By Kevin D. Williamson
Sunday, November 10, 2019
Regis Philbin used to be associated with the question,
“Who wants to be a millionaire?” But there is a new question in his life: “What
kind of a millionaire wants to live in Greenwich, Conn.?”
Not Regis Philbin.
Philbin has just sold his family’s home in Greenwich for
36 percent less than he paid for it a decade ago, representing a
multi-million-dollar loss. The Philbins are, as the Wall Street Journal put it, “the latest victims of a brutal
Greenwich market.”
It is a rarefied kind of brutality, of course. There are
very few houses for sale in Greenwich for less than $1 million, and you can
spend in the tens of millions pretty easily if you want to. But prices are
down, and recent sellers routinely having been taking losses of $1 million or
more. That’s the price of getting out of Greenwich.
Greenwich even has been the scene of — angels and
ministers of grace defend us! — auctions.
(Shield your delicate eyes, Muffy.)
Greenwich is a bedroom community outside New York City,
and it long was the go-to place for Wall Street moneymen, chief executives, and
other very high-earning types. But it is now becoming a cautionary example of
one of the aspects of modern political economy least appreciated by the
class-war Left: Rich people have options.
There are basically two kinds of New York City rich guys.
First, there are the cool ones, and they increasingly are inclined to live in
the city itself rather than on a mock manor out there in the Lyme-diseasey
wilds of nutmeg suburbia. It is not as though they cannot afford a second home
in some more relaxing environment, should they want one, and Aspen is a heck of
a lot nicer than Greenwich. Yes, living in Manhattan or the nice parts of
Brooklyn comes with some financial burdens, but for the cool-rich-guy set, the
tradeoff is worth it. As one Greenwich businessman put it, these moneyed movers
decamp for the city “saying that at least for all the money they spend on taxes
there they get all the restaurants, theater, etc. Though none of them do, or
will, go to the theater.”
The literally and, more to our point here, metaphorically
less-cool guys are in Florida. They have up and left the expensive, high-tax
greater New York City metropolitan coagulation entirely. The flight from Palm
Beach to New York City is less than three hours, and you can afford a lot of
first-class upgrades for what you’ll save in taxes and real estate. The
private-jet set has even more options.
Florida has a lot going for it compared to Connecticut:
Lower taxes, better governance, superior infrastructure (one of Rick Scott’s
unheralded accomplishments), quite a bit less in the way of snow-shoveling,
etc. Palm Beach County has a lower crime rate than does Fairfield County, and
Florida’s overall crime rate has been declining for years. Florida is
(literally and metaphorically, again) on Eastern time, and much of it remains
very much plugged into New York and, increasingly, to Washington. The downsides
have a lot to do with how you feel about lanais and humidity.
My colleague Charles C. W. Cooke, who made the move from
Fairfield County to Florida a few years ago, tells a familiar story: “I can
afford a house that fits my growing family and a swimming pool,” he says. “I
don’t pay any income or personal property taxes. The weather is better. And I’m
not at the mercy of the Metro North or of the roads that make it necessary.” Morning Joe co-host Joe Scarborough is
another Connecticut refugee in Florida. “I wish I could still be in New
Canaan,” he says, but life is simply too much more difficult there. “Traffic
going to kids’ birthday parties a few miles up the Merritt could take 45
minutes.” And in Florida? “It’s easier, cheaper, and the state government (with
no income taxes) is far more efficient. Everything from getting a driver’s
license to getting to your kid’s baseball game is so much easier.”
The allure of Fairfield County used to be that it is
close to Manhattan. But it is not as close to Manhattan as Manhattan is. So,
what else ya got? The tax advantages of being in Connecticut vs. being in
Westchester County, N.Y., or in New York City have narrowed. So have the
quality-of-life advantages.
Low taxes, safe streets, and good governance? Connecticut
has moved the wrong way on some of those metrics, and New York City has moved
the right way on one important one with the dramatic decrease in crime from the
Giuliani years onward. With the general decline in the quality of the Metro
North railroad (and the parallel decline in New York City subway service)
getting to and from the suburbs to offices in the Financial District has become
a much bigger chore, while living in the Financial District itself (as I did
for some years) has become a much more attractive option. Living in the city
makes more sense for more people than it once did.
Economists and social critics used to talk about competitiveness almost exclusively in
terms of the business environment. (Paul Krugman, back when he was a first-rate
economist instead of a third-rate rage-monkey, wrote
insightful criticism of the excesses of that orientation.) But experience
has led social observers to a wider view of the question. When Amazon goes
looking for a place to park a bunch of highly paid and intellectually
sophisticated Amazonians, low taxes and a gentle regulatory environment aren’t
going to be enough to put Muleshoe, Texas on the list of potentials. There is
more to value than price alone. New York City is probably the most attractive
place in the United States for people who desire urban lives of a certain
character. Other places have charms of other kinds: Philbin is not relocating
to some low-tax farm state but to California, which is terribly governed and
has high taxes (mostly on income rather than on property, which may be
attractive to him as a rich retired man) but remains an awfully nice place to
live, especially for show-business types who enjoy being around their peers.
Highly mobile workers (including writers such as Charlie
and me) have a lot of choices about where we live, and the low taxes and cheap
housing of Texas are one of the reasons I choose to live there instead of New
York City, where my magazine is based. But there are a fair number of more
expensive, higher-tax localities that would be attractive under the right
circumstances. And many of these questions are relative: The Bay Area looks
bananas if you’re moving there from Houston or Orlando, but less so if you are
coming from Singapore or Copenhagen. It is no accident that California’s
population growth is sustained by immigration from abroad even as its
native-born population slips away to Nevada, Texas, and Florida. The question
is not only the cost, but what you get for your money. Tampa is not as
culturally interesting as New York City. But, then, neither is Greenwich.
So, think of it this way: The poor governance of
Connecticut and the relative decline of the state as an attractive place to
live have had the effect of devaluing a great deal of capital in the form of
people’s houses, usually the most valuable asset of a family, including
affluent ones in the New York City suburbs. Connecticut in consequence has
suffered all the negative effects of an enormous wealth tax without realizing
any revenue. It is pretty much all downside, with the possible — possible —
exception of buyers who are getting better prices on houses that may or may not
turn out to be good investments. Regis Philbin will get over losing a couple of
million dollars on his Greenwich house. But not everyone can brush off a
comparable loss in quite the same way. And we are all of us enmeshed in a
complex web of economic relationships. The price of a mansion in Greenwich
matters to a gas-station operator, a public-school teacher, a landscaper, and
many other non-gazillionaires, even if there are a few degrees of separation
involved.
(Unsurprisingly, Republicans had a good Election Day in
Greenwich, according to Greenwich Time:
“Greenwich Republicans reversed momentum Democrats had gained over the past two
years, not only keeping the First Selectman’s Office and the majority on the
Board of Selectmen, but taking back control of the Board of Estimate and
Taxation and tax collector’s office as well.” There’s a lesson in there for
Republicans in the rest of the country.)
Like Greenwich homeowners, the governments of New York
City and New York State both are unusually vulnerable to the private decisions
of very wealthy households, because a relatively small number of taxpayers pays
an enormous share of New York’s city and state taxes: 1 percent of New Yorkers
pay almost half the taxes in the state, and they know where Florida is. New
York City has seen some population loss in recent years, and even Andrew Cuomo,
one of the least insightful men in American politics, understands that his
state cannot afford to lose very many millionaires and billionaires. “God
forbid if the rich leave,” he has said. New York lost $8.4 billion in income to
other states in 2016 because of relocating residents. Financial-services firms
are expanding in places such as Austin, Nashville, and Tampa. In early 2019,
New York State’s tax-revenue forecast was cut by $2.3 billion.
There is a reason Senator Elizabeth Warren is proposing
to build a financial Berlin Wall, locking in jacked-up tax rates alongside a
slew of new taxes on wealthy and high-earning American households in a patently
unconstitutional property-seizure scheme. The U.S. government already is
disproportionately reliant upon tax revenue from high-income people, whose
share of tax payments far outpaces their share of income: The top 1 percent of
earners make about 20 percent of the income but pay about 40 percent of the
income tax; the top 5 percent make 37 percent of the income but pay 60 percent
of the income tax.
There are a lot of nice places in this world to live and
do business. The question for the United States is whether it wants to be a
declining, has-been, wealth-repellant country such as Greenwich or a growing
and dynamic wealth-magnet such as Florida. Taxes are not the only part of that,
but they are a part of it. What tax
revenue is spent on matters, too, as any American can see for himself when
visiting places as different as Zurich, Madrid, and Hong Kong.
Who wants to be a millionaire? Everyone. (Except the billionaires.) The more interesting question
is: Where does a millionaire want to live? The question is not who wants wealth but where wants wealth. The place that
welcomes the people who have wealth, the businesses that create it, and the
institutions that sustain that creation is the place that has a future. “Soak
the rich” is a 19th-century idea that fails to account for 21st-century
realities, one of which is that if you’re leaning on the wealthy for your tax
revenue, then you’d better be giving them something of value for their tax
dollars, because they have choices about where they live.
Regis Philbin isn’t going to be the last man standing in
Greenwich, Conn., when the music stops. Who wants to be that guy?
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