Edit: You start somewhere and keep tightening the policy ratchet as loopholes or other policy leakage are detected. You've found a clever hack? Congrats! The law is updated accordingly.
The ones who will be hit are those who do not have the legal frameworks in place to erect such structures - Joe Homeowner who inherits grandmas city house, both worth slightly above the magic 7 figures.
Nobody affected by this is middle class. Nobody that will be affected by this in the next 20 years would be considered middle class by any rational measure.
Inflation is cumulative.
Ken Griffin spend 183 days a year in Florida, so he pays no NY state or NYC income tax. He does pay ~1.8% income tax on his $238 million home though. Now he will pay significantly more. (His property is also assessed at a far lower number.)
Thinking stuff like healthcare, education, housing, public transport, cycling infrastructures or even law enforcement.
Why's there an obsession with the $1m cutoff?
The dollar has been turned to dust. $1M is not that much money, especially in housing, especially in NYC.
Why tax $1m second homes and not second homes generally? Effectively, you're going to tax almost all second homes.
So why the arbitrary cutoff?
Chicago wanted to add a "millionaire's tax" on $1m+ home sales. At least in Chicago, that isn't effectively taxing the vast majority of housing (and total value) - so there's some distinction worth having.
> State lawmakers on Wednesday passed the tax on nonprimary residences in order to help close the city’s budget gap. The so-called pied-a-terre tax will be imposed on second homes valued at $1 million or more. It’s expected to raise $500 million in revenue.
> Details on the tax obtained by CNBC show that the property tax would take effect in two different phases. In the first two years – the tax years 2026-2027 and 2027-2028 – condos and co-ops valued at more than $1 million by the city’s Department of Finance will be subject to the tax. Properties worth between $1 million and $3 million will face a 4% annual tax; properties valued at $3 million to $5 million will face a 5.25% tax; and those above $5 million will face a 6.5% tax.
The rates sound a bit steep (although I'm not familiar with the baseline tax rates on properties of that value) but the principle is sound. In the UK, the equivalent tax on housing is council tax, and local councils in Great Britain (but not Northern Ireland) are empowered to double the rates of council tax on second homes.
Very interesting to know. Many readers may not be aware that council tax in the UK is quite regressive and tops out at ~£4-5K / year on properties valued higher than ~£1M. So you can own a £5M GBP house and still pay only £5K / year for an annual effective property tax rate of just 0.1%.
This is one of the reasons buying a luxury house in the UK is comparatively quite cheap in terms of total cost of ownership compared to many states in the US where you have to pay much higher property tax rates, insurance, and so on.
So even if the council tax is doubled on a second home, you still might be paying only 0.2%. Compare that to an average property tax rate of ~1.8% in NYC (before pied-a-terre).
Is there a better way to think about this?
Its very roundabout as NYC can only make taxes for NYC, but the net aim is to increase the effective tax rate for the ultra-wealthy, using secondary property as a proxy for that.
Edit: AND WE (I) LIKE THIS because progressive taxation is the core play of fixing income/wealth inequality
One wrinkle I haven't heard much discussion of -- cities respond to incentives too. NYC is a global destination for the mega wealthy. If it turns out the uber-rich don't mind paying and this becomes a cash cow for the city, that creates incentives for the city to cater to them and try and get more uber-rich people to have second homes in the city.
Are you under the impression that the wealthy keep their money in a savings account?
They have more money than they can spend so they invest it, what do you think investment does?
Because you would know what the ultra wealthy think ?
It's people who use their money to generate more value and employ lots of people that are, consistently, leaving. That means that thousands of jobs for the lower middle class are leaving and going to somewhere with a more favorable business environment.
And that's not good (well, it's good for the other city).
It's easy for people in tech hub cities to think that's never going to change but history shows boom towns going bust repeatedly. Sometimes they come back (Seattle). Sometimes they don't (the whole Rust Belt + Upstate NY).
And once the talent pool from a few large companies moves to another metro, whole industries relocate their offices to chase it.
I suppose in Ken Griffin's case, even if his residence is owned by an LLC he controls, he is known to reside in it. But how effective is this legislation when the purpose of LLC ownership is expressly anonymity and accounting convenience?
Actual title is "New York passes Mamdani’s pied-a-terre tax"
I live in FL so if you have questions about insurance feel free to ask.
But in all seriousness, they all already own homes in Florida.
https://www.bostonglobe.com/2026/05/25/metro/millionaires-ta...
Unfortunately, doing that is very unpopular. Unpopular enough that we see states trying to get rid of property taxes, and those providing limits to increases, which basically guarantee misallocation and rising prices. But what is economically reasonable and what the voters like have very little to do with each other.
> New York passes Mamdani’s pied-a-terre tax. Here’s who pays and how much
(The submitted title at time of commenting is "New York Passes Tax on the Ultra-Wealthy)
It's a tax on second homes. If you thought it was a wealth tax from the editorialized title, like I did, that's not correct.
> It is unclear how DOF will treat properties owned by LLCs and trusts. In general, these owners are not considered residents. However, this does not mean that the properties are not used as primary residences. For instance, based on publicly available information, Mayor Bloomberg established his primary residence in two adjacent buildings on the Upper East Side, one owned by an LLC, and the other a cooperative apartment corporation. It may be possible for some LLC owners to rent to themselves and avoid the tax.
If that argument holds up in court, we are all screwed.
I heard about a system for this that struck me as brilliant. Make someone declare the value of their property. Then the government has the choice of taxing them at the scheduled rate, or buying the property from them, for that cost.
TADA.
And if someone wants to artificially inflate the value of their home, to reflect the difficulty of moving out, finding a new secondary residence, etc, then that's their business. No worries. We'll tax that additional value, no problem.
I think this system goes back thousands of years. Why not use it?
Also, most municipalities do not have the funds on hand to buy up people's houses just to call their bluff on taxes.
Stocks should be bought and sold, period the end. That is how the market is supported to work.
If you closed this simple loophole, you would see a massive amount of tax revenue.
Are we going to see things classified as not-residences, but then people can vacation there anyway, much like Mar-a-Lago supposedly cannot be a residence, but apparently President Trump lives there and votes there, anyway?
How will that help to avoid a tax on secondary residences? Are they somehow going to claim that these properties are the primary residence of a company? Seems nonsensical.
I think the revenue is probably overstated in the long run as people will find a way to offload the properties except for a select few who will consider a cost of doing business.
Also a great marketing move by Mamdami in terms of walking his talk.
> While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said.
Hardly everyone understands 'owning a house' as millionaire-level wealth. Which is why people cheer the policy on until they realize it is them who is being shaken down.
Owning a house where your equity in it is over a million is absolutely wealthy.
In the US itself (?) lol
I disagree with the comment and entire existence of the person to whom you are replying, but they aren't wrong about $1m actually not being as big or watershed a number as it used to be.
A basic middle-class house in just about any part of the country that's worth living in is going to be $1m, plus or minus 200k.
I'm not coming at this from a rural perspective. I live in the greater NYC area. I have friends in NYC. They make a lot of money and live very close to Grand Central, and even they don't live in $1M properties.
> While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said.
Nothing, absolutely nothing do we have to adjust to America, neither up or downwards.
That being said, and as much as I think Mamdani is an Ideologue, taxing second, unoccupied homes sounds absolutely reasonable (at least if they aren't rented out). Expect all kinds of shenanigans to circumvent this, but still.
"While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said."
It also mentions they plan to adjust property valuations in coming years, and when the valuations go up the rates will go down:
"After the valuation adjustments ... properties over $25 million will be taxed at 1.3%"
I dunno, 1.3% of the actual value seems.. not at all unreasonable? I live in TX and that's about what my property taxes are, for a property valued at several orders of magnitude less than any of Ken Griffin's NYC properties.
Bear in mind, it's 1.3% on top of the existing ~1.8% average NYC property tax rate, so it may still be comparatively expensive relative to TX property taxes.
Agreed, but you also have to keep in mind that those people don't pay NYC income tax.
Council tax is difficult to compare to a percentage based property tax - the band based system means people in super valuable homes pay virtually nothing, at least relative to the value of the property, and each of the ~8 bands pays a fixed fee - once in the max band the tax stays the same no matter how valuable the home.
This is especially acute in places like Scotland, where the top band kicks in at anything over 212,000 and hasn't been adjusted since 1991... Essentially any new build starter home in many places will automatically be in the top band and taxed the same as some dude who bought a castle for millions.
Personally I've never thought of council tax as a property tax, even if the bands superficially are linked to it- the link to underlying property values is so broken now.
My first rented flat outta college was taxed at the highest band, and I sure wasn't rich then. It's widely argued to be a very regressive form of taxation - its opponents indeed argue it should be replaced with an actual property tax.
??
The point is to raise revenue.
In some sense, City is calling the bluff of these deeply immoral rich fucks; the tax is incredibly affordable for them, and almost all of them will simply complain and pay it, and thus generate revenue for the City.
Yep, I'm sorry -- I was very confused here, sorry for the not-very-useful initial post.
By comparison, I have an investment property that's worth about $285k, and I pay 1.97% (about $5,800) on that in annual property tax, so esp. considering he's in Manhattan, that rate looks like a bargain.
Accrue more money pretty much indefinitely?
Money is not a tangible thing, you can't eat or drink it. Instead it is a signalling protocol for resource allocation. If the very wealthy have many empty homes, when many people are homeless or inadequately housed, then that signalling protocol has failed (from a social justice point of view), and 'trickle down' is not working.
If this works (meaning NYC gets the revenue without kneecapping those extra property taxes in the long run because the wealthy bail on their second homes, which would drive down prices and therefore property taxes), it would be an anti-trickle-down win.
edit: grammar
One effect might be that wealthy non-residents prefer to stay in a hotel when they visit New York? The amount of money being collected as property tax would pay for a very fancy suite.
I imagine there will be luxury hotel conversions.
We can and have done this.
The tax is reasonably small enough that I wouldn't expect a lot of wealthy people from divesting from their properties, but it's probably going to make them think twice about buying new properties.
That second-order effect is the important balancing act for any locality-based wealth tax. If you make the tax too high it starts discouraging the behavior you're taxing, which can paradoxically reduce overall tax revenue.
France discovered this the hard way when they implemented their first wealth tax: Many ultra-wealthy people moved their capital out of France to avoid the tax, which was suspected to have had an overall decreasing effect on tax revenue from that demographic. They replaced the wealth tax with a property tax, which probably played a large role in inspiring this pied-à-terre policy.
I am generally against more taxes, but the structure of this one is quite good in terms of the incentives. If wealthy people who only live in the city part-time stay in hotels instead of buying second homes, the net effect should be to increase the cost of hotel rooms and reduce the cost of owned-housing. NYC charges nearly 10% tax on hotel stays, so recoups some of the cost there. Having property in your city mostly being occupied by people who live their full time, particularly when property is already very expensive, seems like a good thing overall.
Property taxes might but if land values are high enough then property taxes approximate land value taxes.
Raising income tax on the other hand discourages working even when it is set very low. This is one which ought to be lowered if anything.
The final straw was when we had to hire a fixer to clear up a state regulatory error that would’ve destroyed our business. No amount of calls or letters over months — by me — fixed the issue. The guy we hired got it cleared up in a week.
That’s when I learned firsthand that the more involved the state tries to be in protecting everyone from everything, the more opportunity there is for bad actors and gross inefficiency, and the worse things get.
Though when you start engaging with the bots they can't handle the nuance.
toomuchtodo•1h ago