New York City’s new mayor, Zohran Mamdani, is making good on his campaign promise of taxing the rich.
On Thursday, Mamdani and New York Governor Kathy Hochul jointly announced a new tax proposal aimed at wealthy people who own second homes in the city.
The proposed pied-à-terre tax would tax luxury homes worth more than $5 million and could raise up to $500 million in revenue for New York City, according to the Hochul Administration.
The policy is splitting expert opinion — dividing academics, think tank researchers, and analysts among familiar lines.
Supporters see it as a practical way to raise revenue from the ultrawealthy, while critics argue it’s a narrow fix that could have unintended consequences for the housing market.
Here’s how smart people are reacting to the news so far.
Emily Eisner, Acting Executive Director at the Fiscal Policy Institute: ‘Much-needed revenue’
Eisner, in a statement published Tuesday by the Fiscal Policy Institute, framed the proposal as part of a broader effort to align New York City’s tax system with its growing wealth.
The tax “will raise much-needed revenue from wealthy property owners who do not reside in the city,” she wrote. “This is an important step in building a tax code that reflects the city’s immense wealth and can fund deep investments in its workforce, housing, and transit infrastructure.”
The Fiscal Policy Institute is a nonpartisan think tank focused on analyzing issues related to the fairness of New York’s tax system.
Over the past 15 years, New York City’s revenues have failed to keep pace with its economic growth, leaving the tax system increasingly out of sync with underlying conditions, Eisner said in her statement. That gap has contributed to pressure on public services and, she said, stems in large part from the city’s limited authority to adjust its tax structure in response to rising inequality.
Gabriel Zucman, professor at the Paris School of Economics: ‘Absolutely nobody leaves’
Speaking at Mayor Zohran Mamdani’s Tax Day forum, Zucman, a professor of economics at the Paris School of Economics, pushed back on one of the central objections of the tax — that it will drive wealthy homeowners out of New York.
“It is largely indeed a myth,” he said, adding that the more accurate term is “propaganda.”
He said that whenever any level of government — city, state, or country — considers even a modest tax increase on the very wealthy, it often triggers warnings about people leaving. The narrative, he said, is used to push back against higher taxes.
The research, however, shows the opposite.
“There’s a lot of work, careful empirical studies that have been conducted exploiting tax variation, tax increases or tax cuts, and [seeing] how this correlates with migration,” he said. “The overwhelming conclusion is that it’s not the case that absolutely nobody leaves.”
Nicole Gelinas, Senior Fellow at the Manhattan Institute: ‘Gimmicky’
Gelinas told the Jewish News Syndicate that the proposal cannot be considered full tax reform. Instead, she said, it’s “one gimmicky, tax-the-rich idea essentially as a marketing ploy as the state budget remains stalled.”
Gelinas is a senior fellow at the Manhattan Institute, a public policy think tank that focuses on urban violence and public sector reform. She’s also a journalist who serves as a contributing editor of City Journal — which is published by the Manhattan Institute — and a contributing opinion writer at the New York Times, where she writes about urban policy and politics.
She told the JNS that while the proposal may sound good to most people without second homes, it isn’t a “rational tax strategy.”
A better option, she said, would be “gently discouraging keeping a house or apartment unoccupied” as part of a broader reform of property taxes.
Bess Freedman, CEO of Brown Harris Stevens: ‘Impacting homeowners at all levels’
According to Jewish New Syndicate, Freedman, the CEO of the real estate brokerage Brown Harris Stevens, wrote a memo to her staff saying the effects of the tax could extend well beyond the extremely rich.
“While this proposal is being framed as a tax on the ultrawealthy, the reality is that its impact would extend far beyond a narrow segment of the market,” she said.
Freedman said that a decline in luxury property values would ripple through the broader market, compressing prices and ultimately “impacting homeowners at all levels.”
James Whelan, President of the Real Estate Board of New York: ‘Lost construction jobs’
Whelan, the president of the Real Estate Board of New York, raised concerns about the broader economic impact, arguing the tax could discourage investment in the city.
“This annual tax will weaken the city’s broader economy — all without addressing its fiscal problems in the first place. Its impact will reach far beyond a small group of owners,” Whelan wrote in a statement to Business Insider. “It will not raise the amount of revenue expected, but will eliminate thousands of construction jobs, lower property values, and raise costs for New Yorkers.”
He also noted that the state should shift its focus to “policies that encourage investment and housing production to create a more affordable city, not ones that stifle its growth.”
