On Saturday night, protesters from a group called Planet Over Profit strolled casually into the American Hotel’s crowded dining room and began haranguing patrons about how the billionaire-led economy is destroying Mother Earth and feeding authoritarianism: “You’re all here in the Hamptons enjoying $200 caviar as though your money isn’t funding an actual fascist regime disappearing your neighbors,” declared a neatly dressed young man. “Shame on you.” The activists then chanted, “Tax the rich! Tax the rich!”
The inequalities of the world today cannot be addressed by attacking caviar; we would like to draw the conversation toward actual potential solutions to the inequalities that ail our communities, instead.
Consider, for example, the so-called “Taylor Swift tax” in Rhode Island. Put succinctly, resort towns there face issues similar to those we face here on the South Fork, with second homes outnumbering year-round residences in some neighborhoods and great swaths of houses sitting vacant most of the year.
Some argue that absentee homeowners don’t pay into the year-round economy as year-rounders do, while still relying on local infrastructure; while year-round residents in the least affluent hamlets (see: Springs) shoulder, percentage-wise, greater property tax burdens to support schools and services than their ultrarich fellow homeowners a few miles south do.
Rhode Island determined that second-home owners weren’t pulling their weight and decided to, well, tax the rich. An extra tax levy has been imposed there on second homes worth over $1 million. And Rhode Island isn’t alone in trying to tax the rich.
Municipalities on Cape Cod are considering a proposal to add a 2-percent transfer tax on property sales above the $2 million mark in order to fund affordable housing. Even the C.E.O. of the Cape Cod Chamber of Commerce supports it: “Nearly 30 percent of the region’s workforce now commutes to the Cape each day,” he said in August. “We are going to turn into something very different if we don’t make aggressive and transformative moves to protect the middle class.”
In these parts $1 million and even $2 million are hardly Taylor Swift-level property values. Those daring enough to discuss openly such shocking policy proposals might do better to set the bar at $4 million or $5 million. Innovative thinking around the issue of taxes, second homes, and the disappearing middle class is critical. Perhaps the question of second homes’ impact on the tax base needs to be addressed at the state level, instead, with a mechanism akin to Massachusetts’s Proposition 2 1/2, which permits municipalities to offer tax exemptions up to 35 percent for primary residences — attacking the problem with carrot rather than stick.