The Absurdity of New York City’s Pied-à-Terre Tax
The Atlantic · LC · trust 41/100
Zohran Mamdani has wasted an opportunity to address the city’s real long-term fiscal problems.
Illustration by Matteo Giuseppe Pani / The Atlantic* September 1, 2026, 11:25 AM ET Share Save Listen − 1.0 x + Seek 0:00 9:16 New York City’s new pied-à-terre tax provokes strong opinions. Supporters argue that the nation’s first tax on luxury second homes will help balance the city’s budget and improve “a fundamentally unfair system” that “hurts working New Yorkers,” as Mayor Zohran Mamdani has put it. Opponents warn that the tax will alienate the rich people who power the city’s economy. Some homeowners fear that the new tax treats them as “ guilty until proven resident .”
But Mamdani’s backers and detractors alike are missing the bigger picture. The new tax was created because the city has been spending more than it takes in. That problem has not gone away. Neither has the dysfunctional property-tax system that made the tax so enticing in the first place. New York’s political class would do well to focus on solving these long-term financial challenges before they metastasize into a crisis. By spending political capital on a controversial but largely symbolic policy change, Mamdani has made that task even more difficult.
For more than a decade , New York lawmakers had noodled around with creating a tax on pieds-à-terre, high-end residential units that don’t serve as year-round homes. A pied-à-terre tax, already used in London and Vancouver, was tossed around to fund city government and, later, to shore up the Metropolitan Transit Authority’s perennially strained finances. The idea gained new attention earlier this year as Mamdani stared down a significant budget gap. State lawmakers authorized the tax, which will apply to about 10,000 properties, to help city hall balance this year’s budget. Nonresident owners of condos and co-ops worth at least $1 million or houses worth at least $5 million will owe an extra tax in the neighborhood of 1 percent of their property’s market value.
The new policy has triggered some overheated reactions. (Mamdani Derangement Syndrome is real.) One pundit described the mere act of listing the properties subject to the tax as “ a call to violence ,” even though local governments have let the public inspect the official list of property valuations and owners since colonial times. Other critics claim that the tax will cause wealthy New Yorkers to relocate. The revenue raised by the tax “is very little compared to to [ sic ] the TAXES PAID by the tens of thousands of people who are fleeing the City, never to return,” Donald Trump, a notable pied-à-terre owner, declared on Truth Social. “This dangerous political ‘experiment’ in New York will destroy what was once a great City and State.” In fact, the people subject to the tax can’t leave New York, because they are already, by definition, not residents.
Still, these histrionic critiques are responding to a real shift in New York City politics. Bill de Blasio, for example—nobody’s idea of a fiscal conservative—sought to raise income taxes on the city’s highest earners in order to finance universal prekindergarten. Mayor Mamdani, in contrast, seems to view certain tax increases as virtuous unto themselves. His campaign slogan, “Tax the rich,” was a policy goal, not a mechanism. He unveiled the pied-à-terre-tax proposal with a video singling out the hedge-fund billionaire Ken Griffin and his Central Park South condo.
Mamdani’s approach makes for good political theater. But the drama around the pied-à-terre tax, along with its turbulent implementation , has distracted from the underlying problem that made co-ops and condos so attractive in the first place: their inequitable tax treatment.
Under state law, the property tax on these units isn’t based on their market value, but rather on the city’s estimate of the rent that a similar unit would fetch if it were an apartment. The result is that many are wildly undertaxed. A Bloomberg analysis of pre-COVID data found that the median sales price of a New York City condo was more than five times the city’s property-tax valuation. The journalists found an example of a Bronx home with an effective tax rate more than 200 times higher than one in Brooklyn. One of the more compelling examples of the disconnect between property values and property taxes was the condo that Mamdani cited in his video: The city considers Griffin’s unit, which sold for $238 million in 2019, to have a market value of just $15.5 million (and a taxable value, a separate city calculation, of less than $7 million).
The gulf between assessed and market value is just one issue. New York City, with the state’s blessing, has since the 1980s used gimmicks to shield homeowners (otherwise known as voters) from property-tax increases. But the benefits have flowed more to some properties than to others. By law, the share of tax paid by each of four classes of properties (essentially: single-family homes, apartment buildings, utilities, and commercial or industrial sites) can change only by a certain amount in a year. This creates huge distortions. Over decades, the restriction has had the practical effect of preventing the property tax on homes in higher-demand neighborhoods from rising as quickly as their market value. That has left certain areas with significantly lower effective property-tax rates and smaller tax bills. One of the most regressive consequences of this system is the way it translates into higher gas and electric bills: The city has raised property taxes on utilities knowing they would pass the expense along to ratepayers.
The pied-à-terre tax does nothing to address these issues. State and city officials could have put a dent in the city’s property-tax inequities, and even produced a windfall for the city, by simplifying the city tax system in a way that makes all property-tax bills more reflective of property values. That would mean allowing the share of tax coming from different types of…
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