The End of US Urban Renaissance

Jonathan D. Miller

Why would the President and Republican leaders want to torpedo the prospects of the most important economic engines in the country—our gateway cities? But that’s what their “tax reform” could do. And real estate owners and investors can only hope all the personal goodies they will be getting in pass-throughs, depreciation and various other writeoffs will offset the potential damage to the economies of the nation’s most important urban centers.

Severely limiting state, local and property tax deductions in these higher cost places (New York, Washington DC, Chicago, San Francisco, Los Angeles, and Seattle among them) will increase, not decrease, tax payouts for many residents, crimp affordability further and pressure state and local governments into cutbacks they can ill afford. Raising already high taxes when they cannot be deducted on federal returns will be unpalatable for many local pols. Basic services—police, fire, sanitation—could be impacted. School districts will suffer and infrastructure spending may be curtailed just when the Congress will be pushing more spending burdens onto the states, given the deficits that the tax cuts will be ramping up at the federal level. Mass transit systems, key roadways, bridges and tunnels in these cities require major overhauls to keep commerce functioning—where is the money to come from?