Governor Kathy Hochul is pushing forward a new proposal to tax wealthy property owners in New York City, specifically those who own luxury second homes.

The plan, known as a “pied-a-terre tax,” would apply to second homes valued at $5 million or more, including condos, co-ops, and private houses owned by individuals whose primary residence is outside the city. The tax is designed to target wealthy individuals who maintain expensive properties in the city but do not contribute proportionally to local taxes.

The proposal is expected to generate $500 million annually, as New York scrambles to close a multibillion-dollar budget gap. Governor Hochul framed the move as a fairness issue, arguing that those who can afford multimillion-dollar second homes should contribute more to the city’s financial stability.

Unsurprisingly, the plan is being advanced alongside New York City Mayor Zohran Mamdani, who has constantly pushed for tax increases on the wealthy and corporations as part of his efforts to address the city’s growing fiscal crisis, which in many ways is his own fault.

The proposal will further damage the already hurting real estate industry, since the tax will drive away investment, lower property values, and wreak havoc on the housing market. Another interesting consequence is that second home owners will be discouraged from being part time residents and will reduce overall economic activity in the city.