New York City Comptroller Mark Levine is giving a thumbs up to Gov. Kathy Hochul and Mayor Zohran Mamdani's proposed pied-à-terre tax, which would target second homes valued over $5 million.
NYC's Pied-à-Terre Tax Targets Ultra-Wealthy to Close Budget Gap
Levine agreed that the tax could indeed raise $500 million, as Hochul and Mamdani estimated. However, that comes with several caveats.
Mamdani has said the city would use that revenue to close a $5.3 billion budget gap.
What the comptroller found
Levine released a detailed report examining the potential revenue from the tax.
"We find that ... our choice of tax rates and brackets could raise almost exactly $500 million from a little over 11,200 properties," Levine wrote.
That said, there are a number of variables that could make that estimate fluctuate substantially, the comptroller found. Those variables lower the estimated income to a range of $340-380 million.
They also include exemptions for properties that have been rented out, co-op and condo valuations, how two- and three-family homes are treated, and how the pied-à-terre tax might change the behavior of the impacted homeowners. Another factor is how properties owned by LLCs or trusts might be treated.
"Each of these decisions can shift collections by tens of millions of dollars," the report found.
Despite the caveats, the Mamdani administration was buoyed by the comptroller's report.
"Mayor Mamdani and Gov. Hochul have been clear that this pied-à-terre tax will generate $500 million in revenue annually to help close the city's inherited budget gap. The comptroller's report makes one thing very clear: thoughtfully crafting and implementing this legislation will do exactly that," mayoral spokesperson Dora Pekec said.
However, James Whelan, president of the Real Estate Board of New York, said the governor and the mayor should go back to the drawing board to find another way to close the budget gap.
"This tax is going to fall far short of raising the revenue that the governor and mayor have spoken about publicly," Whelan said. "And, you know, in addition to that, it's just not going to be good for the long-term health of New York. If they do this the wrong way, it's going to discourage development."
Hochul says the tax won't target NYC residents
"It is not a tax on residents. That is so important. We're talking about people who are ultrawealthy. I mean, there are literally Russian oligarchs buying up properties, driving up the property values," Hochul previously said.
Hochul supports the pied-à-terre tax as a counter to proposals Mamdani has made to raise income and corporate taxes on the weathiest people and companies. The mayor has said unless the budget gap is closed with assistance from the state, he'll be forced to raise property taxes.
New York City Council Speaker Julie Menin and Adrienne Adams, Hochul's running mate and Menin's predecessor, also support the pied-à-terre tax.
The comptroller's report was released on the same day Hochul was set to meet with hedge fund owner Ken Griffin. Mamdani has made Griffin the poster boy for his tax-the-rich campaign. Griffin owns a $238 million penthouse on Central Park South that Mamdani wants to tax.
In response, Griffin's company Citadel hinted they may nix a $6 billion plan to redevelop 350 Park Ave.. They said that project would lead to 6,000 construction jobs and 15,000 permanent jobs.
