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?