People who buy luxurious second homes in New York City, but live most of the year elsewhere, would have to pay a new tax on the properties under a tentative agreement — an initiative to appease Mayor Zohran Mamdani and liberal voters who launched him into office with chants of “tax the rich.”
But the deal, part of a sprawling budget plan announced Thursday by Gov. Kathy Hochul, would stop short of a major priority for the mayor: a broad tax increase on the state’s wealthiest residents.
The proposed tax on multimillion-dollar second homes, known as pied-à-terres, comes as Democrats are trying to address voter concerns about affordability ahead of this year’s midterm elections without alienating the business community.
Critics, including prominent business leaders, Republicans, and some moderate Democrats, have warned that slapping new taxes on rich people who maintain apartments and townhouses in New York, but don’t consider it their primary home, will just lead the very wealthy to abandon the city.
The details of the proposal are not yet finalized, but Hochul said it would apply to homes worth over $5 million. It would only apply to second homes in New York City, not other state playgrounds for the rich, like Long Island’s mansion-dotted Hamptons.
Hochul estimated the tax would bring in at least $500 million for the city annually.
After the governor’s announcement, the state’s legislative leaders warned that much was still left to be negotiated. “There is no budget deal,” said Carl Heastie, Democratic speaker of the state Assembly, adding that much of the financial backbone of the budget had yet to be decided.
Meanwhile, the New York City chapter of the Democratic Socialists of America, of which Mamdani is a member, blasted out text messages to supporters saying the budget proposal doesn’t go far enough to close New York City’s multibillion-dollar budget deficit or fund needed social programs.
“Hochul is trying to shove a deal down our throats with no new taxes on the rich besides the pied-a-terre tax, which only fills 10% of NYC’s deficit,” the organization’s co-chair, Gustavo Gordillo, said in a statement.
Hochul, a Democrat running for reelection, opposes broader tax hikes on the rich, saying it risks encouraging wealthy residents and businesses to flee to lower-tax states.
“We were able to accomplish this extraordinary budget, with all these accomplishments, without raising statewide taxes at all,” Hochul told reporters Thursday.
Mamdani has cast the pied-a-terre tax as a victory, while still pushing — sometimes in personal terms — for more, targeted tax hikes on the very wealthy.
Last month, the mayor, seeking to boost excitement about the new tax plan, posted a video of himself standing outside a luxury building where billionaire hedge fund CEO Ken Griffin purchased a penthouse for about $239 million.
“When I ran for mayor, I said I was going to tax the rich,” Mamdani said in the clip, which has been viewed on X more than 52 million times, before mentioning Griffin by name. “Well today, we’re taxing the rich.”
Griffin later said he was shocked by the video, calling it “frightening,” and potentially threatening to his safety. He added that the CEO of UnitedHealthcare, Brian Thompson, had been shot to death in the same neighborhood, allegedly by someone upset about perceived corporate greed. Griffin said his company has decided to expand its operations in Miami.
“What the mayor of New York has made clear to my partners, and principally my New York partners, is we need to double down on our bet in Miami,” he said at an economic conference in California this week. “Because we want to be in a state that embraces business.”
The post New York is going to tax the wealthy’s second homes, but not tax wealth itself appeared first on Fortune.
