Luxury real estate firms in New York City make a lot of money helping wealthy foreigners exploit the state's tax laws—now some firms overseas want to share in the joy of being richly rewarded middlemen. The Times reports that real estate companies from Germany and London are expanding here to explicitly target New York's "ever-expanding number of foreigner-friendly buildings."

Swimming pools and modern design and blotting out the sun all do wonders for a plutocrat's esteem, but the main reason for dumping $88 million into a glorified dorm room is because New York City is an ideal cash cocoon. Their money lives here so they don't have to.

Global instability is a key driver of demand here, and while there has been an increase in supply to satisfy demand, “we are still at an absorption rate of almost half of what is considered normal in New York City,” said Wendy Maitland, the president of sales at Town Residential. “Yes, we have more inventory, and yes, there will be certain segments of the product that won’t move as quickly as sellers hope, but we are still at historic lows in terms of existing inventory and inventory coming on line.”

The stability that makes these transactions possible—the safety to walk the streets or be free from political and social upheaval—is paid for by the people who actually live here.

Yet New York's public housing stock remains an appalling joke, our transit authority has to beg to keep the trains running, and living here is as hard as its ever been. We need the cash.

State Senator Brad Hoylman wants to create a graduated 4% pied-à-terre tax to units above $5 million. The bill, inspired by a proposal from the Fiscal Policy Institute, would only affect 1.75% of the 88,851 non-primary resident owned coops and condos; the 1,556 units that cost $5 million or more account for $26.1 billion out of the total market for non-resident condos. According to FPI, 445 of those units are worth more than $25 million, and would bear 83% of the tax, and even then, the tax would be less than half of what London is charging its ultrawealthy foreign "residents."

The graduated rate structure means that even these top-selling units would pay an effective tax of only 3.44%. Units $10M-$25M would pay an effective tax of only 2%. Units valued from $5 million to $10 million would pay an effective rate of less than 1%.

Senator Hoylman's proposal could net $665 million annually. The Partnership for New York City, one of the city's biggest business lobbies, supports the idea, mainly because it shifts a potential tax burden overseas.

But the middlemen are upset. Taxes don't sell apartments!

While brokerages are expanding their footprint overseas to lure foreign buyers to Manhattan and vice versa, there are, of course, some stumbling blocks. One is New York taxes. “Taxes are a major problem,” Mr. Cox of Urban Compass said. “We help buyers structure limited liability companies to avoid, or minimize, some taxes, but it is often a challenge to explain all the different taxes they are charged.”

These charges include transfer taxes, the mortgage recording tax and the mansion tax. “When I have buyers from outside New York — not just overseas buyers but Americans who live in other states — they are overwhelmed by the taxes they see crossing the table at a closing,” said Jeffrey S. Reich, a partner at the law firm Wolf Haldenstein Adler Freeman & Herz.

When a Canadian billionaire buys a $50 million apartment, real estate brokers get a reasonable cut of the action; why shouldn't taxpayers?