Mamdani’s Finance Agency Urged Him To Tone Down Contentious Tax-the-rich Rollout

NEW YORK — Mayor Zohran Mamdani wanted his pied-a-terre tax announcement to land with a bang.

So his communications team drafted up a press release celebrating the new property tax, and the mayor took to social media to let wealthy part-time residents know they were about to be on the hook.

“You've got mail,” Mamdani wrote in an X post last week. “Today, we sent notification letters to property owners, letting them know that our new pied-à-terre tax is coming soon.”

Behind the scenes, veterans of city government had tried to convince Mamdani’s team not to deliver the news in such a splashy way.

Prior to last Thursday’s announcement, officials in New York City’s Department of Finance, which is responsible for implementing and collecting the new tax, urged Mamdani’s staff to take a more staid approach, according to two people with knowledge of the conversations who were granted anonymity due to their private nature.

Consistent with the law enacting the new tax, the department had to publicly release a roll of residents who could face the surcharge, which is supposed to be levied against people who own secondary homes worth more than $5 million. The agency also needed to send letters notifying all the people the city ultimately determined should pay the new annual surcharge, which ranges in the tens of thousands of dollars.

But Department of Finance officials privately told Mamdani’s team there was no need to make it a social media sensation, or even a press release, arguing such PR tricks could be interpreted as unserious and veer outside agency norms, according to the two people familiar with the conversations. For instance, the department doesn’t typically issue celebratory press releases when it releases annual property value assessment rolls.

The Department of Finance staffers weren’t successful, though.

“It sounded like the mayor was pushing this and was eager to do it,” one of the two people who spoke with POLITICO said.

Mamdani’s communications choices on the pied-a-terre tax are now haunting him, with some residents saying they were hit with the hefty surcharge notices in error and others claiming the mayor’s trying to dox the rich.

While his hard-left base eats it up, the pied-a-terre situation has illustrated how the 34-year-old mayor isn’t too bothered by how his wealth-redistribution rhetoric lands with other, albeit smaller, slices of the city he leads.

“You’re in a place in the world where the far left vilifies and punishes success,” said Steve Fulop, president of the Partnership for New York City, which advocates for local businesses. “To roll this out in a way that is framed as shaming people who have done nothing wrong, I don't think is the right way to approach it.”

Mamdani spokesperson Monica Klein would not comment on the Department of Finance’s internal pushback, but defended the administration’s communications decision.

“When faced with the choice between transparency and secrecy, this administration will always choose transparency,” Klein said. “It is our responsibility to communicate policy changes openly and honestly. We'll continue improving the process, but we will never sacrifice transparency.”

The tax, which some major European cities have also adopted, levies an annual surcharge on every home with a market value of over $5 million owned by a person who doesn’t use it as their primary residence. Condos and co-ops used as second homes have a lower threshold, with residences in that category being hit with the surcharge if their market value tops $1 million.

Mamdani’s handling of the pied-a-terre launch put a spotlight on the churning frustration among New Yorkers in a deeply expensive city. The surcharge — meant to only impact extraordinarily wealthy people who live elsewhere for most of the year — is now forcing longtime residents who may have purchased homes decades ago during the city’s financial nadir to prove their Big Apple bonafides.

Some city residents have told other news outlets they received letters notifying them they have to pay the tax, even though they say they are full-time residents. Those individuals are now in the unenviable position of having to prove to the city that they are, in fact, full-time residents not subject to the tax — and they only have until Aug. 21 to do it.

In total, the city has sent out pied-a-terre notifications to about 17,000 property owners. It’s unclear how many of those property owners may ultimately not be subject to the tax. The Department of Finance has said the property owners were selected using all available information and that anyone wrongfully targeted will have ample time to dispute their notices via an online form.

In a sign that Mamdani is expecting a significant number of people to contest their notices, he told reporters Thursday his administration is adding 11 new employees to the Office of Administrative Tax Appeals, which adjudicates tax challenges. And later in the day, a Mamdani spokesperson said the Finance Department will do proactive outreach to every letter recipient whose contact information is available to provide guidance on the appeals process.

Though the city was legally required to publicly release the tax rolls, doing so in the way it did has also caused headaches for Mamdani, as critics online, including the New York Post, have claimed the disclosure — coupled with Mamdani’s gleeful tone — amounted to a form of doxxing. The Post’s Tuesday front page blared “PIED-A-TERROR.”

Despite the handwringing over the rollout, Mamdani’s zeal to highlight the pied-a-terre surcharge has energized his socialist base, whose appetite for raising taxes on the rich helped propel him to City Hall.

Still, the pied-a-terre push has become an unwelcome misstep for some of Mamdani’s partners.

It’s created an opening for Republicans, including longshot gubernatorial candidate Bruce Blakeman, to blast Mamdani and his ally Gov. Kathy Hochul, whose administration unveiled the new pied-a-terre tax plan during this spring’s state budget negotiations. As the celebratory mood of the tax roll out made business leaders and moderate Democrats squirm, the governor’s office was forced to distance itself from the city’s implementation.

But it shouldn't come as much of a surprise. Mamdani put himself in a similar situation in April.

After Hochul first announced her support for the pied-a-terre tax, the mayor filmed a cheeky social media video outside hedge fund titan Ken Griffin’s Manhattan penthouse to hype that the surcharge would impact the billionaire. The publicity stunt triggered accusations Mamdani was trying to put Griffin in danger, and the businessman responded by threatening to pull the plug on his company’s planned office expansion in the city. Conversely, the video was cheered by Mamdani’s leftist supporters.

The mayor’s upset election last year was powered by surging anger over the cost of living and frustration that even a six-figure income is not enough to buy a home or raise a family in New York City. Mamdani has characterized his tax-the-rich agenda as a matter of fairness, arguing the revenue generated by new levies will help fund expanded social programs for working class New Yorkers.

Yet, the bungled pied-a-terre push coincides with a politically sensitive moment for New York Democrats.

The party’s moderate wing is contending with a rising left flank calling for aggressive taxes on the city’s wealthiest residents. Insurgent candidates backed by the Democratic Socialists of America and Mamdani successfully toppled incumbents in last month’s congressional primaries, many of them by embracing the same tax-the-rich spirit that fired up the mayor’s base.

Hochul, in her reelection campaign, has tried to balance calls to address affordability while ensuring that rich New Yorkers who provide the bulk of the state government’s revenue do not flee.

The governor’s surprise embrace of the pied-a-terre surcharge this spring was part of that high-wire act.

Hochul introduced the measure after insisting she would not support the broad income tax hikes on rich people and corporations that Mamdani sought. Instead, she proposed a relatively narrow tax impacting only part-time residents — a surgical solution meant to boost the city’s revenue and alleviate the left’s tax push.

Political fallout for the governor, who is leading Blakeman in public polls by double digits, is expected to be minimal over the city’s pied-a-terre controversy. Still, the perception that Mamdani took great joy in taxing New Yorkers created an awkward dynamic in a relationship that has been mutually productive for both Democrats.

Mamdani endorsed Hochul in February, a nod that dealt a body-blow to her primary challenger, Lt. Gov. Antonio Delgado. The mayor largely refrained from publicly pressuring the governor to raise taxes, and Hochul ultimately approved billions of dollars in direct support from the state to aid the city’s wobbly finances.

“More than even how it affects the governor’s race, it affects how those of us in the city are dealing with this mayor,” former Gov. David Paterson said. “He’s not feeling any pain, doesn’t think anything can happen to him and shows absolutely no remorse regardless of what happens.”

Similar measures have been weighed in Albany for years, and City Hall’s efforts to implement the tax highlighted many of the drawbacks state officials have privately discussed.

In 2019, then-Gov. Andrew Cuomo considered a pied-a-terre tax in order to boost the Metropolitan Transportation Authority’s flagging finances. His administration determined there were too many pitfalls for it to be effective.

At the time, concerns centered on the fact that the surcharge would have required a complicated overhaul of the city’s arcane property tax system and put the onus on homeowners to prove they’re full-time residents. There was also concern that the recurring revenue could be too unstable, since it hinged on a population of people who may move from New York. Now those very same backroom concerns are playing out only weeks after state lawmakers signed off on the tax.

“I don’t understand how no one thought this through, because we had this conversation seven years ago,” said Melissa DeRosa, who was Cuomo’s top adviser at the time. “And nothing has changed between then and now.”

Hochul’s allies, too, are frustrated by how the Mamdani administration rolled out the tax and its list of people who may be eligible for the surcharge.

State Democratic Party Chair Jay Jacobs believes the fanfare by the mayor’s team highlighting the tax and publicizing the list of property owners helped “raise the temperature unnecessarily” amid a broader fight over income inequality.

“Making these things public isn’t going to bring you in any extra money,” Jacobs said. “It’s all performative. Let’s focus on substantive things that need to get done.”