Nite Moves (screengrab)

Nite Moves, a strip club in Albany, N.Y., deserves the same treatment as the New York City Ballet in the eyes of the tax man. That's the basic argument before New York's highest court right now. Nearly a half-million dollars are at stake if the establishment wins the case and achieves tax-exempt parity with other fine purveyors of the terpsichorean arts. Public Radio International's Studio 360 reports that the club has been victorious in the past:

The case has gone back and forth. Nite Moves won the first round of litigation in 2009, but an appellate court reversed that decision a year later.

At issue is whether exotic dancing falls into the legally defined category of "choreographed performance."

The Albany-area club, which serves neither food nor alcohol, claims that its cover charges and fees for private dances cannot be subject to sales tax simply because the dancers grind more than they jeté.

In court papers Nite Moves' Attorney Andrew McCullough has contended the state has often acted as "dance critic," even allowing amateur dance groups tax breaks on ticket sales. Mr. McCullough has also had an author of books on dance testify about the standard moves in pole-dancing as well as the fact that legendary choreographer Georges Balanchine would sometimes go to burlesque shows for inspiration.

The court is expected to issue a decision later in the Fall, and the ruling could ripple across the country, affecting similar cases in other jurisdictions.

It is less likely any legal legitimizing of exotic dance will end up with collaborations between establishments like Nite Moves and, say, the Metropolitan Opera, but we can dream.

Kanye West’s newest album, Cruel Summer—a compilation of his G.O.O.D. Music label's artists—is to be released next Tuesday, September 18. A few of the tracks have already been released, but today saw the release of the album's opening track, To The World, which features R. Kelly singing the hook. And at two minutes and 25 seconds in, the following verse comes from Mr. West:

I need a new crib to hold my plaques
Rick Ross had told me that.
Said I'd be all up in Goldman Sachs.
Like, "These ni**as tryna hold me back
These ni**as tryna hold me back."
I'm just trying to protect my stacks
Mitt Romney don't pay no tax
Mitt Romney don't pay no tax.

For those in need of contextual help herein: Rick Ross is a fellow rapper, and "stacks" refers to money. In other words:

• He's just trying to protect his money and find a decent place to invest it.
• He's been advised by fellow rapper Rick Ross to invest it with Goldman Sachs Private Wealth Management, because people will no doubt try to prevent his liquid wealth from growing, by hook or by crook.
• Take Mitt Romney, for example!
• Mitt Romney found a way to ostensibly evade the full reach of the Internal Revenue Service—or at the very least, a tax rate for people as wealthy as he is—and if Mitt Romney doesn't have to pay taxes, why should Kanye West?

 
Previously, Kanye West famously told the world that former president George W. Bush "does not care about black people" and later imagined his eventual foray into fatherhood:

And I’ll never let my son have an ego.
He’ll be nice to everyone
wherever we go.
I mean
I might even make him be Republican
So everybody know he love white people.

And now Mitt Romney can say his taxes have been rapped about. Which his opponent can not.

fkamer@observer.com | @weareyourfek

Best to start saving, just in case. (Tax Credits, flickr)

Time. We really have so little of it. Just a few years ago it seemed like condo and co-op owners had all the time in the world with their beloved tax abatement and now it's expiring.

There are plenty of abatements out there, of course—ones for new construction and capital improvements, senior citizens and veterans, but this one is special. This is the one that gives a generous 17.5 percent property tax reduction to just about all co-op and condo owners. And it's going to die on June 30 if an extension doesn't come along to save it.

The situation has looked bad before, of course. The abatement, first passed in 1996 to help offset the disparity between the tax rates of co-op and condos versus one- to three-family houses, has required several renewals. Still, have things ever been this dire?

"I don't think that it's ever been this down to the wire," said Eva Talel, an attorney at Strook & Strook & Lavan who specializes in real estate law.

It's been a pretty sweet abatement. Owners can get the abatement on up to three apartments in the same building and none of them have to be a primary residence. There's also no cap on the assessed value of a property.

Several bills are pending in the state legislature to extend the abatement, so not all hope is lost, and two of them would extend the current policies through 2016. The third, sponsored by the city, would only extend the current policy for one year before instituting a much less generous one.

The tax abatement costs the city hundreds of millions of dollars in lost revenue. Maybe the city's being greedy here, as the Real Estate Board of New York loves to point out, real estate taxes are the largest single source of revenue for the city. But the cash cow could be producing a lot more milk.

Under the city's new guidelines, the unit receiving the abatement would have to be a primary residence, ruling out investor properties and pied-a-terres. It would also restrict the benefits to the first $100,00 in assessed value, according to Ms. Talel, which makes a pretty huge difference in tax savings for most New York apartments.

"The impact would be felt the most in Manhattan," Ms. Talel said. "The assessed valuation for buildings are getting higher and higher. The combination of that and capping the benefit at $100,00 per unit will have a very serious impact and result in a big tax increase for co-ops and condos."

Ms. Talel said there is confidence in the real estate community that at least one of the bills will pass before the new fiscal year starts July 1. Will the wait cool New Yorkers' recent ardor for buying rather than renting? Probably not. When it comes to real estate in New York, the choices are basically expensive and more expensive.

Still, even an extension does pass, the real problem remains: the tax code is unfair, and while the abatement may address disparities between two categories of property owners, the people who are left to bear the brunt of the city's real estate tax bills don't own property at all—they're renters.

Multi-unit apartment buildings pay the high rate without the benefit of abatements, a cost that is passed on to renters, according to a report NYU's Furman Center for Real Estate and Urban Policy that was released this spring.

The tax code "effectively requires renters to subsidize owners, even though the demographic and socioeconomic characteristics of the two groups suggest that renters already are having a harder time meeting their housing costs," according to the report.

Ok. We admit that rewriting the tax code sounds miserable. But wouldn't it be better than abatements and special programs and incentives and favors to different constituencies? New York is a city of renters, many of whom live in multi-unit buildings, so why keep tax codes that privilege owners of single-family homes?

kvelsey@observer.com

President Barack Obama is set to roll out his backing of The Buffett Rule, which will be at the center of his campaign, reports the Financial Times. The Buffett Rule is being pitched as a "simple principle" of American tax codes inspired by Warren Buffet's now-famous claim that his secretary pays a higher tax rate than himself because of the voodoo implicit in capital gains tax rates and the like that benefit the country's top earners. It is brilliant, if only for already being one of the most well-branded pieces of politics in the history of legislation. Think about this less as a political play, or a piece of propaganda, and more one of brilliant advertising work.

Consider:

1. The Buffett Rule could do for tax increases what Air Jordans did for kicks.

It has a celebrity endorsement in Warren Buffett, a billionaire who less resembles the flesh-hungry Shylock-esque Sith of New York City/Gomorrah, and more a steak-and-corn eating grandpa who thinks giving young people candy is the most amusing and rewarding thing in the world. Who also, as it happens, is a billionaire.

As legendary ad man and famed Esquire art director George Lois once explained:

"Enlisting a celebrity to sell cat food, an airline, off-track betting, an analgesic, or a lube job would seem to be a delusional strategy fraught with irrationality. But let’s face it, it’s a star-struck world.”

True story. And simply by existing, famous people sell simple ideas. Justin Bieber inherently sells acne soap. Jordan inherently sells basketball shoes. And Warren Buffett inherently sells the appeal of more money.

This is despite the fact that most Americans probably can't tell you how Warren Buffett made his fortune, or even the name of the company he owns, but they can tell you in a side-by-side comparison that he resembles Santa Claus more than the other billionaires (who are either marginally human computer geeks, Bond villains, or ominous rich guys who live elsewhere other than Omaha, which most Americans probably envision as Pleasantville).

Take note: Many have asked why they didn't just call it The Romney Rule, after Obama's most capable tax-skirting opponent. Besides the fact that branding this The Romney Rule would be a canny neg on his opponents campaign, it demonstrates a keen awareness of one of Romney's greatest weaknesses: He's got the charisma of gracious Jeopardy loser. Also, he's not the richest guy in America. He's just friends with the others.

2. The Buffett Rule is, right now, whatever it wants to be.

The Buffett Rule is being pitched as a cure-all for all of America's financial woes. Among the claims proponents are rolling out, via the FT, it would:

"...Prevent distortions in the US economy, help tackle rising income inequality, and shrink US budget deficits by $47bn over ten years."

Fantastic! Even though there's no specific legislation being pitched as part of The Buffett Rule, it sure as hell sounds nice. For the supposed Harvard-educated elitists of the Obama Administration to come up with something even more simple to explain than George W. Bush's namesake doctrine—more taxes for rich people, less taxes for not-rich people—is a stunning advertising coup.

3. The Buffett Rule's opponents are as creative as paste-eating children.

As you could imagine, some people aren't too happy about Obama's economic pop song. For one thing, they just don't want to pay higher taxes. For another, as John Gapper explained, most millionaires already pay a higher tax rate than Buffett's secretary. But in their displeasure, they demonstrate the most powerful aspect of The Buffett Rule: It's branding. To fight it off through press lines, opponents have taken to renaming The Buffett Rule.

And when the "left-brain" of shining economic debate kicks in, get out of its way:

• "The Stupid Rule" - Kevin Hassett, senior fellow at the American Enterprise Institute.
• "The Irrelevant Buffett Rule" - Barry Diller.

 
And...that's about it. That's what the opposition is working with right now.

The Buffett Rule is the Kony 2012 of taxes, except instead of servicing the needs of America's White Savior Industrial-Complex, it appeals to a way more powerful part of the human psyche: That which thinks about having to give the government less money.

Another crucial difference: It's creator isn't going to end up pounding the pavement in a moment of frothing psychosis on TMZ, because he's the richest man in America. Just like he can pay to pay more taxes, he can pay for someone to do that. And watching anybody try to take that idea down—especially its creativity-starved opponents—will be a hell of a show. In the mean time, ad agencies around the world should take note. This is how you roll out a celebrity endorsement: By having them shill something everybody wants, regardless of whether or not they already have it.

[Image via Getty]

fkamer@observer.com | @weareyourfek

These hats are only $5! (Getty Images)

No, it's not an April Fool's Day prank: Starting yesterday,the New York State sales tax exemption for clothing under $110has been put back into place, after being off-again, on-again since 2000. So go crazy at Macy's, y'all!

From the Department of Taxation and Finance:

"Sales of eligible clothing and footwear costing less than $110 per item or pair are exempt from the state's 4% sales tax and local tax in those localities that enacted the exemption." This also includes the 4.5% city, 4% state and .0375% Metropolitan Commuter Transportation District tax (whatever that is).

This is great news, although what was the last item of clothing or footwear you bought that cost $110? Even H&M and Target have lines more expensive than that. But we bet customers at Buffalo Exchange and UNIQLO are having a field day!

Yes, New York is coming after it's beloved yogis, and all the supposedly blissed-out folks who practice the ancient leg-bendy ritual fitness of choice.

Last year, after New York State's Education Department attempted to subject Yoga Studios to licensing regulations—in which fees are pulled from making yoga instructors become "teachers," thus generating revenue for the state—the "Yoga Bill" was passed exempting yoga and martial arts studios from state educational certification.

Now, the state's trying a new tactic to tax Yoga studios: auditing them under the claim that they should be subject to the same kinds of tax (4.5%) and regulations as a fitness studio, as opposed to a dance or movement studio, which yoga studios lay claim to being more akin to. They're also gunning to get yoga studios to treat their teachers—currently independent contractors—as employees. Finally, they're trying to subject them to the idea that they are indeed fitness studios, which would require licensing fees for the spaces they are housed in.

The nonprofit that lobbied to get the original Yoga Bill passed last year—Yoga for NY—fights off these claims:

Yoga classes are not specifically listed among the services and classes that are taxable. The matter is therefore open to interpretation. But this could mean adding close to $1.00 to a $20 class, a cost that gets passed on to the student...One studio is being sued for three years of back taxes...While every yoga studio should look out for the welfare of its teachers, almost no studio but the very largest could easily survive when burdened with the thousands of dollars in extra cost that [turning independent contractors into employees and certifications] would represent.

To be fair, this is all true: Yoga could theoretically become—like cigarettes, and soda—much more expensive to this city. That said, Yoga looks like a pretty exceptional way to make a living avoiding some of the more foreboding taxes of New York City businesses even remotely like it have to face. Or it did. Until now.

What will New York's Yogis do? With any luck: Let slip the downward dogs of war with the tax man! For more information, the fight lives "om" here.

fkamer@observer.com | @weareyourfek

We're in the money. We're in the money... (Getty)

In light of the passage of Governor Cuomo’s tax bill last week, The Observer decided to informally poll the rich. What’s your take, you happy few?

“Look, nobody likes to pay higher taxes, but everybody has to contribute or we’ll never get anything done,” the real estate investor and periodicals publish Mortimer Zuckerman told us a day after the new taxes were announced. “In that sense, it’s what I always call the evil of two lesser. I’m very comfortable with this thing. It was done, and we had to do it.”

His contempt for Washington has not lessened, however. “We have to do it at the federal level, now, and it wasn’t done, and the consequences of that have been disastrous. The greatest issue now facing it is the debt this country is assuming. Look what’s happening in Europe.”

Mr. Zuckerman is not alone in support for the governor. Ken Langone, the Home Depot founder, has spoken widely of his responsible moves. On Fox Business in November, he called for a tax on the wealthy and praised the governor, comments he echoed last week on WNYC. “I thought he’d made significant progress on the expenditure side and the thing we didn’t need in New York was gimmicks,”  Mr. Langone told the radio reporters. “So I think what he’s done is to eliminate a gimmick.”

There is widespread agreement, that unlike the president, Mr. Cuomo was making fiscal decisions, not poltical ones, and he did the challenging work of cutting first, raising taxes later, and even then, it’s less than everyone had been paying. “I think taxes are headed in the right direct,” Mr. Zuckerman said with a chuckle.

The millionaire marvel has swept the state, too. Setting aside his champagne at the French Institute gala last week, Robert Wilmers, CEO and chairman of Buffalo’s M&T Bank said he was conflicted about the tax proposal, but he ultimately sided with the governor. “On the one hand, I’m feeling that taxes in the state of New York are very high,” Mr. Wilmers said. “On the other, I have great respect for the governor, and he’s in a very difficult position.” He said he saw the taxes coming, given his membership on the governor’s committee on finance, which lessened the sting.

“Everyone saw this coming,” another Wall Street executive told us. He agreed that it was inspired leadership, though the risk remained that if the tax stayed too long, there was nothing to stop jobs and millionaires from fleeing to states like Florida or Texas. Never mind the recent studies that have shown New York gained millionaires after the 2009 surcharge was added.

A financial planner representing numerous millionaires said the state taxes were nominal compared to what was being debated in Washington, so that is what really has his clients on edge. “It’s not so much the taxes as the not-knowing that is driving everyone crazy,” this person said.

Still, not everyone is convinced. A healthcare executive at the French Institute soirée said the governor was the same as the rest of them. “This is all politics, and anyone who tells you otherwise is just lying to themselves,” the bow-tied gentleman said. “When he proposed never raising taxes, the political mood was very different, you had all these Tea Party wackos running around. The governor is very cautious, as I’m sure you know, so he was attuned to that. Now you have all these Occupy Wall Street wackos running around, so those are the people the governor is paying attention to.”

mchaban [at] observer.com | @MC_NYC

The happy couple.

Edgar Bronfman Jr. announced yesterday that he was stepping down from his position as the chairman of Warner Music Group, effective January 31. Turns out he is stepping down from his perch at 812 Park Avenue, as well.

According to city records, Mr. Bronfman has transferred sole control of the triplex penthouse to his wife Clarissa Bronfman, with whom he bought the home in May for $16 million.The transfer of ownership was made for all of $0.00, which suggests it may be for tax reasons—a not uncommon occurrence in the confines of tony Upper East Side abode.

Initially, The Observer sighed, fearing the worst. A divorce on the horizon? It's happened before. "I love my wife," Mr. Bronfman said via a spokesman. He declined to comment further on the purpose of the transfer, though it does not appear to be related to the Warner deal—unless of course a fat, taxable severance in need of offsetting is involved.

Correction: An earlier version of this article said Mr. Bronfman was stepping down as CEO, which he did earlier this year, not chairman, the move announced yesterday. The Observer regrets the error.

eknutsen@observer.com

As if the headline "Meth Addict With Flame Thrower to Be Spared Prison as States Cut Spending" wasn't enough, there's also an actual story behind it, the gist of which is that criminals labeled as "low level offenders" in California are going to be cut free because of spending cuts to prisons.

But the star of the headline is only given a few words' space in the piece, twelve paragraphs down:

Among recently convicted felons who wouldn’t face prison time in the future, according to Cooley: a methamphetamine addict caught in possession of a flame thrower, a woman who performed abortions without medical training and a credit-card hacker responsible for $6.5 million in losses.

Lest this be a lesson in sensational headline writing, the Bloomberg writer behind this report did the due diligence of linking to L.A. County D.A. Steve Cooley's February report from which that story is culled. Timing aside, yes, it's as much fun as it sounds. In fact, they undersold it. The gentleman in question had a rocket launcher:

In People v. Powell, BA338304, the defendant was a heavy methamphetamine user living in an upscale neighborhood. The police were called when the defendant suffered from severe methamphetamine induced psychosis and his behavior was of great concern to the neighbors. Inside the defendant’s home police found, among other firearms and destructive devices, a rocket launcher, tracer rounds, a flame thrower and methamphetamine. The defendant’s psychosis and access to an arsenal of weapons made him incredibly dangerous. The defendant was sentenced to eight years in state prison.

In an "upscale neighborhood" (if you count Torrance) no less! Either way, if California intends on not spending more cash on prisons, thanks to Bloomberg, you now know: rocket-launcher-toting psychos on meth will be walking around L.A. And that's how tax cuts work!

fkamer@observer.com | @weareyourfek

The city's Department of Finance began using a new formula along with new computational software last year to calculate taxes for the city's vast swathes of co-operative housing stock last year. It resulted in huge new assessments for hundreds of buildings, according to The Journal, driving up some building prices nearly 150 percent. Queens was especially hard hit, where one-third of co-ops saw assessments jump by more than 50 percent. Part of the shock comes because the city didn't notify homeowners in advance of the changes.

Property taxes have shot up as a result, causing consternation among the political class in a year when many elected officials are promising not only no new taxes, but caps on automatic increases. The Department of Finance has sought a solution by capping assessments at 50 percent, but the pols remain unsatisfied, the Post reports. "Cutting assessed values on co-ops from 147 percent to 50 percent is like saying you don't have to drink a full cup of arsenic, you only have to drink a half cup," State Senator Toby Ann Stavitsky of Queens said. "Either way, it's poison--and so is this tax increase."

The city's solution would cap tax increases at 10 percent, but Council Speaker Christine Quinn has called for an increase of no more than 8 percent, according to the Post, while Stavitsky prefers a cap of 6 percent and has introduced a bill in Albany to that effect.

mchaban [at] observer.com | @mc_nyo