(The Center Square) – New York City has won a round in its legal battle over Mayor Zohran Mamdani’s plans to set a new wealth tax on second homes to drum up hundreds of millions of dollars to foot the bill for his progressive agenda.
A ruling by the Appellate Division of the New York State Supreme Court in Brooklyn overturned a lower court ruling that held that Mamdani’s Finance Department had violated homeowners’ due process rights by publishing a list of 17,000 properties that might be subject to the new pied-à-terre tax.
Wednesday’s ruling stems from a lawsuit filed by former first deputy mayor, Randy Mastro on behalf of several homeowners, which claims the city’s decision to release a list of nearly 1 million properties that might be subject to the new pied-à-terre tax set off a “panic” among homeowners.
The new tax, a key plank of Mamdani’s “tax the rich” campaign, calls for charging property owners a 4% surcharge on one- to three-family second homes valued over $5 million and on co-ops and condos valued at $1 million.
The Mamdani administration estimates the tax will generate more than $500 million a year for the city to help plug budget gaps and fund the mayor’s far-left agenda.
In September, state Supreme Court judge Wayne M. Ozzi sided with homeowners who sued over the tax, alleging it unconstitutionally discriminates against out-of-state property owners, impedes interstate commerce and creates tax liabilities for co-op boards because of actions by shareholders.
He ordered the administration to remove the current list of property owners to whom the tax won’t apply and replace it with one listing only those who will be subject to the tax. But the city appealed the ruling.
In its decision, the appellate court reversed Ozzi’s ruling after ruling that the plaintiffs failed to prove they have been subjected to ridicule or that “bad actors” have misused the information” on the published list of properties.
“From Day 1, those with the most have attempted to use every legal avenue available to shield their wealth and avoid contributing more to our city,” Mamdani said in a statement in response to the ruling.
The new law faces other legal challenges, including one filed by former Commerce Secretary Wilbur Ross and Stephen Wynn – founder of Wynn Resorts- that accuses the state and city government of discriminating against wealthy out-of-towners with a “property tax that falls exclusively on nonresidents” of New York City. Both men live in Florida, but have a second home in New York City.
In a statement, Mastro said the legal fight isn’t over and said “the ultimate day of reckoning for this ‘pied-a-terre’ surcharge will occur next month when its constitutionality will be decided.”
“What the City has done here is unconscionable – trying to ensnare thousands of people who don’t owe this surcharge into having to prove they live in their own homes or else have to pay it,” Mastro said in a statement.
President Donald Trump has called the new tax a “dangerous political experiment” and has said his administration is looking into ways the federal government can block it. So far, the Trump administration hasn’t taken any action to block the law.
