New York City Mayor Zohran Mamdani’s new pied-à-terre tax has been sold to New Yorkers under the premise of charging wealthy absentee owners an incremental property tax as a de facto penalty for owning property in the city without living there or renting it out. The stated tension is to close the city’s budget gap, and it was a feature in Mamdani’s record-setting $124.7 billion budget. As part of this budget, Mamdani estimated $500 million a year in incremental tax revenues.

Many, including the city’s comptroller, have cast doubts on whether the expected tax revenues will match what actually comes in, raising questions among analysts about the long-term implications of this tax increase. Some observers note that the incentive structure could encourage certain owners to consider relocating permanently to the city rather than paying the surcharge.

While it has not been a stated objective of the pied-à-terre tax, analysts say that if it results in more wealthy taxpayers becoming New York City residents, it could lead to a larger tax base that helps pay for many of the mayor’s proposed new social services. However, if the tax encourages divestment of New York City property, it could have the opposite effect.

How NYC Taxes Already Stack Up

Before the pied-à-terre tax existed, a high-net-worth taxpayer weighing a move to New York City already faced one of the highest tax levies in the country.

New York State’s top marginal rate is 10.9% for taxable income over $25 million. Unlike most cities, New York City also levies an income tax of 3.876% for taxpayers with income over $50,000. This combined rate exceeds 14%, which is more than any other state income tax rate in the U.S. Even beyond the income tax rate, New York City has an 8.875% sales tax rate on most purchases.

These high taxes took center stage recently New York Knicks star and NBA Finals MVP Jalen Brunson — who left the Dallas Mavericks, a state with no income tax, for a $156.5 million contract in New York — was asked what he had against the Lone Star State. His answer: “I miss the Texas taxes,” according to Yahoo Sports. This........

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