Has New York figured out how to tax the rich?
Hochul and Mamdani are backing a new tax on pricey second homes
New York Mayor Zohran Mamdani ran for office promising to raise taxes on the rich to pay for new social welfare programs. Now he is backing Gov. Kathy Hochul’s proposal to levy a new tax on expensive second homes.
Manhattan “may have more billionaire residents per square foot” than just about anywhere in the world, said New York’s ABC 7. But many of the “luxury, multi-million dollar apartments” in the city are second homes. Hochul’s proposed “pied-à-terre” tax would apply to more than 13,000 such residences worth more than $5 million. Those locations are owned by the “super wealthy” to “store their wealth to benefit from New York City’s real estate market,” Mamdani said in a statement. Critics say the proposed tax will hurt the city’s construction and real estate industries.
The proposal comes as blue states are looking to raise taxes on wealthy residents. Golden State voters are contemplating a “one-time, 5% ‘wealth’ tax on roughly 200 California billionaires,” said USA Today. And the Maine Legislature this month passed a “millionaire tax” on the Pine Tree State’s wealthiest residents, said Maine Morning Star. Getting the highest earners to “pay just a small percentage more” will help solve the state’s revenue problems, Democratic State Rep. Drew Gattine told the publication. But there is a backlash.
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What did the commentators say?
New York’s business community believed that the moderate Hochul “would surely stand in the way” of Mamdani’s tax-the-rich ideas, Crain’s New York Business said in an editorial. And Hochul is “adamantly opposed to the broader tax hikes Mamdani continues to champion” to close the city’s budget gap. But her backing of the second-home tax “moved the needle significantly to the left.” A similar proposal in 2019 failed after getting “scorched-earth opposition” from New York’s real estate sector. Broader tax reform would be more beneficial, but it is easier to sell voters on taxing “foreign oligarchs who spend two weeks of the year in a luxury Billionaires Row penthouse.”
If the concern is that taxing the rich will drive out wealthy New Yorkers, the second-home tax “threads that needle by targeting people who are, by definition, not full-time New Yorkers,” The New York Daily News said in an editorial. The people who buy second homes in the city do so because it is a “global hub of business and culture” and can “happily” pay the tax. They already “enjoy and benefit from the enormous services and amenities that the city offers,” so they can “pay a little bit more on their assets” to contribute to that vitality.
What next?
One notable second-home owner is loudly criticizing the proposed tax, said The Hill. “Mayor Mamdani is DESTROYING New York!,” President Donald Trump, a Florida resident who owns a residence at New York City’s Trump Tower, said on Truth Social. Mamadani and Trump had previously found “common ground on the issue of affordability.” That ground may be lost. “The TAX, TAX, TAX Policies are SO WRONG,” Trump said.
