New York and UK Target the Ultra-Rich with Property Taxes

In April, to mark the day on which Americans are expected to file their taxes, the New York mayor, Zohran Mamdani, filmed himself on Billionaires’ Row, an enclave of super-tall apartment buildings just south of Central Park. When he took office, he said, he would tax the rich, and now, outside the hedge fund billionaire Ken Griffin’s $238m penthouse, he was ready to make good on his pledge. “Today, we’re taxing the rich,” he said with a flamboyant smile, zooming his face into the camera. It was the opening to a short film unashamedly titled Happy Tax Day, New York.

He went into battle armed with stats. According to Mark Levine, NYC’s comptroller (a senior financial executive), the pied-à-terre tax on second homes will raise about $500m annually from about 11,200 properties.

The political theatre with which Mamdani packaged his promise is as eye-catching as the policy itself. The video was clearly shot in the service of an adversarial messaging demonising the rich. It would probably come as a surprise to many people that across the Atlantic, Keir Starmer and Rachel Reeves have been quietly pursuing their own policies targeting the ultra-rich owners of luxury properties, who have driven up the cost of housing in cities and towns across the UK.

As with the pied-à-terre tax, a new tax on second homes and the “mansion tax”, announced in last year’s budget, take particular aim at the most exclusive parts of the city, in so-called super-prime areas. The taxes in New York and England are a step in the right direction, but they alone won’t solve the causes of the housing crisis. This is rooted in a far broader and deeper financialisation of real estate, combined with hugely inflationary monetary policies introduced after the 2008 financial crash that have put the ideal of home ownership out of reach for the majority.

But they are effective policies at raising revenue and they allow politicians, if they take the opportunity, to tell a story about how wealth operates and its wider impact on our cities and society. In New York, the super-talls are called “ghost towers” because barely anyone lives there and the lights are off; owners and investors with multiple homes around the world, whose identities remain mostly hidden, are critiqued for treating the properties as little more than safety deposit boxes in which to stash their millions. The last census in 2021 found that more than a quarter of properties in the City of London, Westminster, and Kensington and Chelsea are empty. The knock-on effect of such high prices means property prices become unaffordable across the city. Billionaires displace multimillionaires, who in turn displace millionaires, who move into what were once affordable areas, fuelling price rises there.

The pied-à-terre tax in New York, which will be implemented on 1 July, is framed as a fair way of targeting ultra-wealthy non-residents, to help fund essential services – and it is backed by the New York governor, Kathy Hochul, who is considered to be a centrist Democrat. She too is bullish. “If you can afford a $5m second home that sits empty most of the year, you can afford to contribute like every other New Yorker,” she has said.

Part of the reason for Starmer’s reticence in framing his policies in such a way has been a fear of antagonising the rich. Mamdani has faced a similar backlash in New York, but he has dealt with it very differently, leaning into it and reframing it rather than retreating from it. Predictions of doom and the escape of billionaires to Florida, amounting to a propaganda campaign that accompanied the election, have not been borne out.

The immediate response from Griffin was to fall back on this mythology, claiming that “New York doesn’t welcome success” and that he would be focusing on Miami to grow his business interests. If Griffin, who condemned Mamdani’s film as “creepy and weird” and claimed it put him at risk, does leave the city, there is little evidence that he represents a growing trend. In fact, the Fiscal Policy Institute found that the top 1% of earners are the least likely to move out of New York City. Indeed, it says, the data “unambiguously disproves the idea that progressive taxation drives away millionaires: insofar as a correlation between the millionaire populations and tax policy does exist, states with more progressive tax systems tend to have higher concentrations of millionaires.” The real threat facing New York is the mass exodus of working- and middle-class families who can no longer afford to live there.

In the UK, similar arguments played out over the abolition of non-dom status, although initial tax data from HMRC has shown no evidence of an increase of non-doms leaving the country. If the evidence shows that a range of wealth taxes can work and are unlikely to push the rich to leave cities and take their tax revenue, why isn’t Starmer being more vocal in his advocacy of these policies? Tax is never popular, but stories around fairness are.

Perhaps the most important outcome of Mamdani’s tax will be that it moves the parameters of the debate on wealth. The impact of high-net-worth individuals in our society isn’t limited to housing alone – they have oversized power in our political systems, they overconsume at the cost of the planet, and they fragment our society. This tax should be just the start.