What’s New York’s problem? – 04/25/2023 – Paul Krugman

Criticizing New York City has long been a popular right-wing pastime. Conservatives often portray the Big Apple as a dystopian wasteland. And the criticism became even more fervent when Alvin Bragg, the Manhattan District Attorney, announced multiple charges against Donald Trump. Republicans ask how dare Bragg investigate such cases when crime is rampant in the territory he oversees.

But crime in New York isn’t really out of control. As in many places, crime rose during the pandemic but appears to be on the decline now; although Republicans don’t believe it, crime in America’s safest big city continues to be far lower than crime in, say, Miami or Columbus, Ohio.

Still, even before the pandemic, there was a steady, if not huge, flow of people choosing to leave New York. Why were these people leaving? It probably wasn’t because of the crime, although perceptions aren’t always in sync with reality. It probably wasn’t because of the taxes either; I will deal with that further. The biggest factor, almost certainly, was and is the cost of housing.

On perceptions: From the early 1990s until the pandemic, a large decline in crime was accompanied by firm public convictions that crime was on the rise. A curious side, however, was that only a minority of Americans said that crime was on the rise in the area where they lived – the impression was that they believed that crime was increasing somewhere, but not where they lived.

And it goes without saying that despite the recent rise in crime, large parts of New York don’t look threatening to a casual observer. I know that Marjorie Taylor Greene, after a quick visit, defined the city as “disgusting”, “filthy”, “repulsive” and “a terrible place”. And there sure are bad neighborhoods. But for most people like me who live here, life seems, I don’t know, normal, and it’s hard to believe that so many people are fleeing an urban nightmare. Indeed, in many ways the quality of life in New York is high — if you can afford it.

But can you pay?

New York is a high tax state — it has to be, to pay for relatively generous social programs. And New York City imposes additional taxes. These taxes actually make living in New York more expensive.

However, although average tax rates are lower in conservative states than in progressive states, taxes in conservative states are highly regressive: the poor and middle class pay a much larger proportion of their income in tax than the 1% more rich. As a result, the differences between conservative and progressive states in terms of the tax rate for ordinary families are smaller than one would expect.

According to the Institute for Taxation and Economic Policy, the middle 60% of Texas taxpayers pay 9.4% of their income in state and local taxes. This amount is actually higher than the tax rate for middle-income families in California. New Yorkers pay more—12.5%—but those three extra tax points probably aren’t a big reason to leave the city.

The biggest tax gap is in the top 1% — 11.3% in New York versus 3.1% in Texas — and there are clearly some high-income people who move because of the lower taxes. But this type of person is also likely to value the amenities of a big, sophisticated city; New York remains one of the preferred residences of the extremely wealthy.

However, for the middle class, it’s really hard to afford to live in New York — not so much because of taxes, but because of the cost of housing. A very imprecise indicator (I’m sure experts are able to produce a more accurate measure, but the conclusions certainly won’t change): Zillow real estate group reports that the median rent for an apartment in New York City is $3,500 monthly, compared to US$ 1,500 in, for example, Dallas. Since the median household income in New York is about $70,000 a year, the “housing tax” that middle-class families pay for living in New York is on the order of 20% of their income, which is several times higher than the difference in actual taxes. And if the person wants to buy a house, the price difference is similar: Dallas is about 40% cheaper.

Oh, and in the case of the homeless — a symptom of social disarray in New York — their plight is largely the result of high housing prices and unavailability.

Thus, the cost of housing, not crime or taxes, is the biggest reason people want to leave New York. And the fact that the lack of access to housing is even worse in much of California than it is here is little consolation.

The truth is, this need not be happening. Greater New York is much more densely populated than any other part of the United States, and the average resident lives in a census tract with a density of 6,000 people per square kilometer. Still, a lot more housing could be built—I live in a neighborhood with 24,000 people per square mile, and it’s nicer and even quieter than you’d think; no, it’s not a crowded nightmare.

One of the main reasons real estate developers are not building more homes in the New York area, and therefore the reason why living here is expensive, is that they are not allowed to do so, because of zoning, restrictions to land use and —especially in the suburbs—community opposition.

In other words, forget the fantasies of the right: The New York area’s main problem is the “NIMBY” posture [“não no meu quintal”]not crime or taxes.

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