New York's Pied-a-Terre Tax Will Barely Scratch the Billionaires It Targets

New York City has a new tax aimed squarely at the very rich, and the early math suggests it will sting about as much as a parking ticket does for the rest of us. The pied-a-terre levy, which took effect on July 1 and runs through 2031, targets pricey second homes owned by people who do not actually live in them, a group that includes some of the wealthiest individuals on earth. For those billionaires, the bill will amount to a rounding error.

The tax was the signature promise of Mayor Zohran Mamdani, who unveiled it in April in a video shot on the sidewalk outside the Manhattan penthouse of hedge fund magnate Ken Griffin. When I ran for mayor, I said we would tax the rich, Mamdani said in the clip. Today we're taxing the rich. Griffin, whose home was used as the backdrop, was not amused, calling the video creepy and frightening and warning that he might move Citadel's planned 6 billion dollar Manhattan office tower to Miami.

How the tax works

In its first years the levy applies to houses assessed at 5 million dollars or more and to condos and co-ops valued at 1 million dollars or more, with primary residences and leased properties left out. The city will lean on its own assessed values at the start before shifting to market comparable figures around 2028 and 2029, at which point only properties worth 5 million dollars or more will be caught. The design is meant to hit trophy apartments rather than ordinary homes.

City officials expect the money to add up even if no single owner feels much pain. The Mamdani administration projects about 500 million dollars a year, while the city comptroller offers a more cautious range of 340 million to 380 million dollars. Set against a municipal budget of 125.8 billion dollars, in which real estate taxes already supply 39.6 billion dollars, or nearly half of local tax revenue, the new charge is a modest addition to the pile.

A rounding error for the ultra rich

The gap between the tax and the fortunes it touches is where the story gets striking. Griffin, worth an estimated 51.4 billion dollars, owns a penthouse he bought for 240 million dollars, though the city assesses it at just 15.6 million dollars, along with two units at 740 Park Avenue valued together at 83 million dollars. His projected tab through 2031 comes to about 12.9 million dollars, which works out to 0.025 percent of his wealth.

Others get off even lighter. Jeff Bezos, worth about 247.1 billion dollars, holds nine apartments in the city and faces an estimated 5.1 million dollars in tax, a mere 0.002 percent of his fortune. Joseph Tsai, the Alibaba cofounder worth 12.3 billion dollars, bought three units at 220 Central Park South for 345.5 million dollars in 2021 and would owe around 12.4 million dollars, the heaviest relative hit on the list at roughly 0.1 percent.

Loopholes and second thoughts

Some of the wealthiest owners will pay nothing at all, simply by calling their New York apartment home. Bill Ackman has designated his One57 duplex penthouse, bought for 91.5 million dollars, as his primary residence, a move that could spare him about 4.6 million dollars through 2031. Michael Bloomberg has similarly labeled his East 79th Street mansion a primary home, placing it outside the tax entirely.

Even supporters of the idea concede it may cost more to run than it looks. Nathan Goldman, an accounting professor at North Carolina State University, noted that assessing and appraising all these high end properties will consume real city resources, and he questioned whether the effort is worth the revenue it brings in. For the billionaires on the receiving end, the answer is almost beside the point. The tax makes a political statement far louder than the dent it leaves in their bank accounts.