What Are We to Do with the Rich in our Cities

 

Income inequality is an important topic of our day, and it finds its highest emotions in our cities where the juxtaposition is greatest. So it is telling that within the past month, on this very subject, we've heard from two of the far left's most prominent leaders, Zohran Mamdani and Katie Wilson, representing big-city mayoralties on both coasts.

Wilson, mayor of Seattle, chuckled as she waved "bye" to millionaires who threatened to leave the city and state over a proposed "millionaires tax" being advanced in state government. Mamdani, mayor of New York City, cut his own ad to announce his pied a terre tax, and singled out billionaire financier Ken Griffin by filming the piece in front of Griffin's pied a terre. In both cases, the message was clear both in terms of what the intent was - the rich should be made to pay more - and in terms of how the messengers felt about it - gleeful and triumphant.

These policies and sentiments are quite popular, and since politics is a popularity contest - and I say that descriptively and not pejoratively, since the way we do things in this country is we elect people based on majorities and then those people have to form coalitions and take actions in accordance with those majority preferences - I can understand and respect what Wilson and Mamdani are saying and how they're saying it.

But, while politics is a popularity contest, the public sector is not, particularly at the local level, where local governments have to worry about meat and potato issues like snow removal and homelessness and human services and public safety. So, somehow, the popularity contest dynamics of politics have to meld with the "get sh*t done" mandate of the public sector, to bring in revenues in a way that is reasonably efficient and equitable, and then execute expenditures in a way that is also reasonably efficient and equitable. 

So, from a messaging standpoint and practically speaking, what are we to do with the very rich among us in our cities? Many feel strongly that they should be made to pay more in taxes to fund the services we need for our cities. This is an argument based on fairness - the rich have more resources, the larger payments are a counterbalance to the unjust system that allowed them to get rich in the first place, and so on - and that is a good argument to hash out.

But, it doesn't take much effort to realize that adding new taxes targeting the rich and then dismissively waving them away when they leave is incompatible. Of course in this country we are free to move about, and this is particularly so when it comes to local policies. And that's because avoiding an individual municipality's policies can sometimes be as easy as moving down the street and otherwise not having to change your life, while conversely, moving in response to federal policy would require leaving the country altogether and applying for citizenship elsewhere. So, if the rich don't like one city's policies and move away, an important reason for those policies - to obtain resources from those who have them to help those who need them - is significantly diminished. 

One may argue that the rich won't leave, because there is more than just fiscal policy that tethers them to a place. Whether or not that's true, being gleeful about "bye, we don't want you anyway" doesn't seem to help in any way.

I don't have a good answer to all of this, just making observations. To delve into the pied a terre tax for a minute, it is my understanding that Griffin is rarely at that residence, pays a ton in property tax on the place, and consumes very little in the way of city services, so for him to decide to have a pier a terre in Manhattan seems like a huge win for New York City finances. On the other hand, as noted above, Mamdani ran on "eat the rich," the pied a terre tax is a pretty clear manifestation of that, and he won the mayoral election so he gets to do what he campaigned on.

In time, people will vote, both at the ballot box for who will represent them in city halls across the US, as well as voting with their feet in the form of moving away from places they no longer feel are attractive and moving to places they feel are. So, let's keep an eye, on Seattle and New York City, as well as on Austin and Minneapolis and Miami and Boston.