-tax arguments are in that political fight. Those arguments are, moreover, always the same and are always backed up by nothing but hunches and (at best) cherry-picked examples.
Before getting there, it will be helpful to look at the big picture beyond the New York real estate market and think about the larger "taxes are bad" mantra. Again, wealthy backers have for generations paid to produce shoddy public relations documents (sometimes mislabeled "studies") telling us that every tax is counterproductive. If that were true, then we would always be on a "Laffer curve" that only slopes down -- that is, as tax rates rise, revenues fall.
It is obviously not enough, however, to respond by saying simply that we collect tax revenue at nonzero tax rates, because only the most mindless anti-tax zealots -- who are hardly scarce, to be sure -- make the claim that any tax will destroy every tax base immediately. What does matter is knowing whether we could increase tax rates above where they are now as a way to collect more revenue. Why would we wish to collect more revenue? Maybe to expand the housing stock, to improve schools, to make transportation safer and cheaper, or to make sure that more people receive adequate health care (especially preventive care). You know. Socialist stuff.
To be clear, there are situations in which we should be happy that a tax "harms" something, such as when cigarette taxes harm tobacco companies by reducing the number of teenagers who take up smoking, or when carbon taxes induce polluters to reduce their toxic outputs. And given the impact that the emergent billionaire class has had on American politics in the last generation, simply taxing them for the sake of reducing their political impact (no matter how the revenue is spent) would be a net positive for society, even if they responded by buying fewer yachts or choosing not to inflate real estate prices in major cities.
But if we are going to look at what economists call revenue-maximizing tax rates, the evidence is exactly the opposite of what the billionaires' employee-economists are trying to peddle. A new report by Jane Gravelle of the Congressional Research Service, for example, looks at debates over corporate tax rates in the US in this century, focusing specifically on ginned-up studies that purported to prove that corporate taxes are so high as to reduce tax revenue -- that is, the Laffer argument.
Noting that the 2017 Republican/Trump tax bill (which Republicans extended and made worse in 2025) reduced the federal corporate income tax rate from 35% to 21%, Gravelle writes that both an error of economic theory and an error of statistical design undermine the claims that we could collect more tax revenue at lower rates. On the matter of economic theory, she shows that "[u]nder the most generous assumptions, theory suggests the revenue-maximizing tax rate is probably no less than 70%." After correcting the statistical error, the "revenue-maximizing tax rate [is] 61% in general and ... around 100% for a large, less-open country" (like the United States).
This actually should not be surprising, because the evidence stubbornly refuses to support trickle-down economics, and it has done so for decades. Lacking any new arguments or new evidence to support the anti-tax incantation, the right simply goes for repetition. And as I noted in my Dorf on Law column this past Saturday (from which I quoted above), "if there is one policy area in which Times editors cannot resist mucking around in political issues, it is economics." In that column, I discussed (again) the editors' obsession with the US national debt, but that is hardly the only topic on which the supposedly liberal Times carries water for the rich.
And by the way, when I plugged "New Taxes Helped Cool London’s Housing Market. Could That Happen in New York?" (the title of that April Times article) into a search engine, the impossible-to-disable "AI Overview" gave this answer: "Yes, a proposed 'pied-Ã -terre' tax on high-value secondary homes in New York City aims to mirror London’s strategy of cooling the luxury market to generate revenue and boost affordability." That is a pretty weird way to describe even what the (terrible) Times piece claims, as I will show momentarily, but if we needed further evidence that AI is at best rudimentary, this is it.
Having hidden the ball now for eleven paragraphs, teasing the idea that this NYT piece is truly bad (and it is), I should warn readers that the payoff here is actually a major letdown. There is no clever trick, no innovative sleight of hand, no ruse to make the trickle-down argument work. It simply replays the hits, making the article no different from any of the others in the long line of "You can't tax rich people, because ... bad!" articles that we have been reading all of our lives. Consider:
[R]eal estate agents and economists say the tax could be catastrophic for the city’s housing market, hurting not the superrich investors who park their money here, but the very middle- and lower-income citizens it’s designed to benefit.
For proof, they say, just look at London.
A slew of punishing new taxes has transformed London’s luxury housing market over the last decade. The taxes have pushed housing values down and driven international buyers, who have historically made up nearly half of the homeowners in prime London neighborhoods, to consider other markets.
The once-sizzling housing market in central London is now chilled. Sales prices of properties in London have dropped more than 20 percent since 2015. As taxes mounted, interest rates increased and prices dipped, smaller landlords threw in the towel, taking tens of thousands of apartments off the market and constricting supply. Average monthly rents, as a result, are now at record highs.
A similar blowback could be the consequence of Ms. Hochul’s proposal that Mr. Mamdani has gleefully promoted, the economists and real estate agents warn.
"Punishing new taxes," you say? (Later in the article, we learn that taxes on second homes "have been piling up" in England.) "Gleefully promoted," you editorialize? How objective of you, you news reporter person, you.
It just so happens that "since 2015" means "starting with the Brexit vote," which makes what seems to be the argument here -- taxes increased, so interest rates increased, and supply went down -- a bit difficult to take seriously. Other than a passing reference to Brexit that I note below, the argument is simplistic in the extreme: Taxes on rich people went up, and London is now more expensive. There is also no explanation of why "smaller landlords threw in the towel," which would have been helpful in the context of trying to understand how a "chilled" luxury housing market in central London could have caused such a result.
We also know that there are housing crises in nearly every major city in North America and Europe. Average rents are at record highs in London. And Toronto. And Seattle. And Amsterdam. And Lisbon. Did they all adopt a London-style tax?
But have no fear, because as the quote above indicates, the reporter for The Times has interviewed real estate brokers -- who of course have no reason at all to make contrived claims that taxing their wealthy clients will trickle down, hurting "the very middle- and lower-income citizens it’s designed to benefit." One New York-based broker found a gullible listener who was willing to include this statement in the article:
“There is a big exodus of wealthy individuals from London, they’re trying to sell and they are thinking then maybe I will put this money into the stock market and I will do much better,” she said. “London is no longer a beacon for this kind of buyer. We don’t want this to happen here.”Who is "we" here? And why would we want New York to be a "beacon for this kind of buyer"? No explanation. But again, have no fear, because the reporter has interviewed those "economists" to supplement the objectivity of New York's real estate agents. Normally, I would not put scare-quotes around the word economist, but in this case it it necessary, because the article quotes in-house hacks for the real estate industry.
Consider the way the reporter tries to finesse the Brexit angle. The UK started committing national economic self-harm in 2016, but that is only noted as a way to give the real estate industry the last word:
There are additional factors to consider. The new taxes came just as Britain exited the European Union, a move that bruised its own economy and made foreign investment more uncertain than ever. Research from real estate firms like Knight Frank, however, have pointed to the new taxes as having a more direct impact on housing prices than Brexit.
Yes, there were massive political and economic changes that easily explain what has happened to housing prices, but researchers at a London firm that bills itself as a group of "Independent Global Real Estate Consultants" assure us that it was the fault of the taxes on luxury real estate. Actually, they merely say that those taxes had "a more direct impact," which is not even a claim about magnitudes. The reporter, however, leaves it at that.
There is also this:
The flurry of new taxes, said Lucian Cook, a London-based housing economist who leads research for Savills, have created a narrative that London is no longer as friendly to real estate investment. The number of foreign buyers in the Britain registering with a real estate agent — the first step before purchasing property — is now at its lowest level since 2008.
[I]n London, Mr. Cook said, so many international buyers have turned elsewhere, taking their spending and charitable giving with them, that the market has deflated.
And in the featured comment at the end of the article, the reporter adds this:
I spoke to several economists while reporting this story, and they shared something counterintuitive: it’s new second-home taxes, not Brexit, that has played the biggest role in battering the housing market in London. The lowering of home prices hasn’t brought any relief to renters, either — rents there are now actually at an all-time high.
Several economists. Again, the only "economists" cited in the article are from London-based real estate firms. And it is not difficult to find "several economists" who would say anything. That is not research, or even competent reporting.
But the cherry on top is that the article ends with seven full paragraphs dedicated to arguments not even from realtors or their economists but from the wealthy people who would pay this tax, quoting their press releases saying that the the man who is the public face of extreme wealth in New York (Ken Griffin, who lives in Florida but bought a New York penthouse for $238 million) "has personally made donations worth $650 million to social-good causes in the city, including museums, hospitals and educational groups."
The analytical errors in this article include the presumption that this relatively small tax will cause so many rich people to leave New York that the city will lose money, that the properties they currently own will lie empty and that their businesses will never be replaced, and that reduced demand for housing somehow makes prices go up. If my opinion as an economist were for sale, I suppose I could hire myself out to one of those companies to say all of that with a straight face, too.
With apologies for repeating myself, there is nothing new here, either in the bad arguments or the biased reporting in The Times. Rich people can buy economic hackwork, and they can buy journalistic hit pieces. What they cannot buy is an argument that withstands even a moment's scrutiny.
- Neil H. Buchanan