New York is going to tax the wealthy's second homes, but not tax wealth itself | Fortune

"People who buy luxurious second homes in New York City, but live most of the year elsewhere, would have to pay a new tax on the properties under a tentative agreement - an initiative to appease Mayor Zohran Mamdani and liberal voters who launched him into office with chants of "tax the rich.""

"The proposed tax on multimillion-dollar second homes, known as pied-à-terres, comes as Democrats are trying to address voter concerns about affordability ahead of this year's midterm elections without alienating the business community. Critics, including prominent business leaders, Republicans, and some moderate Democrats, have warned that slapping new taxes on rich people who maintain apartments and townhouses in New York, but don't consider it their primary home, will just lead the very wealthy to abandon the city."

"Hochul said it would apply to homes worth over $5 million. It would only apply to second homes in New York City, not other state playgrounds for the rich, like Long Island's mansion-dotted Hamptons. Hochul estimated the tax would bring in at least $500 million for the city annually."

"After the governor's announcement, the state's legislative leaders warned that much was still left to be negotiated. "There is no budget deal," said Carl Heastie, Democratic speaker of the state Assembly, adding that much of the financial backbone of the budget had yet to be decided."

A tentative budget plan would impose a new tax on multimillion-dollar second homes in New York City, known as pied-à-terres. The tax would apply to properties worth over $5 million and would cover only second homes located in New York City, not other wealthy retreats elsewhere in the state. The measure is intended to address affordability concerns and voter pressure to tax the rich, while avoiding a major increase on the state’s wealthiest residents. Critics warn that taxing non-primary residences could encourage very wealthy owners to leave the city. The tax details are not finalized, and legislative leaders say negotiations remain. The proposal is estimated to generate at least $500 million annually for the city.

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