Zohran Mamdani’s signature “tax the rich” proposal suffered another courtroom setback Tuesday after a judge accused New York City officials of mishandling the rollout of the so-called “pied-à-terre” tax.
The measure would impose an annual surcharge on owners of expensive second homes who do not primarily live in New York City. It targets properties valued at more than $5 million.
State Supreme Court Judge Wayne Ozzi of Staten Island sided with homeowners who sued the city, finding that officials had not done enough to determine who was actually subject to the tax before beginning collection efforts.
“Homeowners are being substantially harmed and penalized needlessly by D.O.F.’s method of implementing the tax law,” Ozzi wrote.
Ozzi also criticized the city for publishing a list containing nearly one million properties that could potentially be affected, along with the names of roughly 17,000 owners.
The tax, signed into law by Democratic Governor Kathy Hochul, remains legal. However, its future implementation is now uncertain, with the city still expected to collect the money owed by next spring.
The judge ordered the city to remove its existing list and replace it with a narrower version showing only properties that are actually subject to the surcharge.
“Our administration is fighting every day to deliver for working New Yorkers,” Mamdani spokesperson Matthew Rauschenbach told The New York Times.
Zohran Mamdani’s headline “tax the rich” proposal suffered another courtroom setback Tuesday after a judge accused the city of mishandling its rollout of the so-called “pied-à-terre” tax.
The tax covers three-family homes worth at least $5 million, as well as condos and co-ops valued at $1 million or more when they are not primary residences.
“The ultrawealthy are fighting in court to avoid paying their fair share. They have filed lawsuit after lawsuit to protect their privilege, and we will not back down.”
Rauschenbach said the city would “continue implementing the surcharge fairly, efficiently and in full compliance with the law.”
The city appealed Ozzi’s decision Tuesday night and invoked an automatic stay, allowing officials to continue implementing the tax while the case proceeds.
“City Hall botched this rollout and should have just admitted the errors and fixed its own mistake, instead of wasting time and taxpayer dollars by fighting it in court,” said Randy Mastro, an attorney representing the homeowners.
The residents challenging the city say Mamdani’s tax rollout “caused mass confusion” because officials disregarded state-provided information identifying who would qualify under the new law.
They say the city placed the burden on longtime New Yorkers, leaving many scrambling to prove that they lived at their homes before a tight one-month deadline expired.
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The lawsuit does not challenge the tax itself. The measure applies to three-family homes worth at least $5 million and to condos and co-ops valued at $1 million or more that are not used as primary residences.
The surcharge rises with a property’s value, reaching 1.3 percent for a single-family home worth more than $25 million and 6.5 percent for a condo or co-op valued above $5 million.
City officials project that the measure will generate approximately $500 million in annual revenue.
A view of the interiors at 220 Central Park South, the residence of billionaire hedge fund investor Ken Griffin, who previously clashed with Mamdani over a video message filmed outside his Manhattan penthouse.
Critics of Mamdani’s proposal argue New York relies heavily on high earners and commercial real estate taxes to fund city services – and fear alienating billionaires and large employers could backfire economically.
Still, Mamdani appears determined to keep pushing his tax agenda despite the public fallout.
However, last month it was revealed the mayor is extending an olive branch to the community by establishing the Business Advisory Council, including CEOs of Chobani, Etsy and the WNBA New York Liberty team.
Hamdi Ulukaya, the billionaire CEO of Chobani, had urged Mamdani in April to ‘have a regular dialogue with the business community,’ Kathryn Wylde, the former CEO of the Partnership for New York City, who was also at the meeting, told the Wall Street Journal.
‘It’s an honest effort by the mayor to get direct input from a group of business people that are not part of his natural constituency,’ Wylde added.
‘He isn’t used to messaging to this constituency, and doesn’t necessarily anticipate how they’re going to react to various policies or statements.’
There are 15 business leaders who have agreed to be a part of the council and will meet quarterly with Mamdani and Deputy Mayor for Economic Justice Julie Su, the mayor’s office said in an announcement.
The advisory is intended to advise City Hall on finance, technology, real estate, sports, entertainment, retail and healthcare.
Prominent council members include: CEO of the New York Liberty Keia Clarke, CEO of Etsy Kruti Patel Goyal, CEO of Brandon Blackwood New York Brandon Blackwood, President and CEO of Northwell Health John D’Angelo, President and CEO of Amalgamated Bank Priscilla Sims Brown and acclaimed restaurateur Marcus Samuelsson.
The council represents business leaders across multiple sectors, including healthcare, fashion, sports, food and finance.
However, tech and Wall Street leaders are noticeably absent. The New York Times reported before the official announcement that Jose Tavarez, the president for New York City at Bank of America, Ken Chenault, the former chief executive of American Express, and Charles Phillips, a private equity executive, were approached to join the council but ultimately did not.
A spokesperson for the mayor’s office told the Times that they could not discuss specific conversations with candidates, but that some executives choose not to participate due to time commitments, media attention, or clearance from their companies.
