Hours after Gov. Kathy Hochul declared that she would back a new surcharge tax on so-called pieds-à-terre in New York City worth more than $5 million, various stakeholders on Wednesday were trying to game out if the proposal would become reality.
Prior attempts have failed, often under the weight of opposition from real estate interests and even the union representing doormen.
But this year may be different. The election of Mayor Zohran Mamdani, a democratic socialist, has given the tax-the-rich movement visibility and momentum, and Democratic leaders seemed enthusiastic about the proposed tax on pieds-à-terre, or second homes, in the city.
Mr. Mamdani took to social media to claim victory, releasing an elaborately scored video shot in front of one of New York’s most expensive buildings in which he proclaimed, “Today, we’re taxing the rich.” City Council Speaker Julie Menin, a moderate Democrat, called it a “smart, sensible proposal,” with a spokesman adding that she would support local legislation to impose the tax, if necessary.
And despite having the barest of details on how the tax surcharge would be implemented, state lawmakers welcomed the proposal.
“It’ll fly pretty easily,” Michael Gianaris, the deputy leader of the Democratic majority in the State Senate, said of the proposal.
Another factor in the proposal’s favor is that it is not being considered as a stand-alone bill; Ms. Hochul intends to include it in the state budget. Under that scenario, the tax proposal will not be voted on separately. It will instead be largely hashed out in closed-door negotiations between the governor and the leaders of the Senate and Assembly.
That will make it harder for the tax’s opponents, including the Real Estate Board of New York, a powerful industry group, to lobby effectively against the proposal.
The group nonetheless warned on Wednesday that the tax would “eliminate thousands of construction jobs, lower property values and raise costs for New Yorkers.”
Ms. Hochul, a centrist who is seeking re-election this year, has been steadfast in her opposition to increasing income taxes. But she said on Wednesday that she had come to support the proposal to tax second homes, which often sit vacant for most of the year.
She told reporters in New York City that calling for a surcharge like similar ones adopted in Paris and Toronto was a matter of fairness.
“Those who benefit from the city without living in a full-time capacity should contribute to the costs that it takes to run the city: public safety, world class parks, amenities, the roads, the subway system,” she said.
“This is not a tax on residents,” she added.
But exactly what effect the measure would have on New York City’s $5.4 billion budget gap is less certain. Ms. Hochul had earlier pledged to provide the city a one-time payment of $1.5 billion. More recently, Mr. Mamdani has identified $1.3 billion in cuts, on top of savings he had initially announced.
The Hochul administration said the tax would yield “at least $500 million” in recurring revenue. But an analysis of a similar proposal from the Independent Budget Office put the estimate at just $232 million in 2020.
Ms. Hochul told reporters that her team was working closely with New York City to set rates that would raise the targeted funds. She estimated that the tax would affect roughly 13,000 units.
“We’re talking about people who are ultrawealthy,” Ms. Hochul said on Wednesday. “There are literally Russian oligarchs buying up properties, driving up the property values. They’re all welcome to stay, but I think there’s a logic behind them also contributing to the city.”
There has long been a desire to tax wealthy foreigners living in New York, but such efforts have often run into constitutional issues, said the Manhattan borough president, Brad Hoylman-Sigal, who introduced a version of the pied-à-terre tax when he served in the State Senate. Mr. Hoylman-Sigal’s proposal broadened the surcharge to include all owners of second homes above a certain threshold.
“That is, I think, the most elegant part of the concept: You’re capturing people who use New York City as an investment haven,” he said.
He framed the pied-à-terre tax as something of a win-win for New York City: The only way for wealthy property owners who live outside the city to avoid the surcharge would be to become a city resident and pay city income tax. If owners choose to sell, the tax burden would fall to the new owner, and the city would collect taxes on the sale.
Even so, Mr. Hoylman-Sigal said the proposal would have plenty of hurdles to overcome, from the mechanism for assessing the value of properties to the powerful real estate lobby who helped sink the idea back in 2019.
“This annual tax will weaken the city’s broader economy — all without addressing its fiscal problems in the first place,” James Whelan, the president of the Real Estate Board of New York, said in a statement. “Its impact will reach far beyond a small group of owners.”
The organization believes that the city also stands to lose income from the transfer tax and mansion tax, a tax on properties that sell for more than $1 million, as fewer high-end properties are constructed and sold. The technical challenges of determining who owns a pied-à-terre and how to determine the value of the property on which to base the tax are also factors that would make implementation too difficult, real estate board officials believe.
Mr. Whelan said that the governor and state legislators should instead “focus on policies that encourage investment and housing production to create a more affordable city, not ones that stifle its growth.”
On Wednesday, Mr. Mamdani attended a Tax Day Forum with two economists, Gabriel Zucman and Joseph Stiglitz, whose work focuses on global income inequality. The group sat in front of a sign that read “tax the rich” in capital letters. Earlier, the three men wrote an opinion piece in The Guardian calling for changes to the country’s unequal tax system.
Mr. Zucman said the idea that the wealthy would flee the city after the tax was “largely a myth” based on data that correlates changes in tax policy to migration. The United States, and particularly New York City, are excelling when it comes to income inequality, Mr. Stiglitz added.
Mr. Mamdani has called for raising taxes on high earners and corporations to fund proposals such as free buses and universal child care since he began his campaign for mayor in late 2024. Ms. Hochul has resisted calls to tax the wealthy, a chant she has faced from protesters at public events.
But the city’s looming $5.4 billion budget deficit made the urgency of taxes on the wealthy an even more pressing idea, city officials said. Mr. Mamdani dangled the idea of a 9.5 percent increase on property taxes if the state failed to tax the wealthy to raise revenue, but he all but abandoned that proposal after political blowback.
Mr. Mamdani called the idea that millionaires and billionaires would leave the city because of the tax an “imagined exodus” and said he was more concerned about the 200,000 Black New Yorkers who had left the city in the two decades between 2000 and 2020, calling it the “cost of inaction.”
In the afternoon, the mayor spoke at a rally with Local 32BJ of the Service Employees International Union, whose 34,000 members are threatening a strike.
In a sign of how the political environment has shifted, the union, which opposed the tax five years ago, did not immediately reject Ms. Hochul’s proposal. A spokeswoman told The New York Times it is examining the plan.
Grace Ashford covers New York government and politics for The Times.
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