NYC’s Proposed Pied-a-Terre Tax: Does it Go Far Enough?

"I'm never going to be hard on someone for changing their view in favor of more progressive taxation," says Emily Eisner of Fiscal Policy Institute. "I think it's laudable that Governor Hochul has shifted towards wanting to ask high earners and extremely wealthy people to pay into providing the services that make New York City and New York State a great place to live." Listen to what else Hochul is doing in NY by upgrading your subscription below!

Subscribe for as little as $4 a month (5-day free trial)

FEATURING EMILY EISNER - New York City Mayor Zohran Mamdani, together with New York Gov. Kathy Hochul, has proposed a new tax on nonresident second-home owners in the city. The so-called Pied-a-Terre tax is a surcharge on homes valued at $5 million or more, owned by people who don’t live in the city year-round. While the tax has wealthy homeowners up in arms, some tax experts say it doesn’t go far enough to address the city’s major budgetary shortfall. 

Emily Eisner is the Acting Executive Director and Chief Economist at the Fiscal Policy Institute and spoke with Sonali Kolhatkar about what the tax entails and how additional taxes are required.

ROUGH TRANSCRIPT:

Sonali Kolhatkar: What is this tax? I gave the broad outlines of it. A lot of people who own second, third homes in New York City aren't having it, don't like it. How badly would it actually impact them, if we should even have that as a consideration, but what exactly is that tax? 

Emily Eisner: Yeah. Some of the details of the tax haven't been ironed out yet. I think that the mayor and the governor are in negotiations over this. What we do know is that they're aiming to raise a total of about $500 million from the tax overall, and they expect to tax about 10,000 to 15,000 units. Keep in mind that these are units that are worth... By units, I mean apartments that are worth more than $5 million at the market rate. So, these are people who own $5 million apartments as their second homes, or third, or fourth. 

So, I don't expect this to be a high enough tax for people to feel a budget strain. And as you sort of said in your introduction, $500 million is about a 10th of the budget gap that New York City has. So, this is not really that large a proposal in the grand scheme of things.