It seems like a place like Manhattan might benefit from first up-zoning the low slung sections that are currently 4-8 stories.
My point here is that I'd start with trying to build enough housing before spending political capital on marginal things that neither unlock supply nor generate much revenue.
If someone tried to "up-zone," wouldn't they incur enormous popular and media backlash for demolishing buildings and displacing communities that have been there for decades just so they could build high-rent luxury skyscrapers?
I feel like that was the backdrop to about half the movies I watched in the '80s.
If I might put my tinfoil hat on for a moment, I think the recent obsession with upzoning is to distract from the possibility of regulating landlords—as if there were any large number of people opposed to upzoning before....
LOL. Why not just build bunkhouses and then rent out bunk beds there? For a cool $5000 a month. Because that's the end goal, isn't it? Manhattan is _already_ one of the densest cities in the world.
It needs a good _downzoning_ to be liveable again.
In Manhattan the low zones are due to the soil not being good for higher construction. Lower Manhattan and midtown are made of basalt stone that is extremely strong and apt for skyscrapers.
We have similar taxes in major cities in Canada (including both metro and provincial taxes here in Vancouver).
Housing is still massively squeezed and unaffordable for many in the Vancouver metro area, but the taxes definitely have encouraged some homeowners to sell or rent their properties, especially foreign investors, and their seem to be few or no downsides for people of middle-class and even moderately-affluent incomes.
I doubt that NYC will lose too much sleep over the protestations from extraordinarily wealth plutocrats.
Reactionary taxes like this have a tendency to be ill-considered and have unintended side effects.
NY also has a 1% penalty on paying more than $1 million for housing, which was probably enacted to proletariat applause when $1 million was still considered a lot of money. Now it distorts the value of entry level housing in NYC, where you'll have a hard time finding anything more than a studio apartment for $1 million. High closing costs and similar distortions mean people tend to lose money on housing in NYC unless it's held for many years.
$5 million is expensive enough that this probably won't add much housing stock in the short term. Still, politicians never seem to think through the consequences of headline-grabbing tax policies.
Even in worse case scenario, which this isn't, the affected persons would at most try to cheat the system. This proposal is really narrow to non-primary residences, that are also very valuable. None of which will affect 99.999% of the population.
You're comparing the wrong numbers. The question is what 1% of the purchase price does to the amount you need for your down payment and fees. On a 10% down payment an extra 1% increases the amount you need by 10%. Remember that while a million dollar home sounds extravagant, it's first time buyers who often have just barely enough who are trying to buy these.
Golly gee willikers, not the spooky potential for possible side effects! Wouldn't want any of those when we could have gigantic sucker-punch scarcity-amid-plenty instead!
I assume this will be challenged in court immediately. Does anyone understand whether it is likely to survive those legal challenges?
EDIT:
Here is a list reported by Google search but I really do not understand or know how reasonable these challenges are.
Equal Protection: Owners may argue the tax unfairly treats similar properties differently based on second-home status, value threshold, or owner residence. This is likely a weaker challenge because tax classifications usually receive deferential rational-basis review.
Nonresident Discrimination: A challenge could claim the tax targets out-of-city, out-of-state, or foreign owners rather than property use. The law is safer if written as a tax on non-primary luxury residences, not on nonresidents as a class.
Assessment Inequality: Owners may challenge how the city values condos, co-ops, townhouses, and mixed-use properties. This could be significant if the $5 million threshold is applied inconsistently or without reliable valuation rules.
Due Process: Owners may argue the law lacks clear notice, proof, exemption, and appeal procedures. This would be especially relevant for disputes over whether a home is truly a second home.
Residency Conflicts: Taxpayers may challenge inconsistent treatment if the city treats them as NYC residents for income tax but non-primary homeowners for this tax. Clear coordination between residency rules would reduce this risk.
Home Rule Authority: Opponents may argue NYC lacks authority unless the state clearly authorizes the tax. This challenge is less likely to succeed if Albany passes valid enabling legislation and NYC follows required procedures.
Property taxes already exist. There is no obvious reason why this particular property tax would be legally problematic.
The tax is also likely politically difficult to counter. Consider how limited in scope these taxes are, how the tax revenue benefits residents who live in NYC through providing more revenue for services without taxing residents at all, and how the only constituent the taxes negatively affects are non-residents (aka it’s non-trivial to argue that these people should even be considered constituents) who benefit from the services the city offers through stable apartment prices that nicely store their wealth yet provide little value in return.
The only rebuttal one could conceive is the value these high-net-worth individuals altruistically provide the city through developing office space and giving jobs to the city is not worth risking, but that is like saying the tail wags the dog. The reason these CEOs go to NYC is because that is where the talent and economic clustering is: if these high-net-worth individuals could get the talent they need to run their firms in Miami and Austin, they would have done so already. They have tried and they have failed up until this point.
Regardless, a claim into the future in such a complex system such as the markets and the judicial system (especially a common law system) always relies on induction which is never going to be deterministic. However, this tax is just another property tax meaning it likely will stand in court. Additionally, given that the opposition has very weak rebuttals against a well-versed counterparty implies the legislature or other political machinery won’t have a strong enough incentive to fight this tax.
NYS already has tax breaks for one's primary residence which varies by income and a tax on the sale of homes >$1Mil. Given how entrenched those are, I have trouble imagining a way in which this new tax is incongruous with existing rules.
"We find that, before adjusting for these factors, our choice of tax rates and brackets could raise almost exactly $500 million from a little over 11,200 properties. However, revenues could be reduced to between roughly $340 million and $380 million based on assumptions on exclusions for rented units and behavioral changes following the imposition of the tax."
It's all media feel goodsies but not actually do anything substantive.
I think that this has the benefit of both raising a non trivial amount of money as well as reducing housing demand from the wealthy in a supply constrained market
> an initiative to appease Mayor Zohran Mamdani and liberal voters
Taxing the rich is not a Liberal thing, but the Rich is calling it that because they do not want to pay any taxes at all.
He was elected because people are starting to feel real pain and seeing the ultra rich paying far less taxes then they are. If it was up to me, I would tax all the second homes above 5 million USD and add a Luxury Tax on all valuable Autos too.
Last year year Jeff bezos and I both paid taxes for the year of 2024. The percentage he paid on the money he made is far less than I did. I gave higher share of my income to the government than he did. Bezos's true tax rate was less than 1% and mine was around 25%.
What matters is the top 10% generates wealth through investments/equity/asset appreciation- stuff that the tax code barely touches.
The bottom 90% is locked into W-2 labor.
The tax code gives capital gains a massive, legal pass- for those that can afford to exploit it.. aka, the ultra rich are paying far less taxes then they should be.
Top 10% is the upper middle class, not the ultra rich. A successful surgeon making $1M per year is paying well over 40% a year in taxes, while Bezos is paying 1%.
This claim is often repeated but simply misleading. Taxable income is only a tiny fraction of the wealth of ultra rich folks - many even take symbolic wages, because their real compensation happens in stock, which they can use to lend effectively infinite money. There's a great episode of the Ezra Klein Show on this topic too[0].
Because wealth is also distributed in a very lumpy way across the city.
154 residents of NYC own 33% of the entire wealth of the city... notice I didn't say 1%, I said top 154. They are not contributing 33% of the tax income to the city.
So yes, the ultra rich pay "less taxes" if you look at how much of the resident wealth they control.
Also, property taxes are significantly lower than appraised value and the richer you get the bigger the disparity. That Ken Griffin’s $238M penthouse pied-a-terre? It's assessed value is $9M. So yea, he's paying like $150k/yr in property taxes.
And finally, it is a known fact that sales tax definitely hits poor people harder (re: "everyone pays sale tax equally"). What you want to look at is what percentage of a person's post taxincome vs sales tax paid, because if you make like $60k/yr you're probably close to 60% of all post tax income paying some form of sales tax (you buy with all the money you make). If you have $2B, your percentage of "tax paid as sales tax" is significantly lower, because you don't typically spend a billion dollars the same way you spend $60k.
I strongly doubt that this is going to have the effect that they want it to.
It won't raise the taxes that they expect it to. It won't free up inventory. It will halt construction.
This guy thinks a tax on second homes in fucking NYC is going to disproportionately harm the middle class.
He is economically illiterate.
Edit: scratch that, he also mentioned leaving a rent controlled apartment because of a crabs in a bucket mentality. I think he’s lying to push his own political agenda which appears to be that of the rich never paying taxes.
I’ll lol if he’s some pleb like most of us and is just running defense for his “betters”
I'm not sure it's that clear, and the taxes might not be the point. If this halts construction of second homes in the higher price ranges, then those construction crews will still need to do something. So, that might make it possible to find construction capacity for higher-density construction that otherwise wasn't available. Whether or not such a trickle-down effect will happen isn't guaranteed, but it's possible. It's also possible that no construction happens and we see a loss of jobs in the process.
It's a complex market and this is definitely a risk.
Seriously. Instead of using that land to build a $250 million penthouse Ken Griffin only spends 10 days a year in, they could probably build enough housing for 500+ middle class families.
NY should tax anyone with any money until everyone leaves. Then abolish money, like in Star Trek, and live the utopia. I don't think this will happen during my lifetime, but I am not missing it either.
Tax them to oblivion, the goal should be for them to sell! Let them go to Dubai if they don't like it.
Good! Second homes in any region with low inventory should be taxed...
It seems like a place like Manhattan might benefit from first up-zoning the low slung sections that are currently 4-8 stories.
My point here is that I'd start with trying to build enough housing before spending political capital on marginal things that neither unlock supply nor generate much revenue.
If someone tried to "up-zone," wouldn't they incur enormous popular and media backlash for demolishing buildings and displacing communities that have been there for decades just so they could build high-rent luxury skyscrapers?
I feel like that was the backdrop to about half the movies I watched in the '80s.
Why not both? To suggest otherwise is absurd.
If I might put my tinfoil hat on for a moment, I think the recent obsession with upzoning is to distract from the possibility of regulating landlords—as if there were any large number of people opposed to upzoning before....
You're right, when I think of a place that has an overabundance of 2 floor single family homes, I think of Manhattan.
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How do you know it's ineffective? Other targeted taxes, such as alcohol tax, tobacco tax, congestion tax, etc., have been shown to be very effective.
LOL. Why not just build bunkhouses and then rent out bunk beds there? For a cool $5000 a month. Because that's the end goal, isn't it? Manhattan is _already_ one of the densest cities in the world.
It needs a good _downzoning_ to be liveable again.
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In Manhattan the low zones are due to the soil not being good for higher construction. Lower Manhattan and midtown are made of basalt stone that is extremely strong and apt for skyscrapers.
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We have similar taxes in major cities in Canada (including both metro and provincial taxes here in Vancouver).
Housing is still massively squeezed and unaffordable for many in the Vancouver metro area, but the taxes definitely have encouraged some homeowners to sell or rent their properties, especially foreign investors, and their seem to be few or no downsides for people of middle-class and even moderately-affluent incomes.
I doubt that NYC will lose too much sleep over the protestations from extraordinarily wealth plutocrats.
Yup
Zohran is doing too much. I hope he at least leaves the second yachts alone.
What's the context here? Isn't he doing enough?
It's sarcasm (and I enjoyed it).
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Reactionary taxes like this have a tendency to be ill-considered and have unintended side effects.
NY also has a 1% penalty on paying more than $1 million for housing, which was probably enacted to proletariat applause when $1 million was still considered a lot of money. Now it distorts the value of entry level housing in NYC, where you'll have a hard time finding anything more than a studio apartment for $1 million. High closing costs and similar distortions mean people tend to lose money on housing in NYC unless it's held for many years.
$5 million is expensive enough that this probably won't add much housing stock in the short term. Still, politicians never seem to think through the consequences of headline-grabbing tax policies.
Even in worse case scenario, which this isn't, the affected persons would at most try to cheat the system. This proposal is really narrow to non-primary residences, that are also very valuable. None of which will affect 99.999% of the population.
Gosh, 1% on $1m, that's almost $10k! I can see that how would discourage homeownership and distort the market.
Actually wait, I can't.
You're comparing the wrong numbers. The question is what 1% of the purchase price does to the amount you need for your down payment and fees. On a 10% down payment an extra 1% increases the amount you need by 10%. Remember that while a million dollar home sounds extravagant, it's first time buyers who often have just barely enough who are trying to buy these.
Golly gee willikers, not the spooky potential for possible side effects! Wouldn't want any of those when we could have gigantic sucker-punch scarcity-amid-plenty instead!
Who are you protecting here?
You realize a very small subset of the population can afford a million dollar home, let alone a five million dollar home?
The majority of the city does not give a shit.
"The majority of the city does not give a shit."
Based on the voting, it seems they do give a shit but in the opposite direction.
I assume this will be challenged in court immediately. Does anyone understand whether it is likely to survive those legal challenges?
EDIT: Here is a list reported by Google search but I really do not understand or know how reasonable these challenges are.
Equal Protection: Owners may argue the tax unfairly treats similar properties differently based on second-home status, value threshold, or owner residence. This is likely a weaker challenge because tax classifications usually receive deferential rational-basis review.
Nonresident Discrimination: A challenge could claim the tax targets out-of-city, out-of-state, or foreign owners rather than property use. The law is safer if written as a tax on non-primary luxury residences, not on nonresidents as a class.
Assessment Inequality: Owners may challenge how the city values condos, co-ops, townhouses, and mixed-use properties. This could be significant if the $5 million threshold is applied inconsistently or without reliable valuation rules.
Due Process: Owners may argue the law lacks clear notice, proof, exemption, and appeal procedures. This would be especially relevant for disputes over whether a home is truly a second home.
Residency Conflicts: Taxpayers may challenge inconsistent treatment if the city treats them as NYC residents for income tax but non-primary homeowners for this tax. Clear coordination between residency rules would reduce this risk.
Home Rule Authority: Opponents may argue NYC lacks authority unless the state clearly authorizes the tax. This challenge is less likely to succeed if Albany passes valid enabling legislation and NYC follows required procedures.
Property taxes already exist. There is no obvious reason why this particular property tax would be legally problematic.
The tax is also likely politically difficult to counter. Consider how limited in scope these taxes are, how the tax revenue benefits residents who live in NYC through providing more revenue for services without taxing residents at all, and how the only constituent the taxes negatively affects are non-residents (aka it’s non-trivial to argue that these people should even be considered constituents) who benefit from the services the city offers through stable apartment prices that nicely store their wealth yet provide little value in return.
The only rebuttal one could conceive is the value these high-net-worth individuals altruistically provide the city through developing office space and giving jobs to the city is not worth risking, but that is like saying the tail wags the dog. The reason these CEOs go to NYC is because that is where the talent and economic clustering is: if these high-net-worth individuals could get the talent they need to run their firms in Miami and Austin, they would have done so already. They have tried and they have failed up until this point.
Regardless, a claim into the future in such a complex system such as the markets and the judicial system (especially a common law system) always relies on induction which is never going to be deterministic. However, this tax is just another property tax meaning it likely will stand in court. Additionally, given that the opposition has very weak rebuttals against a well-versed counterparty implies the legislature or other political machinery won’t have a strong enough incentive to fight this tax.
NYS already has tax breaks for one's primary residence which varies by income and a tax on the sale of homes >$1Mil. Given how entrenched those are, I have trouble imagining a way in which this new tax is incongruous with existing rules.
I dunno why anyone thinks this matters. https://comptroller.nyc.gov/reports/the-pied-a-terre-tax-and...
"We find that, before adjusting for these factors, our choice of tax rates and brackets could raise almost exactly $500 million from a little over 11,200 properties. However, revenues could be reduced to between roughly $340 million and $380 million based on assumptions on exclusions for rented units and behavioral changes following the imposition of the tax."
It's all media feel goodsies but not actually do anything substantive.
So it'll still raise at least 300 million? Sounds like a great thing to me. I dunno why you think it doesn't matter.
Unlocking extra housing is the real boon, the tax revenue is the bonus.
I think that this has the benefit of both raising a non trivial amount of money as well as reducing housing demand from the wealthy in a supply constrained market
> an initiative to appease Mayor Zohran Mamdani and liberal voters
Taxing the rich is not a Liberal thing, but the Rich is calling it that because they do not want to pay any taxes at all.
He was elected because people are starting to feel real pain and seeing the ultra rich paying far less taxes then they are. If it was up to me, I would tax all the second homes above 5 million USD and add a Luxury Tax on all valuable Autos too.
"seeing the ultra rich paying far less taxes then they are."
Is this actually true? I thought looking at the aggregates that the top 10% pay something like 1/3rd of all income/cap gain taxes.
Last year year Jeff bezos and I both paid taxes for the year of 2024. The percentage he paid on the money he made is far less than I did. I gave higher share of my income to the government than he did. Bezos's true tax rate was less than 1% and mine was around 25%.
Link - https://itep.org/washington-post-rich-not-paying-fair-share/
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"I thought looking at the aggregates that the top 10% pay something like 1/3rd of all income/cap gain taxes."
This is because much of the income of the wealthiest families in the country never appears on their income tax returns. https://www.americanprogress.org/article/forbes-400-pay-lowe...
What matters is the top 10% generates wealth through investments/equity/asset appreciation- stuff that the tax code barely touches. The bottom 90% is locked into W-2 labor.
The tax code gives capital gains a massive, legal pass- for those that can afford to exploit it.. aka, the ultra rich are paying far less taxes then they should be.
Top 10% is the upper middle class, not the ultra rich. A successful surgeon making $1M per year is paying well over 40% a year in taxes, while Bezos is paying 1%.
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i am not in NY, but aren't yearly auto registrations scaled significantly by the value of the auto?
that seems to be true in Arizona, for example.
The top 1% of NYC residents contribute 40-48% of all personal income tax collected in NYC. When you extend that to Top 2.5% you cross 51%.
Personal Income Tax accounts for around 31% of collected NYC tax revenue.
"The rich" also pay property tax. NYC's poorer residents generally don't have property to pay tax on. Everyone pays sales tax equally.
So how exactly are the ultra rich paying "less taxes"?
This claim is often repeated but simply misleading. Taxable income is only a tiny fraction of the wealth of ultra rich folks - many even take symbolic wages, because their real compensation happens in stock, which they can use to lend effectively infinite money. There's a great episode of the Ezra Klein Show on this topic too[0].
[0]: https://open.spotify.com/episode/3Jjy4drElYHNMRtxVQPENR?si=5...
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Because wealth is also distributed in a very lumpy way across the city.
154 residents of NYC own 33% of the entire wealth of the city... notice I didn't say 1%, I said top 154. They are not contributing 33% of the tax income to the city.
So yes, the ultra rich pay "less taxes" if you look at how much of the resident wealth they control.
Also, property taxes are significantly lower than appraised value and the richer you get the bigger the disparity. That Ken Griffin’s $238M penthouse pied-a-terre? It's assessed value is $9M. So yea, he's paying like $150k/yr in property taxes.
And finally, it is a known fact that sales tax definitely hits poor people harder (re: "everyone pays sale tax equally"). What you want to look at is what percentage of a person's post taxincome vs sales tax paid, because if you make like $60k/yr you're probably close to 60% of all post tax income paying some form of sales tax (you buy with all the money you make). If you have $2B, your percentage of "tax paid as sales tax" is significantly lower, because you don't typically spend a billion dollars the same way you spend $60k.
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Surely you know this, but the rich are paying less percentage taxes relative to the money they have.
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Voters don't feel like it's a fair deal. Telling voters that their concerns aren't real is a losing strategy.
I strongly doubt that this is going to have the effect that they want it to. It won't raise the taxes that they expect it to. It won't free up inventory. It will halt construction.
Taxing second homes would halt construction? Plenty of people out there wish to own a first home, myself included.
How will that tax result in more houses existing?
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The cost of construction in _New York City_ generally sets a floor as far as who can afford to pay for it.
The per-apartment cost of construction in Manhattan is more than the retail price of my 3500sq ft house in near-rural South Carolina.
This guy thinks a tax on second homes in fucking NYC is going to disproportionately harm the middle class.
He is economically illiterate.
Edit: scratch that, he also mentioned leaving a rent controlled apartment because of a crabs in a bucket mentality. I think he’s lying to push his own political agenda which appears to be that of the rich never paying taxes.
I’ll lol if he’s some pleb like most of us and is just running defense for his “betters”
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I'm not sure it's that clear, and the taxes might not be the point. If this halts construction of second homes in the higher price ranges, then those construction crews will still need to do something. So, that might make it possible to find construction capacity for higher-density construction that otherwise wasn't available. Whether or not such a trickle-down effect will happen isn't guaranteed, but it's possible. It's also possible that no construction happens and we see a loss of jobs in the process.
It's a complex market and this is definitely a risk.
New York City rent exists at an equilibrium.
The draw for people to move there is so intense, that any draw downs in rent are met with upticks in immigration.
Adding housing stock in NYC is not like adding housing stock in Lawnsdale Ohio. Almost by definition you cannot out build the demand for housing.
It’ll halt construction on luxury second homes? Wonderful!
Seriously. Instead of using that land to build a $250 million penthouse Ken Griffin only spends 10 days a year in, they could probably build enough housing for 500+ middle class families.
I don't think the demand for second homes worth over $5 million is a major driver of construction of new units in NYC.
> It will halt construction.
Why would that be the case?
Those homes are built for money laundering anyway. Good riddance.
NY should tax anyone with any money until everyone leaves. Then abolish money, like in Star Trek, and live the utopia. I don't think this will happen during my lifetime, but I am not missing it either.
California next please! If you aren’t in your home 9 months of the year you can stay in a hotel. Thanks!