One wrinkle I haven't heard much discussion of -- cities respond to incentives too. NYC is a global destination for the mega wealthy. If it turns out the uber-rich don't mind paying and this becomes a cash cow for the city, that creates incentives for the city to cater to them and try and get more uber-rich people to have second homes in the city.

I heard about a system for this that struck me as brilliant. Make someone declare the value of their property. Then the government has the choice of taxing them at the scheduled rate, or buying the property from them, for that cost.

TADA.

And if someone wants to artificially inflate the value of their home, to reflect the difficulty of moving out, finding a new secondary residence, etc, then that's their business. No worries. We'll tax that additional value, no problem.

I think this system goes back thousands of years. Why not use it?

> State lawmakers on Wednesday passed the tax on nonprimary residences in order to help close the city’s budget gap. The so-called pied-a-terre tax will be imposed on second homes valued at $1 million or more. It’s expected to raise $500 million in revenue.

> Details on the tax obtained by CNBC show that the property tax would take effect in two different phases. In the first two years – the tax years 2026-2027 and 2027-2028 – condos and co-ops valued at more than $1 million by the city’s Department of Finance will be subject to the tax. Properties worth between $1 million and $3 million will face a 4% annual tax; properties valued at $3 million to $5 million will face a 5.25% tax; and those above $5 million will face a 6.5% tax.

The rates sound a bit steep (although I'm not familiar with the baseline tax rates on properties of that value) but the principle is sound. In the UK, the equivalent tax on housing is council tax, and local councils in Great Britain (but not Northern Ireland) are empowered to double the rates of council tax on second homes.

Edit: Actually, as a property tax of nonprimary residences, is this not also effectively also a Landlording tax? Will my landlord's tax bill go up because he's not residing in my building, if my building is above the threshold assessed value of $1mm? Or are >$1mm "multi-family homes" (significant % of housing of New Yorkers in BK/Queens) exempt and this only applies to condos?

This is also some opportunity for intra-state and intra-city arbitrage where random cities and states lean into the controversy and start offering tax incentives for the "sad" and "offended" egos of wealthy of NYC to move there. That often happens to companies, where states, sometimes down South offer such "deals" to move company headquarters from higher tax states up North.

But at the same time, this might encourage some wealthy people who "fled" to Florida to return back and make New York their primary residence.

I also see slew of loopholes popping up, couples divorcing so each can claim on of the residences as "primary"

>Rather than overhaul the system immediately, the city will gradually update valuations – and the tax – according to the budget documents. Starting in the 2028-2029 tax year, the property values will be based on comparable sales. Since valuations will skyrocket, the tax rates will fall to compensate.

Hold on a second. Reading between the lines, this means everyone's property taxes are going up, right? Because the valuation system is being revised to more accurately reflect resale value.

Obviously this would affect more expensive properties more. But I havent seen anyone acknowledge that everyone's taxes will increase. Is that because I have the details wrong or because it's just flying under the radar?

Wild that there are so many rich people in NYC. Truly an engine of wealth creation.

If that argument holds up in court, we are all screwed.

But they just repealed that system so no more property tax but you can also no longer deduct mortgage interest from your taxes. So now the system favors people that don't have loans.

That with laws against foreigners buying property (most of Switzerland - not in some economically under devised areas though) the hope is the cost of housing will go down.

Unfortunately, doing that is very unpopular. Unpopular enough that we see states trying to get rid of property taxes, and those providing limits to increases, which basically guarantee misallocation and rising prices. But what is economically reasonable and what the voters like have very little to do with each other.

Is there a better way to think about this?

Why's there an obsession with the $1m cutoff?

The dollar has been turned to dust. $1M is not that much money, especially in housing, especially in NYC.

Why tax $1m second homes and not second homes generally? Effectively, you're going to tax almost all second homes.

So why the arbitrary cutoff?

Chicago wanted to add a "millionaire's tax" on $1m+ home sales. At least in Chicago, that isn't effectively taxing the vast majority of housing (and total value) - so there's some distinction worth having.

Are we going to see things classified as not-residences, but then people can vacation there anyway, much like Mar-a-Lago supposedly cannot be a residence, but apparently President Trump lives there and votes there, anyway?

I suppose in Ken Griffin's case, even if his residence is owned by an LLC he controls, he is known to reside in it. But how effective is this legislation when the purpose of LLC ownership is expressly anonymity and accounting convenience?

that is how it was designed, it only applies to people who are ineligible to vote in New York City, there is no way to push back.

As such, it's really quite disgusting, abuse of power motivated by pure greed, violating literally the founding democratic principle of these United States.

Our tree of liberty needs watering.

(I do not have to pay this tax, but I am a principled person)

Stocks should be bought and sold, period the end. That is how the market is supported to work.

If you closed this simple loophole, you would see a massive amount of tax revenue.

Actual title is "New York passes Mamdani’s pied-a-terre tax"

This is part of the reason we have a housing shortage in the US: 20% of available homes are purchased by investors, which squeezes the supply.

Airbnb has made this worse. There are areas near me where during the COVID ZIRP, people snatched up like 70% of the homes to turn into rentals. Those places are now ghost towns, unless it's Memorial Day weekend.

> New York passes Mamdani’s pied-a-terre tax. Here’s who pays and how much

(The submitted title at time of commenting is "New York Passes Tax on the Ultra-Wealthy)

It's a tax on second homes. If you thought it was a wealth tax from the editorialized title, like I did, that's not correct.