Aaron Elstein: Trump qualified for a tax break for New Yorkers making $500K or less
It’s called the STAR program, which stands for the New York State School Tax Relief Program and has been around since 1997. It offers an approximately $300 annual benefit for those who qualify. Hundreds of thousands of New York homeowners get it.
Here’s where it gets interesting for Trump: To be eligible for STAR, a married couple must have annual income of $500,000 or less. One wouldn’t think a guy as rich as Trump claims to be would qualify, but records filed with the city’s Department of Finance show he received a $302 STAR benefit on his latest property-tax bill for his Trump Tower penthouse on Fifth Avenue.
That means whatever his annual income is, it’s less than $500,000. (The state defines income for STAR purposes as federal adjusted gross income minus the taxable amount of total distributions from annuities or individual retirement accounts.) And Trump would have to have declared his New York apartment as his primary residence and sent the state a copy of his federal income-tax return in order to qualify for the $302 tax break.
From: Trump qualified for a tax break for New Yorkers making $500K or less | Crain’s New York Business
So in New York, an income below half a million puts you in line for means-tested poverty relief tax breaks. They’re still using US dollars in New York, right? Didn’t switch to Jamaican dollars and I missed it?Report
It makes more sense if you think of it as an extra little fish-you tax to people making more than $500,000 per year. Think of it like federal tax brackets. The 39.6% tax rate doesn’t kick in until you make more than $413,200. So are the 4.6-percentage-point savings in the $411,501-to-$413,200 (really?) bracket and the 6.6-point savings in the $189,301-to-$411,500 bracket a “means-tested poverty relief tax break” for people making up to $413,200 and $411,500? No, it’s just that the 39.6% bracket is there as an extra fish-you to people making more than that.
Also, incomes of people who make most/all of their income from investments tend to be highly volatile. I don’t see anything even remotely interesting about Trump or any other very wealthy person making less than $500,000 in one particular year. The “poorest” people in the world as measured by income in any given year are rich people whose investments had a bad year. Anyone can have zero income, but you have to be rich to have income in the negative millions of dollars.Report
It’s all kinds of goofy because NYC property taxes for schools are implemented a bit differently than most of the rest of the state, so residents of the five boroughs only see about 300 dollars for the basic (about 600 bucks for the enhanced, whose income cutoff is around 85K), while those in, for example, Westchester see typically between 1-2K for basic and 3-4K for enhanced. (which is a much larger percentage of their overall property tax bill)Report
As I understand it — and as someone who received a STAR exemption for I believe over $1000/year — the intent of the program was to help offset large increases in school taxes. They didn’t want to price people out of their homes because of rapidly increasing school taxes.
I don’t know how it actually works in practice and what incentives it creates — good, bad, or otherwise — but that is my understanding of its purpose.Report
Rich folks have “guys” who “manage” their income vs investments. Don’t know why this is news.Report
IANA CPA, but aren’t there clever accounting tricks that keep your income low while still allowing you access to the sort of money that qualifies you as “filthy rich”? Like being paid in stock options, or having most of your expenses paid by the company you own?
(Confession: I thought of this because I remember an episode of Cheers where Sam bets the millionaire dating Kirstie Alley’s character a year’s income on a game of chess, and then he manages to win. The punchline of the episode is that for tax reasons, the guy pays himself 1 penny per year. So as you can see, I’ve done a lot of research on this topic.)Report