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.
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.
Reducing the cost of $5M+ homes will slightly help some wealthy people who live in NYC, and there will be a modest trickle-down effect into less expensive properties. But I thought the goal was to generate tax revenue from the taxes, which wouldn't happen to the extent they end up in the hands of NYC residents.
EDIT: apparently it hits all homes over $1M, which means it will hit more homes but also won't generate revenue to the extent the homes end up being owned by New Yorkers.
So this is also a developer / market incentive, if it actually changes demand.
What prevents the tax following the offshoring attempts? Is it simply that the IRS doesn't have the manpower? or is there a legal loophole for avoiding paying your share that only works for the ultra wealthy?
> we'd still be on the hook for taxes for (iirc) 15 years
> Further, expatriated individuals will be subject to U.S. tax on their worldwide income for any of the 10 years following expatriation in which they are present in the U.S. for more than 30 days, or 60 days in the case of individuals working in the U.S. for an unrelated employer.
Is that really needed when the homeowner vacancy rate is 1.3% in the New York-Newark-Jersey City MSA?
This is going to raise property taxes for everyone.
The ultra wealthy can just pack up and move. It doesn't affect them in the slightest.
But in two years when the property tax overhaul is complete, the middle class will foot the bill. As per usual.
https://www.msn.com/en-us/money/companies/new-york-passes-ma...
"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.
Rather than overhaul the system immediately, the city will gradually update valuations – and the tax – according to the budget documents. Starting in the 2028-2029 tax year, the property values will be based on comparable sales. Since valuations will skyrocket, the tax rates will fall to compensate."
this is, at minimum, a 10% increase in ALL property taxes. And the people most affected will be the lower and middle class.
> this is, at minimum, a 10% increase in ALL property taxes
If they're ~10x'ing the erroneously low valuation to true them to market value, then that would be more than a 10% increase.
>> Since valuations will skyrocket, the tax rates will fall to compensate
But as the article points out, this is an expected outcome and will be blunted by subsequent tax rate decreases.
All things equal, undervaluing properties for tax purposes isn't fair, although it may be politically (corruptly) popular.
Historically NYC housing used to be a lot more affordable before they stopped building, reducing supply relative to demand and thereby raising prices.
Yes. And that's impossible to fix.
> Historically NYC housing used to be a lot more affordable before they stopped building, reducing supply relative to demand and thereby raising prices.
Demand will _always_ outstrip supply. And there's no such thing as "affordable housing", it's a contradiction like "hot liquid helium". If housing sells, then it's affordable for _somebody_.
What you're talking about is subsidized housing in some form. Like rent control or housing projects.
The Law of Supply and Demand is not a paradox.
Citation needed (for a solid study, not right-wing propaganda from CNews/Libération). From a quick cursory look, it appears the French government had no problem raising taxes when the taxes were higher, and that the previous governments who reduced taxes for the rich setting blame on public debt have in fact increased public debt over and over. (disclaimer: i'm not an economist)
The 2025 deficit ran at around ~150 billion euros. The Zucman wealth tax would raise 25 billion in the most optimistic projected scenario (so, one sixth of the deficit at most). This is the very best case as projected by its proponents - there's a decent chance receipts would be significantly lower than that.
You're absolutely right that right wing parties did not, and probably will not, solve any of these issues. Neither will a wealth tax. In my opinion, this is only solved in a bang. Analogous dynamics in NY.
Property taxes might discourage construction 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.
tl;dr it doesnt work the same way for every tax.
Are you serious? LVTs expressly incentivizes landlords to kick out "grandfathered in" developments and uses in favor of redevelopment and sale for that purpose.
But those grandfathered in developments and uses are exactly what made the place valuable in the first place and you need some amount of them to remain.
Fairest? I mean, land value tax is fair. So are Pigouvian taxes. In fact they're arguable more than fair. Not having these taxes is arguably unfair. Who deserves ownership of natural resources or to inflict negative externalities on others?
Taking things someone earned through labour and not letting them give it to who they want isn't very fair.
> To deserve means to be worthy of, entitled to, or to have a valid claim to a reward, punishment, or treatment based on your actions, qualities, or circumstances
So you genuinely believe that nepo babies, despite not taking actions or creating any circumstances to earn their wealth .... nevertheless deserve to have it anyway?
How is it terrible for my kids to not have to break their back like I did to build the wealth I'm looking to pass on to them after I die? Why should they go through the same struggles that I did? It is up to them to squander it or transform it into even more wealth to pass it down to their children and so on. Ideally the former, but sometimes what parents dream for their children does not always come to pass.
There is nothing wrong with striving to give a heads up in life to your kids, on the contrary, it's a core, visceral instinct of parents to do so, and removing that would be alienating.
There is a certain level of wealth though, where the "heads up" transforms to an unstoppable compounding lever.
France for instance has a progressive inheritance tax (starting at 5%, up to 45%), triggered for children inheriting at 100k€ per parent. In practice, 50% of the population inherits <70k€.
Also, the proposed Zucman tax in France for instance is triggered starting at 100M€ wealth. At these levels, a mere 2% risk free investment yields 2M€ annual income, this is enough to both compound and enjoy a very luxurious lifestyle. This level of wealth is unstoppably compounding, and that is why it is proposed to tax it.
If you don't, well you end up with a US situation, where disproportionate wealth (and thus power, influence) end up in the hands of random citizens with their own agendas, possibly (likely) orthogonal to the interests of the majority.
As a point on terminology: That's not a really a wealth tax on the accumulated assets at-rest own by the (now eternally-resting) owner, but an income tax on the wealth as it moves to the recipients who didn't have it and are getting a massive gift.
It just happens to be a kind of gift/transfer we've decided because of tradition to consider as a special case, where (A) it happens right after a given dies and (B) the giver is frequently but not necessarily related to the recipient.
Granted, this requires lawmakers to explore more of the "exploit space" around their proposed regulations, but I don't think that's really asking a lot of them.
Inheritance is, notably, not earning it.
> continue do productive work
That's a pretty bald assertion. Useless nepo babies abound.
> relying on public largesse
Any chance the existence of a stable, well-educated, high-trust society benefits the children of wealthy people at all?
There's just too much fun to be had with 0.1% wealth that you didn't have to sacrifice your 20s, 30s (and maybe 40s) to build. Coast at some job with a top 25-50% income and 0.1% inheritance in NYC and live the life.
I get the political power concern, and money = power at a certain point. But I'd rather work on getting money out of politics than putting limits on what people can decide will happen to their assets after they die.
For example, step up basis allows inherited assets to have their cost basis re-struck at the value at time of inheritance. So if there is no inheritance tax, the assets transfer to a new owner and a large chunk of value is forever untaxed, even when/if they eventually sell.
Similarly all sorts of interesting stuff that can be done with trusts. Again stuff that's only accessible / worth the hassle to 1%.
In a world with extreme outcomes due to scaling, we might accidentally be re-inventing the hereditary aristocracy if the assets can accumulate outside the tax system.
- Bob Menendez (Senator)
- Randy Cunningham (Congressman)
- William J. Jefferson (Congressman)
- James Traficant (Congressman)
And a bunch more at more "local" level...
There's so many indirect ways of influencing politics given lots of money - alternative media, buying out local news, controlling national news.. making entertainment media of your own ideology. Fund interesting groups around particular topics. Give poor Ivy League grads a job and groom them for higher office.. oh wait.
To be clear, i'm not exactly defending inheritance tax if resources are shared another way. For instance, it would make sense to let people keep a − modest − home across generations. But i'm tired of rich capitalist tech bros saying income taxes are unfair because they've worked so hard, and inheritance taxes are unfair because they've already been taxed.
So what taxes aren't "morally wrong"?
Consumption tax is sales/VAT tax excluding some necessities and capital goods. Yes, there are some awkward edge cases: in the UK the exclusions were food and children's clothes, which leads to battles over prepared cold food (e.g. sandwich), takeaway and restaurant dining.
Sin taxes are obviously things society might want to discourage, mainly for health reasons, like alcohol and smoking, but also gambling and externalities, like pollution. Some might stretch that to all carbon emissions to moderate climate change.
Don't tax things you want: working / income and investment / capital gains.
Inheritance tax is doubly wrong because the wealth is already taxed, and death is unavoidable (but emigration is possible, which might help in some countries).
> Don't tax things you want: working / income and investment / capital gains.
What if I don't want hoarding of wealth?
Tariffs, various usage taxes and fees.
Need a mechanism to address the regressiveness of some of this but that's an implementation detail.
Capital gains taxes, on the other hand, are completely moral, and should be much, much higher. Capital investment benefits enormously from the State protecting their property "rights" (you don't need to hire a private army to prevent the workers from just deciding to run your factory for their own benefit, that's what the cops are for), and at a minimum the state would be justified in collecting that dividend for itself. Bootlickers and profession bootlickers (i.e., economists) would complain that a high capital gains tax disincentives investment, but as long as the value of investment is positive, that is, outpacing inflation, it makes zero sense to let your money languish in a Scrooge McDuck pile rather than get some value out of it.
So if I spend $5000 on groceries because I'm eating wagyu steak and lobster everyday, is that a fair "expense" too? You might retort that's obviously a luxury and there should be some baseline that's tax free, but then you're just describing the standard deduction.
>but as long as the value of investment is positive, that is, outpacing inflation, it makes zero sense to let your money languish in a Scrooge McDuck pile rather than get some value out of it.
...or they take their money elsewhere instead.
Or look at monarchies and titles of nobility. In the past direct inheritance of political assets was common, and acting on that natural desire, the people involve claimed that parents deserved to direct what they (and their ancestors) had accumulated on to the next generation of their own family.
Yet nowadays most countries and people have decided it is immoral, and they also took steps to make common forms of it extremely illegal.
My point is that economic inheritance today is just as much a social-construct as political inheritance was then. It exists because we permit it to exist, don't be fooled by anyone claiming it's an intrinsic law of the universe or a divine mandate by god that must be obeyed.
Inheritance taxes tend to only kick in at the 8+ digit range.
If anything, taxing that should encourage descendents to do productive work, eh? Since not taxing it, but taxing other things actually discourages it?
I can’t imagine how it would result in anyone relying on public largesse either unless they are really terrible with money. In which case a few extra zeros is unlikely to help any?
On the other hand, most people die closer to 75-80 and their kids are 50+. Leaving inheritance to them isn't really spoiling them as they are alread adults with established lives.
I don't care about estate and inheritance taxes much but many people do and it empirically drives behavior.
Won't someone think of the children? The very wealthy children paying a 3% marginal tax rate on some of their multi-million dollar inheritance?
I might live till 72, my kids will be my age right now when they hit inheritance instead.
That's not a headstart.
It's misleading to cite that since it basically never happens.
The tax doesn't even come into the picture for fortunes below $30 million dollars (for two parents), and the rest of the time it averages ~14%.
https://www.cbpp.org/research/federal-tax/the-federal-estate...
The only tax that is fair to everyone is a sales tax.
When I was little and playing SimCity 2000 I looked at the tax rates for the city and noticed that the sales tax rate was like 2%, and based on our 14% VAT at the time, it seemed super low to me so I upped it to 12% and was surprised at how unhappy the citizens were.
This gave me the impression that Americans wouldn’t be happy with a significant sales tax, or perhaps this was a city sales tax on an existing state sales tax, which yes, would be outrageous, or maybe Americans get taxed in some other way which makes up for our VAT.
Anyway, I look back and chuckle at my own lack of knowledge at the time.
Americans are stupid. They see a higher tax on an iPhone they don't need, they will cry about it.
But they pay more at the end of the year on income tax, property tax, car registration, etc., they could care less.
Most Americans don't even look at their pay stub, and are more than happy to overpay their income taxes every paycheck so they get a bigger tax return at the end of the year.
They don't realize that money was theirs to begin with.
They complain about not being able to become wealthy while they give the government an interest free loan, when they could be investing that money and earning on it.
Is that the stated goal? I thought the goal was to generate revenue from the tax. It's true that triggering sales will create a one-time boost in sales-related taxes, but that's just temporary.
There is a difference between property-as-primary-residence and property-as-secondary/tertiary-residence or property-as-proxy-for-parking-money.
Property taxes handle the first scenario, wealth taxes handle the latter.
The landed gentry want you to believe that they can't be touched unless you're willing to kick your grandmother to the street, but we can absolutely write taxes that apply more narrowly, and sensible tax policy leads to better outcomes and fewer market distortions than hamfisted regulation.
* https://www.toronto.ca/services-payments/property-taxes-util...
Anyway, NYC real estate taxes are a mess and in some cases regressive.
For example, taxes are based on values set by the city which for the ultra high end, the are understated by an ORDER OF MAGNITUDE..
See: > Griffin purchased his 24,000-square-foot penthouse at 220 Central Park South in 2019 for $238 million. ..t he city values the apartment at just $15.5 million .. property tax bill for the 2026-2027 tax year is $858,332
.. Griffin’s property tax bill would more than double to $1.87 million .. in the 2028-2029 tax year, it would increase to just under $4 million
I don't feel terribly about someone paying $4M on property probably worth close to $400M at the moment. Normal high income NYers already pay $10-20k/year on properties worth $1.5M by comparison.
Another regressive aspect there was a proposal to change was a purchase tax for cash purchases. Currently one of the closing costs in NYC/NYS is a mortgage recording tax of nearly 2% of mortgage amount. This means if you are rich enough to buy in cash, you can avoid this tax. And if you are a rich cash buyer you are probably buying a higher end property so.. doubly regressive in a sense.
lol. why would it? if you tax something, you get less of it.
there is not even close to any kind of shortage of demand for housing in NYC. there is an enormous shortage of supply; it is in fact _illegal_ in most places to build more supply.
Or show me a worker who benefits the same amount of money from the city being improved.
> that creates incentives for the city to cater to them
What does that even mean? If catering to the wealthy was profitable, everyone would do it. Just look at Dubai, it's built entirely around that model, and it's a brutally competitive space. NYC attracts the mega-wealthy for a different reason: network effects. Meta-wealthy come to be around other mega-wealthy people.
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.
This makes more sense; I had engaged with just the phrase "property tax" without this qualification.
We can and have done this.
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
The original comment, and many other comments spread across the Internet including yours, are written as if the elites themselves are the ones "advertising" the label of "trickle down economics" as if it's some kind of economic theory they are advocating for. But it's always been a label used by opponents, particularly Democrats to derogate Reagan era policies.
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?
So your claim is that wealthy people aren't interested in generating more wealth for themselves? What exactly is it you are claiming? Sounds like something a populist youtuber would say.
Accrue more money pretty much indefinitely?
If you invest in $AMZN, much less so.
But that's only because there are other people who will happily move money into your control to get that share from you. Doesn't change the fact that the money you spent acquiring it has moved out of your control onward in the economy.
Liquidity doesn't matter? Huh.
That's a Nobel Prize in Economics waiting to be awarded, if true.
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.
It's a barrier for low income people to buy homes.
Sales tax is a workable wealth tax.
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?
It dramatically cuts housing security, and allows local governments to inflate their own property values by doing what is basically eminent domain without the requirement to show need. Make everyone pay taxes, use those to buy up homes, re-list the homes at a higher price. They can effectively price gouge using tax dollars. This could happen to you at literally any point, and that local government doesn't care if the house won't even sell as long as the other houses rise enough in value to cover the lost tax revenue.
I've also heard the same thing but allowing private citizens to buy them, which is almost worse. Anyone sufficiently well off can just wreck someone else's life. If I hate my neighbor and they report the real value of their house, I can force them to sell it to me so they have to move and I can resell it while only losing fees in the process. They would have to over-value their house by an amount that I'm not okay losing, which ends in a sort of auction of escalating values. At the very tippy top, if I'm Warren Buffet's neighbor there's probably not a value I can pay taxes on that would stop him from buying me out if he wanted. Any number that would be a meaningful loss to him is something I can't even pay the taxes on.
At least as important, this scheme is trivially exploitable for corruption and weaponization by government officials in countless ways that don't currently exist. This is not something that anyone should want to enable.
Your "gish gallop" and "justifying antisocial behavior" dismissal is almost literally how creationists dismiss discussions of evolution.
It is very common to have goods where the price a buyer is willing to pay is smaller than the price a seller is willing to accept, and in a free market that simply results in no transaction happening. Forcing the transaction to happen is always going to make at least one side of the deal unhappy.
And if the difference is more than X% then it’s fraud unless you can persuade a judge otherwise.
The loophole might be that Billionscorp LLC is listed as the property owner, and Jeff Billions technically only rents the penthouse from his own company, which lives forever, and never has to sell up. Closing that loophole by banning corporations from owning residential property would do everyone a favor.
It would also complicate the home buying negotiation. People would look at your recent tax payments and put a cap on the bids they would make based on what would trigger back taxes for you.
You are right to imply that it seems unfair if you discover in year 49 of your happy 50 year tenure that your Queens bungalow was built on top of a seam of pure gold nuggets all along.
Also, most municipalities do not have the funds on hand to buy up people's houses just to call their bluff on taxes.
Which they won't do if it's assessed appropriately.
See California's Proposition 13 for the alternative.
The only way to end up with a loss is a coordinated attack by owners and potential buyers: to intentionally understate the value, and then to hold off ANYONE attempting to purchase before the market sale price is below the compelled price. So multiple rich people lose their houses in a naked gambit to bankrupt the government. I mean... I guess it could happen? But at that point, it's open class warfare.
Isn't that what got Guatemala invaded back in the 1950s?
Uhh... what? How is this not an insane system?
1. You give an accurate, good faith projection.
2. Government taxes you.
OR
3. Repeat.
1. Property is taxed at correct rate (win)
2. City buys property at low cost (win)
Nope, that's not in the rules. It's up to their discretion.
It seems like you agree it would be bad for the government to be able to buy your house when you give an accurate assessment. So why not design it out of the rules?
> It seems like you agree it would be bad for the government to be able to buy your house when you give an accurate assessment.
You're thinking about this wrong (as is the person you were replying to). The whole point of this system is to define "accurate assessment" as the break-even price where you could take or leave being bought out. That's how much the property is actually worth to you. Not some estimate of the aggregate market price. By definition, it's value to you is greater than or equal to the market price because if it's lower, why haven't you sold already? In other words, the idea is not to tax market price, but "market price + consumer surplus".
Note that because everyone's valuation would go up, this should be paired with a reduction in the tax rate.
> 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.
"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.
EDIT: As mil22 pointed out, this 1.3% tax is on top of the existing ~1.8% NYC property tax rate, so it's more like ~3.1% total.
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.
That's as may be, and for residents of NYC that's impactful.
The new law targets second homes, which are generally defined as a residence which is not your primary residence. Meaning that the folks affected are generally not NYC (and often not NY state) residents, so the NYC/NY State income tax is irrelevant, as the folks affected don't pay those income taxes.
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).
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.
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.
Agreed, but you also have to keep in mind that those people don't pay NYC income tax.
A new house costs at MINIMUM $400k to build (in New York state, not to mention the city).
There are around 100k pied-à-terre in New York CITY alone.
There are about 350k homeless people in New York city.
Taxing all of those secondary 'homes' at 40k would and spending those taxes ONLY on new housing construction would yield at MOST 100k houses (per year).
So I was incorrect in what was more efficient IF taxes only go to building new houses... which I AFAIK is not accurate to how those taxes would be distributed. (it may still be better if enough revenue is going to housing dev).
So a ~10% tax rate for SECOND+ homes is still too small considering how many houses we need to build. I argue for 100% tax: pay that price every year if you want a SECOND+, that would completely offset a new house in compensation for tying one up).
If you are rich enough to afford a vacation home: you pay vacation prices. You don't get to use it as an "investment vehicle" we need to dissuade that mentality completely.
Not exclusively though, right?
Since they are revising the valuation system to not artificially depress valuations, isnt this a global tax increase? No rate changes or extra tax for someone with a primary residence but the base is increasing, right?
>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.
>Rather than overhaul the system immediately, the city will gradually update valuations – and the tax – according to the budget documents. Starting in the 2028-2029 tax year, the property values will be based on comparable sales. Since valuations will skyrocket, the tax rates will fall to compensate.
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.)
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.
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.
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.
God I hate this sort of armchair despot type thinking.
People are not stupid. They're only ok with the absurd attitude given to the government to tax and regulate insofar as it's mostly kept it out of the grubby mitts of those who'll abuse it.
Like yeah, you absolutely could strictly enforce the speed limit and use the clean water act to regulate people's lawns but if you did that someone would get elected on promises to depose you and change the law to prevent that in the future.
This is the same reason the NSA doesn't go around using zero days on movie pirates and the FBI doesn't go around bringing RICO charges on everyone who ever ran a scummy business. The power is more useful to have on hand to use surgically. If you abuse it you'll lose it.
This is not "your math is slightly off and we're going to be punitive." This is defending against tax evasion strategies by those with the wealth and power to attempt them. If you don't believe in taxes, or don't believe the wealthy should have the majority of the burden, certainly, we will not find common ground.
My mental model is "You are very wealthy because you are very lucky. The cost to you for the societal socioeconomic system enabling this wealth is higher tax rates than those who work. Please pay your taxes due for a system that enabled your accumulation of wealth, and permission to keep it during your lifetime. If you attempt to evade the system, we will improve the system accordingly." One owes taxes on a lottery ticket, this is no different, just a different form of lottery ticket that paid out.
If you’re so smart, why aren’t you rich? Turns out it’s just chance. - https://www.technologyreview.com/2018/03/01/144958/if-youre-... - March 1st, 2018
Ref: arxiv.org/abs/1802.07068 : Talent vs. Luck: The Role of Randomness in Success and Failure https://arxiv.org/abs/1802.07068
Tax evasion by millionaires and billionaires tops $150 billion a year, says IRS chief - https://www.cnbc.com/2024/02/22/tax-evasion-by-wealthiest-am... - February 22nd, 2024
Panama Papers helps recover more than $1.2B around the world - https://www.icij.org/investigations/panama-papers/panama-pap... - April 3rd, 2019
https://en.wikipedia.org/wiki/Panama_Papers
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
> 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.
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.
Not so fast.
1) It is complicated. It has progressives rates that start out higher for 2 years then decreases but coincides with how the base is calculated.
2) The budget projections assumes no behavioral changes from the taxed residents. This doesn't seem like a safe assumption. You should at least assume some amount of the tax base leaves since it disincentives 2nd properties.
This doesnt mean its a bad plan. But it's definitely not the least complicated tax law. I'd say thats more like sales tax or something.
This is also some opportunity for intra-state and intra-city arbitrage where random cities and states lean into the controversy and start offering tax incentives for the "sad" and "offended" egos of wealthy of NYC to move there. That often happens to companies, where states, sometimes down South offer such "deals" to move company headquarters from higher tax states up North.
But at the same time, this might encourage some wealthy people who "fled" to Florida to return back and make New York their primary residence.
I also see slew of loopholes popping up, couples divorcing so each can claim on of the residences as "primary"
Edit: Actually, as a property tax of nonprimary residences, is this not also effectively also a Landlording tax? Will my landlord's tax bill go up because he's not residing in my building, if my building is above the threshold assessed value of $1mm? Or are >$1mm "multi-family homes" (significant % of housing of New Yorkers in BK/Queens) exempt and this only applies to condos?
> 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.
Sounds like something worth addressing as a second phase!
But they just repealed that system so no more property tax but you can also no longer deduct mortgage interest from your taxes. So now the system favors people that don't have loans.
That with laws against foreigners buying property (most of Switzerland - not in some economically under devised areas though) the hope is the cost of housing will go down.
If land property taxes were wealth taxes then you'd be able to deduct e.g. mortgage debt when applying the tax rate.
In this regard, property taxes in the US largely make sense.
If that argument holds up in court, we are all screwed.
Wild that there are so many rich people in NYC. Truly an engine of wealth creation.
>Rather than overhaul the system immediately, the city will gradually update valuations – and the tax – according to the budget documents. Starting in the 2028-2029 tax year, the property values will be based on comparable sales. Since valuations will skyrocket, the tax rates will fall to compensate.
Hold on a second. Reading between the lines, this means everyone's property taxes are going up, right? Because the valuation system is being revised to more accurately reflect resale value.
Obviously this would affect more expensive properties more. But I havent seen anyone acknowledge that everyone's taxes will increase. Is that because I have the details wrong or because it's just flying under the radar?
it's flying under the radar because people don't read these things and critically think about them.
as per usual, the middle class will take the hit. the people that voted for this will become poorer, and the wealthy will go on as normal.
I jest.
Im not sure you understand what Im saying though. Wouldnt normal people's taxes go up because the appraisal changes are global? Say, a primary residence bought for $750k.
No. Our town finally reassessed everyone after not doing it since before COVID. Assessments doubled and everyone freaked out, but the tax levy didn't change, so the amount of actual tax basically didn't change; $160M in taxes for 20k people is still $160M in taxes for 20k people. People just now pay less tax per $1k house value, but for higher house values.
Is there a better way to think about this?
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.
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
I guess three-pronged, cause it says if they turn it into a rental that it's exempt from the taxes, which means someone is still at least living in it rather than just being used as a speculative asset.
There is plan to add to the housing stock as well: https://www.nyc.gov/mayors-office/news/2026/05/mayor-mamdani...
He is also aggressively going after landlords withholding repairs, maintaining dilapidated units, etc. and thus tackling the quality of the housing stock problem.
So he'll move to a higher office and leave his messes for the next sucker.
Also outcomes are generally not positive or negative in & of themselves: if you could specify who exactly you anticipate will be worse off, it would make your comment much more insightful.
Secondly... the track record of NYC mayors' post-mayoral careers is abysmal. Not one mayor appears to have successfully held elected office after their mayorship. There's one failed bid for NY governor (unexpected primary loss to the senior Cuomo), and four failed bids for president, the most successful of which being Bloomberg's 4th place showing in the 2020 Democratic primary. So as a springboard to higher office, NYC mayor is absolute garbage.
??
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.
If that is your starting point, I don't think you're going to approach tax policy rationally.
Ken Griffin may be deeply immoral -- I don't know -- but it's not a condition of being rich.
Yep, I'm sorry -- I was very confused here, sorry for the not-very-useful initial post.
It is. Increasing the housing supply[0] is a different initiative.
[0] https://www.nyc.gov/mayors-office/news/2026/05/mayor-mamdani...
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.
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.
> 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.
This is $1mil in assessed value which would translate to roughly $5mil in market value.
In NYC $1mil market value is pretty much the starting price for a 1-bedroom condo in a gentrified area. $5mil market value, on the other hand, is a pretty luxurious place.
It's.... problematic to say the least. Say you bought a bungalow for €30k in the 2000s that you frequently visit to escape the city. You are a middle class worker, it's paid off and monthly costs are minimal. It is now worth €350k. You need to pay €7700 a year. Most people don't have that type of money so they are forced to sell.
I think this is because the term "millionaire" is a catchy term. And that caught on in the 1800s.
> The primary residence of at least one owner.
> The primary residence of a parent or child of at least one owner.
> Cooperative and condominium units that are appraised at less than $5 million in the previous three years.
> Properties and dwelling units that are rented to a NYC primary resident.
(https://comptroller.nyc.gov/reports/the-pied-a-terre-tax-and...)
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.
Help me understand your comment. Do you think the country is only made up of like, 3 big coastal cities? Do you think the only houses worth living in are several thousand square feet in only the coolest parts of town? I want to understand what you think the country actually looks like, here.
Subjective, obviously. My view is that I wouldn't live almost anywhere outside of one of the major coastal cities in a blue state. Certainly nowhere in "flyover country".
I too would only live in a small subset of the country (a different, but not opposite, subset from you). But I would never do something as petty/hostile as describe those places as "the only places worth living."
> you are using the general term "worth living in" to describe places you would live,
In general, anyone who uses the phrase is going to mean it subjectively.
But--there is a somewhat objective measure: property prices :)
And they are all higher in blue state coastal cities than in buttfuck Trump-loving nowhere.
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.
I have lived in both NYC and Southern California, and I was mostly thinking about SoCal, where in general one assumes a basic middle-class house in a reasonably decent area is going to cost $1m. Do they always? Not necessarily, but even fairly modest houses like my parents house now exceed $1m in value easily.
Out of curiosity, do your friends own condos? Doesn't even a studio condo on the UES cost at least like $600k base (i.e. not counting any fees related to the sale, nor any ongoing HOA)?
Only ~30% of home owners own their outright.
~60% own 40% of the house or less.
I'd argue that you can't own more than ~92% of a home, because it costs a lot to sell a house...
The "average" homeowner moves every ~7 years in the US, and this is heavily skewed to people with less equity - the people who outright own typically have stayed put 20+ years.
So "owning" a million dollar home means anything from: you put 3.5% down, and you're currently underwater cause prices went down in a lot of the US (i.e. you are literally own NEGATIVE equity)... to you actually have $1m in equity.
I "own" a $1.2m home. I really only own about $425k of it. If I had to sell it, that typically costs close to 9% - so I'd be lucky to get $300k.
The person underwater who put 3.5% down on a home could easily have -$250k if they had to sell... So the idea that everyone who "owns" a $1m house is "rich" is a bit strange...
I mean, in general, people who "own" $1m houses are not destitutely poor, but that's about as far as you can extrapolate.
You can put 3.5% down for a $1m house in places where ~50% of the population lives.
At current interest rates, no, you can't qualify, but at interest rates where people bought most of these houses... Yes, the median person could afford it (in those areas).
https://www.bostonglobe.com/2026/05/25/metro/millionaires-ta...
This tax may make it more attractive to own a second home there, because it proves you're not one of the fake-wealthy who can't afford the price.
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.
And it does not explain how the current system arrives at such low valuations.
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?
This is part of the reason we have a housing shortage in the US: 20% of available homes are purchased by investors, which squeezes the supply.
Airbnb has made this worse. There are areas near me where during the COVID ZIRP, people snatched up like 70% of the homes to turn into rentals. Those places are now ghost towns, unless it's Memorial Day weekend.
“Some of the supply of housing that is permitted to exist is used a short-term rentals rather than as actual housing” may be “part” of the problem, but its a vanishingly small part, in that if you deal with the basic building problem, there would be no actual problem, even if the short-term rental thing continued.
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?
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.
Actual title is "New York passes Mamdani’s pied-a-terre tax"
Thinking stuff like healthcare, education, housing, public transport, cycling infrastructures or even law enforcement.
> 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.
Like others said in the comments here: there's a balance of how much money you have to pay as tax until you move to other places. New York is taxing people on top of whatever other taxes are there just because they have money.
My issue is that if people earned the money fair and square, they shouldn't be taxed because they were successful. And this is what this tax does: oh, you afford to buy a 10M home, here's an X% annual tax just because.
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 how 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.
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.
NYC has always been extremely expensive, and people have largely decided that it's worth the price. I don't see how a little wobble in either direction changes that. Everyone could have already moved to Miami, or Salt Lake City, or even cheaper places if they were actually price-sensitive.
Also I'm someone who did move from NY to Miami during COVID along with maybe 1/3 of my peers (work and social). Not all to Miami but mostly to either the southeast, texas or non-LA socal.
Though when you start engaging with the bots they can't handle the nuance.