‘It’s shameful’: New York’s elite lash out at Zohran Mamdani’s second-home tax

A time-honoured New York ritual is playing out again as millionaires and billionaires threaten to flee the global financial capital where they own luxurious second homes.

The latest breaking point for the penthouse set: Mayor Zohran Mamdani’s plan to tax their pieds-à-terre worth more than $5mn.

Yet for all the times wealthy New Yorkers have cried “Miami” over the Big Apple’s taxes, evidence of an exodus has been mixed.

“It’s a rounding error for them,” said Yasser Salem, chair of OneNYC, an independent pro-business organisation that backed Mamdani for mayor.

Still, the wealthy are bombarding advisers with angry calls, asking them to mitigate the levy’s impact even though the exact rate has not been announced, and it is unlikely to make a serious dent in their net worth.

For one Miami-based businessman with a second home in New York’s West Village, the proposed levy is financially manageable. But he described it as reprehensible.

“Can I afford the tax? Yes. Is it going to deter me? No. But I think it’s shameful,” he said. “I provide a lot of money to people who are blue-collar workers who work for me, servers in restaurants. If we’re not there, there are going to be less people being paid.”

New York’s Democratic governor Kathy Hochul said the tax will affect 13,000 properties — about 0.4 per cent of the city’s more than 3.7mn housing units — and raise about $500mn annually.

That expected revenue is equal to the combined value of a handful of the properties set to be affected, including Citadel founder Ken Griffin’s $238mn pied-à-terre, which was the backdrop for Mamdani’s video announcing the tax.

Griffin’s apartment is within the stretch of Midtown Manhattan often referred to as Billionaire’s Row, the city’s archetypal pied-à-terre neighbourhood where Michael Dell and developer Christian Candy purchased properties in recent years.

Dell’s 10,923-square-foot penthouse spans two floors and boasts views of Central Park and the Manhattan skyline on each side.

The area famously sits relatively empty. “If you look at those skyscrapers at night, not a lot of windows are lit up,” said Douglas Elliman broker Fredrik Eklund.

Crucial details of the tax plan are set to be released in the state budget in the coming days. But already, some of the policy’s loudest critics have raised alarm about the wider impact of the levy — and New York City’s new administration.

“The progressive movement is the most dangerous thing for the upper-middle-class professional that’s ever happened in these big cities,” said Patrick Dwyer, a wealth adviser for NewEdge Wealth in Miami.

“When these people are successful, and they become a managing director after working 100 hours a week and they’re making real money, these governments are going to crush that person,” he added.

Steven Fulop, chief executive of the Partnership for New York City, said the levy could have a “chilling impact on economic investment”, adding that the proposal risks driving away companies that employ New Yorkers, especially if executives are based elsewhere.

“Our belief is if you’re going to force this policy — which is a bad policy — you need to have some responsible carve-outs,” he said.

Some of the millionaires and billionaires who own pieds-à-terre in New York City view the proposal as a personal affront. At the Milken conference in Beverly Hills, Griffin spoke publicly for the first time about Mamdani’s announcement video.

“What Mamdani just did to me, and more broadly is doing to the city of New York, is triggering of the trauma I went through in Chicago,” he said, adding that the firm planned to “double down” on Miami, where it moved the hedge fund’s headquarters four years ago.

Miami realtors had claimed in the run-up to the democratic socialist’s election that rich residents in the city were looking to move to Florida, but that did not show up in much of the available data.

Luxury brokerage Corcoran said that in the two weeks after the tax was announced, 20 per cent of its agents reported clients cancelling or pausing deals in New York, at an average price point of $15.7mn.

But many wealthy homeowners find themselves stuck owning properties in the city even if they bristle at the prospect of higher taxes.

“I’m not selling my apartment because I really can’t,” said one wealth adviser. “I have the children down the street and I’d like to stay married to my wife. There’s literally no dollar amount I wouldn’t pay to be near my grandchildren.”

Scott Bok, former chief executive of investment bank Greenhill & Co, who is based in New York, said: “People are just on a hair-trigger alert for anything Mamdani does, but to me this is not going to be the thing that drives people out of the city.”

New York is not alone in its pied-à-terre plan. Rhode Island is implementing a similar levy this July, while Montana has a higher tax rate on second homes.

In the meantime, advisers and attorneys are strategising with clients on how to handle the proposed tax despite not knowing how it will work.

“It’s hard to know or plan around it or with it without the legislation,” said Mark Klein, a tax lawyer at Hodgson Russ who advises some of the country’s wealthiest residents. “We’re in purgatory. We just don’t know until we see what’s going on.”

Klein described his clients as “very angry”, but conceded the new tax was expected to be relatively minor compared to their overall net worth.

The Miami-based chief executive with a condominium on the West Village’s Hudson River waterfront is sick of being vilified.

“I know what it is to not have money, I’m also a regular person who has had to work his way up,” he said. “A lot of these people who have pied-à-terres are real people.”