NEW YORK (AP) — Wealthy individuals who purchase expensive second residences in New York City while maintaining their primary residence elsewhere will face a new property tax under a preliminary agreement announced as part of Governor Kathy Hochul’s budget proposal Thursday.
The measure represents a compromise that falls short of Mayor Zohran Mamdani’s broader goal of implementing sweeping income tax increases on New York’s wealthiest residents — a campaign promise that helped propel him to office with supporters chanting demands to “tax the rich.”
This proposed levy on multi-million-dollar secondary residences, commonly called pied-à-terres, emerges as Democratic leaders attempt to balance voter concerns about cost of living with maintaining positive relationships with the business sector ahead of upcoming midterm elections.
Opposition has come from various quarters, including influential business figures, Republican officials, and centrist Democrats, who argue that imposing additional taxes on wealthy individuals who own apartments and homes in New York without claiming them as primary residences will simply drive the ultra-rich away from the city.
While specific details remain under development, Hochul indicated the tax would target properties exceeding $5 million in value. The policy would exclusively affect second homes within New York City limits, excluding other wealthy enclaves across the state such as the Hamptons on Long Island.
Governor Hochul projected the tax would generate a minimum of $500 million in annual revenue for the city.
Following the governor’s announcement, state legislative leaders cautioned that significant negotiations remained ahead. Democratic Assembly Speaker Carl Heastie emphasized that “There is no budget deal,” noting that crucial financial components of the budget still required resolution.
The New York City chapter of the Democratic Socialists of America, which counts Mamdani among its members, criticized the budget proposal through text messages to supporters, arguing it inadequately addresses the city’s multi-billion-dollar budget shortfall or provides sufficient funding for essential 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,” stated organization co-chair Gustavo Gordillo.
Governor Hochul, a Democrat seeking reelection, has rejected broader tax increases on wealthy residents, expressing concerns that such measures could prompt affluent individuals and businesses to relocate to states with lower tax burdens.
“We were able to accomplish this extraordinary budget, with all these accomplishments, without raising statewide taxes at all,” Hochul explained to reporters Thursday.
Mayor Mamdani has characterized the pied-a-terre tax as a political win while continuing to advocate — sometimes through personal appeals — for additional targeted tax increases on the extremely wealthy.
In a publicity move last month designed to generate enthusiasm for the new tax proposal, the mayor filmed himself outside a luxury building where billionaire hedge fund executive Ken Griffin acquired a penthouse for approximately $239 million.
“When I ran for mayor, I said I was going to tax the rich,” Mamdani declared in the video, which garnered over 52 million views on X, before specifically naming Griffin. “Well today, we’re taxing the rich.”
Griffin subsequently expressed alarm about the video, describing it as “frightening” and potentially compromising his personal security. He referenced the recent shooting death of UnitedHealthcare CEO Brian Thompson in the same area, allegedly by someone motivated by anger toward corporate greed. Griffin announced his company’s decision to expand 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 commented at an economic conference in California this week. “Because we want to be in a state that embraces business.”
