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NYC Mayor Zohran Mamdani and Gov. Kathy Hochul proposed a new tax on Wednesday.Anadolu\/Anadolu via Getty Images<\/p>\n
Gov. Kathy Hochul and Mayor Zohran Mamdani proposed a new tax on wealthy second-homeowners.<\/p>\n
The tax is expected to generate $500 millon in annual revenue.<\/p>\n
NYC’s comptroller forecast a $2.2 billion budget shortfall in 2026.<\/p>\n
New York City Mayor Zohran Mamdani<\/a> is following through on one of his most divisive campaign promises: tax the rich.<\/p>\n Mamdani and Gov. Kathy Hochul introduced a new pied-\u00e0-terre tax proposal<\/a> on Wednesday. The tax, which requires legislative approval, would affect residents who own a secondary property in New York City valued at over $5 million but live elsewhere. It’s the first of its kind for New York state.<\/p>\n The proposal drew swift ire from some members of the upper echelon<\/a>, including President Donald Trump<\/a>. He, alongside other billionaires like Citadel CEO Ken Griffin<\/a>, could be directly affected by the tax. Griffin purchased a Midtown penthouse for $238 million in 2019, while Trump owns properties in New York.<\/p>\n “Sadly, Mayor Mamdani is DESTROYING New York! It has no chance! The United States of America should not contribute to its failure,” Trump wrote in a Truth Social post on Thursday.<\/p>\n The Mayor’s Office of New York City said it expects the policy to generate $500 million in annual revenue.<\/p>\n Here’s what we know so far.<\/p>\n Why are Mamdani and Hochul taxing the rich?<\/p>\n The Mayor’s Office of New York City said the tax will address the city’s multi-billion-dollar budget gap.<\/p>\n In January, New York City Comptroller Mark Levine said the city is facing a $2.2 billion budget shortfall for the 2026 fiscal year. He projected a $10.4 billion gap for the 2027 fiscal year.<\/p>\n “This is the first time since the Great Recession that the City faces a budget shortfall of this magnitude this late in the fiscal year, presenting serious challenges for the City’s budget,” the comptroller’s office said in a press release.<\/p>\n The comptroller’s office said the city’s economic outlook was not the reason for the budget gap. Rather, it blamed former New York City Mayor Eric Adams<\/a>‘ administration. Specifically, spending levels that exceeded revenue and a failure to properly budget for known and recurring expenses.<\/p>\n New York State Comptroller Thomas P. DiNapoli urged city officials to address the budget in March.<\/p>\n “The city should take steps to balance its budget without depleting reserves during a projected period of economic growth, which would signal fiscal stress and leave it less prepared for when a rainy day arrives,” DiNapoli said in a press release.<\/p>\n The offices of Governor Hochul and Mayor Mamdani did not immediately respond to Business Insider’s request for a comment.<\/p>\n Where will the money go?<\/p>\n The proposed tax is projected to generate $500 million in revenue that will be diverted to city services.<\/p>\n During a press conference on Friday, Mamdani said the money will be used to fund “essential city services like free child care, cleaner streets, and safer neighborhoods.”<\/p>\n The Hochul Administration said on its website that “as New York City faces a significant budget gap, the Governor’s proposal will generate much needed revenue for the city without impacting every day New Yorkers.”<\/p>\n Lawmakers make the call<\/p>\n The proposed tax would need to be approved by both the New York State Assembly and the State Senate before it can go into effect.<\/p>\n The measure is being negotiated as part of the broader state budget process, where it has emerged as a potential compromise to help close New York City’s multibillion-dollar deficit, which has been delayed.<\/p>\n One of the major questions that lawmakers will discuss is whether it will be a bracketed or flat tax. The New York Times reported that one proposal under discussion would set tiered tax rates: one rate for pieds-\u00e0-terre valued between $5 million and $15 million, a higher rate for those valued between $15 million and $25 million, and an even higher rate for those valued at $25 million or more.<\/p>\n