New York Likes to Hang on to the 1% as Long as it Can

15 january 2013

One of my biggest problems with the “Occupy” movement is that I am not exactly sure who is in the 1%.  Eileen Taylor, who appears in this decision by the New York Tax Appeals Tribunal, seems like a candidate.  Her employer, Deutsche Bank, played a significant role in the housing bubble, and her career has continued to thrive.  She has not lost total faith in the US housing market.  Her investment advisor told her to keep her cooperative apartment on Riverside Drive in Manhattan and her vacation home in Valatie, Columbia County, New York for diversification even after she spent $2,000,000 on a fixer-upper in London.  Her advisor was probably not a SALT (State and local tax) expert.  It is very hard to convince the state of New York that you have abandoned your New York domicile, which is what she was trying to do.  Here is the story:

In November 1998, the acquisition of Bankers by Deutsche Bank, a German-based financial institution with significant operations in the United Kingdom and in the United States, including New York City, was announced. At the time of this announcement, petitioner [Ms. Taylor] was working for Bankers in Singapore under a one-year assignment, which had commenced as of March 1, 1998. Petitioner returned from Singapore to New York in December 1998 to work on the integration of Bankers into Deutsche Bank. On June 4, 1999, Bankers was formally acquired by Deutsche Bank.

Petitioner had intimate knowledge of Bankers through her work experiences and was asked to continue working in New York City on the post-acquisition integration of the two banks. Petitioner accepted this offer and was employed by Deutsche Bank Trust Company, located at 60 Wall Street, New York, New York.

Shortly after the summer of 1999, and in light of petitioner’s work on the integration of the two banks, Deutsche Bank as the new owner of the combined banking operations offered petitioner the newly created position of Chief Operating Officer (COO) for global foreign exchange operations. Petitioner’s Deutsche Bank home office was designated as Deutsche Bank Securities, Inc., New York, New York. However, the new COO position was with Deutsche Bank Trust Company’s associated corporation, DB Group Services (UK) Limited, and was a “host” location position based in London. Although petitioner was required to come to New York for business meetings, the COO position had to be staffed in London and could not be handled from the New York office.

Petitioner viewed this as an excellent opportunity for career advancement and, after closing personal affairs in New York, she relocated to London on August 26, 1999, and has lived in London since that time.

In early 2002, petitioner was offered a larger, enhanced role as the COO for the institutional client group, where she would have direct supervisory responsibility over approximately 750 people, as opposed to her previous position as COO of global foreign exchange operations where she had direct supervisory responsibility over approximately 200 people. As with her previous position, petitioner’s new position had to be staffed in London and could not be handled from another location. Her new position was much more visible and prestigious within Deutsche Bank and enhanced petitioner’s career at the bank.

In 2002, petitioner began looking to purchase a residence in London. She was successful in finding a suitable residence and, on or about March 14, 2003, petitioner purchased what is described as a “terrace house,” including three floors and a garden patio, located in Kensington, London, for approximately two million dollars.  After completing some renovations, including painting inside and outside, redoing the wiring and restoring the wood floors, installing a completely new kitchen with new appliances, installing a new bathroom, installing custom cabinetry in the dining room and living room, and new shades and curtains for all the windows, petitioner moved into this residence in June 2003

Petitioner owns two residences in New York State. The first, considered her “historic” domicile, is a cooperative apartment purchased in 1994 at a cost of approximately $410,000.00 and located on Riverside Drive, New York, New York. Petitioner’s RiversideDrive cooperative apartment consists of 1,700 square feet, and includes two bedrooms and a maid’s room. The second residence is a farm house purchased in 1997 at a cost of approximately $245,000.00 and located in Valatie, Columbia County, New York. Petitioner’s Valatie, New York, residence, described as a “vacation house,” consists of a four-bedroom farm house with a barn situated on 11 acres of land. The combined cost of these two residences was approximately $655,000.00.

Petitioner decided to keep her two New York residences, partly upon the recommendation of her investment advisor to retain these properties for investment purposes as part of her portfolio diversification. In testimony, petitioner described the London residence as a “home.” Petitioner’s financial circumstances and wherewithal are such that the ownership and maintenance of the two New York properties do not constitute an inconvenience or burden.

Frankly, it was being able to maintain the two New York residences without breaking a sweat that made me tag Ms. Taylor as a possible one per center.  I had forgotten about Deutsche Bank’s role in the housing bubble.  That brings up my other problem with OWS, Ms. Taylor seems like a really nice person.  Although some of this might be self interested as she was trying to make a point I think there was sincerity in it: