NY Gov. Kathy Hochul proposes a wealth tax on pied-à-terres in major u-turn

New York Gov. Kathy Hochul, who has long resisted calls to significantly increase taxes on the state's wealthiest residents, is now proposing a compromise: a new levy on multimillion-dollar second homes in New York City. This move comes after months of pressure from progressive voices, including Mayor Zohran Mamdani, who have advocated for higher taxes on the rich.The moderate Democrat's plan, announced Wednesday, would empower New York City to impose a tax surcharge on secondary residences valued over $5 million, know as pied-à-terres. The governor′s office estimates this measure could generate at least $500 million annually, a crucial sum as Mamdani seeks to address a multi-billion dollar budget deficit and fund his ambitious policy agenda."As Governor, I understand the importance of stabilizing the city’s finances without compromising on essential services New Yorkers count on," Hochul stated. "If you can afford a $5 million second home that sits empty most of the year, you can afford to contribute like every other New Yorker."The governor's office confirmed the measure would be included in this year's state budget. This sprawling legislative package is currently undergoing intense negotiations in Albany, having already missed its April 1 deadline for a spending plan.Mayor Mamdani, who has consistently pushed for a more extensive tax increase on the wealthy, hailed the proposal as a victory. In a statement, he said it brings him "one step closer to balancing our budget by taxing the ultra-wealthy and global elites." Speaking at a tax-focused forum under a "Tax The Rich" banner, Mamdani emphasized that the proposal targets "the super wealthy who can purchase properties and use them to store their wealth to benefit from New York City’s real estate market but not have to pay back into that same city."New York Governor Kathy Hochul agreed to sign New York's medically-assisted death bill with stricter regulations around who can qualify (Getty Images)Hochul has historically opposed increasing personal income or corporate taxes, arguing that such policies could encourage residents and large businesses to relocate to states with lower tax burdens, thereby eroding New York's tax base. Despite her stance, progressive activists have persistently chanted "tax the rich" at her public appearances, even following her to an annual political conference in San Juan late last year.The governor also faces potential political vulnerability over tax increases as she campaigns for a second full term, aiming to counter Republican criticisms regarding the state's high tax rates. Her Republican challenger, Bruce Blakeman, swiftly seized on the proposal, framing it as a broken promise. Hochul’s Republican challenger Bruce Blakeman with Trump (Getty)"Kathy Hochul’s ‘No Tax Hike’ promise has expired faster than the families fleeing New York’s affordability crisis," said Blakeman, a county executive in the city's suburbs. "Unlike Hochul, I’ll actually keep my word when I’m governor: I’ll cut your taxes, slash your utility bills in half, and protect the American Dream."Mayor Mamdani, a Democrat, has urged both the governor and the state Legislature to raise taxes on the rich, advocating for wealthier residents to contribute more to programs designed to assist the city's struggling working class. He is simultaneously grappling with a significant budget gap, initially estimated at $12 billion but later revised to about $5 billion after state financial assistance and savings. This deficit threatens to jeopardize his agenda and broader city services.At a recent news conference, Hochul asserted that the proposal would help the city bridge its budget gap without resorting to service cuts. However, she stressed that the mayor and City Council must identify additional savings to balance their budget. "Our goal is to get the city on stable ground, to close the gap so we can take the pressure off," she concluded.