Mayor Zohran Mamdani is gearing up to tax the rich — if they live elsewhere but own multimillion-dollar properties in New York City.

Mamdani and New York Gov. Kathy Hochul announced a proposal last week to tax pieds-à-terre — homes owned by people with primary residence outside the city — worth over $5 million. Hochul estimates it could raise $500 million in revenue annually, helping to close the city's budget gap and funding new affordability measures. The proposal has already invoked immediate backlash from business leaders and right-leaning politicians.

Significantly, the proposal would, indeed, tax the rich — a signature policy position of Mamdani's that Hochul has previously resisted in broader forms.

While New York has flirted with such measures before, other cities ranging from Vancouver to Berkeley, California, have enacted similar taxes. Those policies were often designed to bring empty housing back on the market and raise revenue in the process.

Its vacancy rate is near a 50-year low at 1.4%, and the new tax would only apply to around 13,000 affected units. This makes it unlikely to add a meaningful amount of housing supply the way it has elsewhere.

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New York's tax seems to be primarily focused on raising revenue from ultrawealthy out-of-city homeowners instead, said Rita Jefferson, a local analyst at the Institute on Taxation and Economic Policy who focuses on equity and fairness.

"It's possible that there's some new units that come on the market as a result of this, but I'd be willing to bet this is meant to be a tax generator," Jefferson said. "There's such high demand that people who can afford more are willing to pay however much they need to to live where they want."

The projected revenue would only cover a fraction of the city's budget gap.

"$500 million is a good start," said Emily Eisner, the acting executive director and chief economist of the Fiscal Policy Institute. "It's only 10% of the budget gap that we're looking at in the city, but it's a good start for raising some additional revenue to try to meet the city's needs."