‘Taylor Swift Tax’ Stirs Bad Blood With Rhode Island Homeowners

0:00As a top-performing advisor, you demand top-performing funds. That's why Fidelity's 1 ,000 experienced research professionals combine deep insights and advanced analytics to deliver consistent outcomes for clients across market cycles. Explore 300-plus Morningstar-rated 4 - and 5-star funds at i.fidelity.com slash top funds. Across all fund share classes of Fidelity, Fidelity Advisor Shares, and Fidelity ETFs as of 6-15-2026, past performance is no guarantee of future results. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need.

0:40Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. When you own your own business, you own every decision. Now own the card that rewards you for it. Chase Sapphire Reserve for Business is a pay-in-full card that elevates your travel experience and offers premium benefits that will take your business to the next level. Sapphire Reserve for Business offers 8x points on all purchases through Chase Travel, 3x points on social media and search engine advertising, airport lounge access, and more.

1:25Chase Sapphire Reserve for Business. It's the card that gives back all you put in. Learn more at chase.com forward slash reserve business. Chase for Business. Make more of what's yours. Accounts subject to credit approval. Restrictions and limitations apply. Cards are issued by JPMorgan Chase Bank N.A., member FDIC. Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser. and Tim Stenevek on Bloomberg Radio. Let's talk a little bit about Taylor Swift because everybody is talking about this wedding that is supposedly happening this weekend at Madison Square Garden.

2:06But the Bloomberg audience knows that's not the most important thing to be focused on, especially if you live in Rhode Island. This is very true because we also have what they're calling the Taylor Swift tax. Greg Ryan writes all about it. Greg joins us from Boston. He's Bloomberg News Boston money and power reporter. Greg, good to have you on the program. This is a most read story on the Bloomberg terminal and for very good reason. It's not just the headline. That is amazing. The entire story is amazing. Taylor Swift taxed her as bad blood with Rhode Island homeowners. What is the so-called Taylor Swift tax?

2:42So the tax is an annual property tax on second homes in Rhode Island that are valued over $1 million. It's half a percentage point. And it was passed last year as part of the state budget. The purpose is to raise money to build more affordable housing in Rhode Island. It seems like a relatively small amount. And the reason I bring that up is just for the Taylor Swift example, OK? She has a 12 ,700 square foot mansion. It's assessed at$28 million. So that means an extra tax bill of about$136 ,000. That's not that much for her, given the value of the home. How is it affecting, though, people at the lower end of the income and fame spectrum?

3:27Yeah, it's interesting. I mean, the loudest protests here are not coming from those who own mega mansions next to Taylor's and Watch Hill. It's really coming from these homeowners who have had modest properties, modest vacation homes in their family for generations, often, you know, three or four generations who are going to be seeing their tax bills going up by 50 percent or more. with this taylor swift tax um you know a lot of these homes can't be you can't stay in them or you can't rent them out during the winter and parts of the spring or the fall because they're not insulated or they don't have heating um so considering you know how if people even if people wanted to rent them out to try to make some money to make up for this tax they really have a a small window to do so in the summer i mean i just find it being interesting that the loudest protests aren't necessarily coming from the billionaires like taylor swift but those who have those vacation homes there.

4:21How long has this really been a contentious issue in the area, or have we really been seeing this more highlighted as of late? Yeah, it's interesting. So the tax was enacted, as I said, as part of the state budget about a year ago, but it's really only gotten on people's radars in the past few weeks. The state sent out notices to those who may be subject to the tax in May, sent about 8 ,000 notices. And as people have arrived to their summer homes on the coast, You know, conversations have started. It's really only been in the past few weeks that there's been an uproar about this. And actually now there's a law firm in Providence is organizing a lawsuit.

5:00You know, they're hearing from these unhappy homeowners who want to challenge this tax in court, saying it's unconstitutional. So there may be legal action coming in the next few weeks. Greg, you make the point in your piece, and it's a really important one, that this is not occurring in a vacuum. The challenges that it's trying to address have to do with affordable housing. That's affecting pretty much every state in the country right now. But it's also part of a pattern of leaders in democratic states of introducing taxes to try to supplement affordable housing or try to tax those at the most upper ends of the income spectrum.

5:38So it makes me think of what's happening here in New York with Zorin Mamdomini pushing through his second home tax. We just spoke about Ken Griffin and what he's doing in Miami right now and the buying of basically that entire building. We just spoke about that a few minutes ago. What does this signify to you in this moment of time? There's a lot of voter anger around wealth inequality, around affordability. That's maybe the big buzzword this midterm season is affordability. So, yes, you are. You did see that second home tax also taking effect this week in New York. You're seeing more and more states looking at millionaire taxes.

6:18Actually, Rhode Island just last month enacted its millionaires tax. Massachusetts, Maine, Washington state, they all have millionaire taxes. So, yeah, Democrats, you know, there's their Democratic leaders are saying, look, we're facing a budget crunch. They're blaming Trump and federal funding cuts in D.C. and they're looking toward the wealthy to make up some of that gap. So in this particular instance, it's collecting$5 for every$1 ,000 that a vacation home's value is assessed over$1 million. Do you expect this model to potentially be used in other regions of the nation? I think so. I do think this is a bellwether.

7:00That's how these taxes have worked. You saw Massachusetts pass the nation's first millionaire tax in 2022. more and more. So it's popping up in more and more states the past year or two. So and there, you know, think of places that are led by Democrats, California, you know, Washington State, you know, states up and down the East Coast that have lots of vacation homes that are vacation hotspots. So I could certainly see this spreading to other states in the coming years. You mentioned the the potential legal challenge that this this could face. You do note in your piece that the law firm Hinckley, Allen and Snyder expects to file a lawsuit on behalf of homeowners challenging this.

7:40What is their argument going to be? Well, that's that's still under development, but they're they're arguing this this tax violates the federal and state constitution that they are. They could claim that it's a non-constitutional taking what you are when I'm hearing from homeowners. And I'm not sure the extent to which this will be, we'll make it into the legal filings. But again, this argument that, you know, it's not fair, you know, we can't make up this money. Even if we rent out our homes, we can only rent out our homes for a few, you know, a handful of months a year. It's just not fair that, you know, we're expected to pay, in some cases, you know, upwards of$10 ,000 or more in new taxes under this measure.

8:28So do you expect any sort of exodus? I mean, I'm also looking at the story about the Providence area. The luxury home sale prices in the area have increased about 6.3 % year over year. Of course, we know this kind of is due to tight supply and prices going up. But do you expect some of those deep-pocketed buyers to start looking elsewhere? Or are we getting to the point where it's like, where else can we go? Because everyone's pushing them out from certain regions. yeah it's it's fascinating you know i i talked to a lot of real estate agents for this story and you're not really seeing any sort of effect yet and they don't they don't expect that you will for at least at least the near term i spoke to one agent who pointed to a texas resident who sails off of the newport coast and was in the market for a house you know in the 10 million to 20 million dollar range and then once this tax passed decided yeah forget about it i'll look elsewhere.

9:23But that's really been the exception. You know, people are really attached to these homes, especially these homeowners whose properties have been in their family for generations. So, you know, the tax just went into effect. They're not feeling the financial pain yet. I suspect people will be filing for exemptions and maybe seeing how this lawsuit plays out. So I think we're a bit away before you see anything resembling a meaningful exodus. It's called the quote Taylor Swift tax. Has Taylor Swift said anything about this? She has not. Yes. Unlike Ken Griffin, who, you know, has had that very public feud with Momdani over New York's second home tax.

10:02Taylor has not commented on it. I reached out to her publicist and did not hear back. So she's maybe she's focused on the wedding, but she's she's staying quiet. Greg Ryan, a good place to end it. Appreciate your time this afternoon on this holiday weekend. Greg Ryan, Bloomberg News, Boston Money and Power reporter joining us from Boston.

10:26Get the news you need in just 15 minutes. Start your day with Bloomberg Daybreak, the podcast with a global view on the stories that matter. I'm Nathan Hager. And I'm Karen Moscow. Join us each morning for curated stories on current events, politics, business and foreign relations. Plus one conversation on the day's biggest developments, all in just 15 minutes. Subscribe to Bloomberg Daybreak for a precise, thoughtful take on the stories that matter. Listen to Bloomberg Daybreak each morning on Apple, Spotify, or anywhere you listen.