'NYC is cooked': Business leaders and Wall Streeters erupt over proposed luxury second-home tax

• Kathy Hochul and Zohran Mamdani proposed a tax on New York City second homes worth over $5 million.
• Critics were quick to attack the proposal, arguing that it would drive wealth out of the city.
• NY hedge fund manager Daniel Loeb hinted at relocating; others called the proposal "class warfare."

A New York City tax proposal targeting ultrawealthy homeowners is drawing fierce backlash from business and financial figures.

"NYC is cooked," wrote Austin-based entrepreneur Jason Calacanis in a post on X, capturing a wave of alarm among investors, executives, and conservative commentators after Gov. Kathy Hochul and Mayor Zohran Mamdani introduced a plan to tax second homes in the city valued above $5 million.

Mamdani said that the so-called pied-à-terre tax is expected to raise roughly $500 million annually to fund priorities such as childcare, transportation, and public safety. The tax has not yet been enacted, and implementation dates were not included in the announcement. Hochul said about 13,000 properties would be affected.

The proposal has become a flash point in a broader debate over wealth, taxation, and New York City's economic future. Supporters frame the proposed tax as a targeted measure on part-time residents with high-value properties, while critics argue it risks creating an exodus of affluent homeowners and investors.

Data from JLL, a commercial real estate firm, shows that demand for leased office space in Manhattan is up and vacancies are down since Mamdani took office, continuing a trend that began before he won the election last year.

While many of Mamdani's economic proposals have sparked heavy debate, Olivia Becker, the director of video for Mamdani's office, wrote in a post on X that a clip of the Mayor announcing the tax, posted on April 15, is "now our most viewed video of all time."

Those who oppose the proposal

President Donald Trump blasted the idea on Truth Social, saying Mamdani is "DESTROYING New York," while Sen. Ted Cruz of Texas suggested the proposal would drive wealth out of the city.

"Texas & Florida realtors' phones are ringing…." Cruz wrote on X.

Hedge fund manager Daniel Loeb, whose firm Third Point has been based in the city since its founding in 1995, retweeted a post by Sen. Ashley Moody of Florida that showed a close-up of Mamdani's face from the announcement video, along with her own comment, "last thing you see before you move to Florida."

Loeb's post underscored concerns shared by some ultrawealthy that the tax could push capital — and high earners — out of New York.

New York-based hedge fund billionaire Bill Ackman warned of unintended economic consequences, writing on X that "non-residents who spend millions of dollars on NYC apartments help drive NYC's economy."

Although "Mamdani likes the tag line 'Tax the rich,'" his policies "will harm the constituencies he is supposedly trying to help," Ackman wrote.

Others, including Calacanis, described the plan as "class warfare" and took issue with Mamdani's video, in which he pointed to Miami-based Citadel CEO Ken Griffin's $238 million penthouse as an example of the type of properties he was targeting.

Calacanis, who moved from San Francisco to Austin in 2024, also said he'd be "tempted to come back and fix this mess," floating the idea of a potential mayoral run. Linda Yaccarino, the New York-based former CEO of X, responded to Calacanis that she'd be "happy to help."

In a separate post, Yaccarino called Mamdani's video proposing the tax "actually one of the scariest things I have seen."

Eric Chaffee, a professor of tax and business law at Case Western Reserve University, told Business Insider that the proposal, especially so close to Mamdani's inauguration, is a definite political victory. He said it remains unclear whether the tax will benefit New York City residents the way Mamdani has suggested.

"The predicted $500 million is an aggressive number, and it really assumes that there's not going to be enterprising lawyers out there, individuals who are very smart about how they go about thinking about their taxes, figuring out ways to get around it," Chaffee said.

There may be some departures from New York to other American cities, like San Francisco or Chicago, Chaffee said, but "Manhattan's a wonderful place to be."

"For individuals who are ultrawealthy and own these $5 million properties, some of them are going to be willing to actually pay this amount to stay in the city — others will probably figure out ways to get around this particular tax," Chaffee said. "But, at the same time, this is unlikely, really, to affect New York City that much in terms of making the ultrawealthy leave."

Representatives from Mayor Mamdani's and Gov. Hochul's offices did not immediately respond to requests for comment from Business Insider.