NEW YORK (BLOOMBERG) -- Governor Kathy Hochul is backing a new tax on second homes in New York City worth at least $5 million as a way to raise cash for the city’s struggling budget.
“If you can afford a multi-million dollar second home in New York City, you can afford to join its residents in supporting the greatest city in the world,” Hochul said in a social media post Tuesday.
The plan is expected to be part of ongoing state budget negotiations and would levy a yearly surcharge on multi-million-dollar pied-à-terres. Final details are still being ironed out, but the tax may be levied on a progressive scale, meaning higher-valued properties would be subject to a bigger rate, according to the New York Times, which first reported on the details of the proposal.
The new tax would aim to raise $500 million a year to help New York City’s deficit, the newspaper said.
The plan represents a compromise of sorts between the governor and New York City Mayor Zohran Mamdani, a democratic socialist who, for months, has pushed Hochul to raise taxes on the wealthy and large corporations. The governor has repeatedly resisted such measures and didn’t include material hikes in her initial budget.
Mamdani praised Hochul’s plan to tax highly-valued second homes, saying it would help bridge the divide between the ultra-rich and working-class residents.
“We are one step closer to balancing our budget by taxing the ultra-wealthy and global elites with a pied-à-terre tax — the first of its kind in our state,” Mamdani said in an emailed statement. “Alongside the governor, our administration is fighting every day to make sure we address this fiscal deficit fairly, where the wealthy contribute what they owe and our budget reflects our commitment to the working New Yorkers being priced out of our city.”
While the proposal would raise money for the city’s budget, alone it isn’t enough to stem the current shortfall or finance Mamdani’s full affordability agenda, said Emily Eisner, acting executive director and chief economist at the Fiscal Policy Institute, a left-leaning think tank. “New York lawmakers will need to look toward broad-based solutions such as the personal income tax and corporate tax,” she said.
Taxing pricey second homes in New York City has been proposed before, without success. A similar plan was brought forth by state lawmakers in 2019, which was considered by then-Governor Andrew Cuomo as a way to raise money for the subway system. The push followed a $238 million purchase of a Central Park South penthouse by hedge fund billionaire Ken Griffin.
That legislation stalled after strong opposition from the real estate industry, who said at the time such a measure would be a drag on the luxury home market.
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