Mamdani vs. Beyoncé: Who are the ultra rich the mayor has set his sights on

“When I ran for , I said I would tax the rich. Well, today, we’re taxing the rich”, that’s how he started the video on his Instagram page, with which he announced to New Yorkers the proposal of a new law concerning second homes over 5 million dollars.

The so-called “pied-à-terre”, which in French literally means “foot on the ground”, is the term used to describe properties owned by the wealthy as second homes in some big cities.

Their peculiarities, in relation to simple holiday homes, are the luxury that characterizes them, the fact that they are located in very expensive and popular metropolises, while at the same time, in many cases, they are a way of laundering black money or avoiding taxation.

Especially after the global financial crisis and , in destinations such as , , and , where it was launched to such an extent that it concerns exclusively the ultra-rich, the pied-à-terre, ceased to be an alternative home for the owners, but real estate acquisitions that remain empty throughout the year.

With these, billionaires complete a real estate portfolio for the sake of impressing, that is, they create something of a collection, as they would with works of art.

A measure that can generate an additional 500 million in New York

So Mamdani decided to “put his hands” on these properties, proposing an additional tax on those that cost more than 5 million dollars. This is a world first as there has not been a similar initiative anywhere, although it has been discussed for years both in New York and in other countries and capitals of the world.

The mayor, together with the Governor of New York Kathy Hocul, are proposing, in essence, the imposition of an annual surcharge on any type of residential unit, from single-family homes to condo and co-op apartments, provided that their value exceeds $5 million and the owner maintains his primary residence outside of New York.

This means that the law catches in its “pincer” not only foreign investors and oligarchs, but also American billionaires who have moved their tax headquarters to states like or to avoid income tax, but keep their luxury penthouses in Manhattan.

The tax escalation is designed to be progressive, increasing the rate as the value of the property rises. For properties near $5 million, the rate starts at 0.5%, while for properties of legendary value, such as the multi-hundred-million penthouses on Billionaires’ Row, the tax can be as high as 4% per year.

The process of control and application of the measure will be based on the official data of the tax returns. New York State will consider a secondary residence any property on which the owner does not pay income tax as a permanent resident of the city. In this way, the state creates a dilemma for the super-rich, who will either have to accept the new pied-à-terre tax as visitors, or declare New York as their permanent base, thereby contributing to the city’s overall tax system through their income.

That measure is expected to bring in $500 million a year in revenue, which the mayor has pledged to fund public services such as free daycare, more street cleaning and neighborhood safety.

Despite the overwhelming majority of residents, up to 93%, supporting the proposal, there is also strong opposition from the real estate lobby and businessmen such as Bill Ackman, who claim the measure will drive away investment and hurt the economy.

The mega-deals of hedge fund and technology tycoons

Although Mr. Ackman, owner of the hedge fund Pershing Square Capital Management, owns several properties in New York, including one he bought in 2015 for $91.5 million in the ultra-luxury skyscraper One57 – the second most expensive real estate deal at the time, he has no reason to worry since he himself is a resident of the Big Apple.

But the same is not true for Michael Dell, owner of Dell Technologies, who bought the most expensive apartment in the same building. This is the two-story penthouse that the tycoon bought in the same year for $100.47 million, but he does not live in it, as his main residence is in Austin, Texas.

But the one boldly named by Mayor Mamdani in the video as an example of a pied-à-terre owner who is going to be taxed, is Kenneth Griffin.

The Chicago-based founder of hedge fund Citadel Advisors, who has now moved his business and home to Miami, owns a four-story maisonette at 220 Central Park. A property he bought in 2019 for $238 million and is the most expensive real estate sale in the US to date.

Although the building is not exactly on Billionaires’ Row, the street in midtown Manhattan where the most expensive homes in the metropolis are found, it is favored by tycoons for its elegance.

Designed by the architectural office of Robert AM Stern, it is more reminiscent of New York’s historic antebellum buildings than modern glass skyscrapers.

The complex consists of a 70-storey central tower and a smaller 18-storey section, the ‘Villas’, offering residents amenities reminiscent of a five-star hotel, including a private restaurant by Jean-Georges Vongerichten, a saltwater swimming pool and an impressive porte-cochère for maximum privacy.

Steve Cohen, owner of hedge funds Point72 Asset Management and SAC Capital Advisors, as well as the New York Mets, although a New Yorker, now lives primarily in Connecticut on a sprawling estate that includes a two-hole golf course and an ice rink.

But this does not prevent him from owning a 2,787 square meter mansion. meters at 145 Perry St. in the West Village, worth more than $60 million.

Bezos’ favorite skyscraper and the apartments of Beyoncé and Jay-Z

Jeff Bezos is among those who will be significantly affected if the law is implemented. Although he officially moved to Miami in 2023, buying $150 million worth of real estate there -in Indian Creek, the so-called “Billionaire Island”-, he maintains an impressive collection of real estate in Manhattan, having spent over $100 million on five apartments at the ultra-luxurious 212 Fifth Avenue, or otherwise, NoMad Tower.

Bezos, as reported by Curbed, started 2019 by buying a three-story penthouse and two apartments directly below for $80 million. In 2020 he added a fourth apartment for 16 million, and in 2021 a fifth for 23 million. In total, within three years, he spent 119 million dollars on the same building.

His aim was to join these apartments to create a huge single residence of over 1,850 sq. m. meters. This phenomenon is described as “vertical consolidation”, turning a multi-tenant building into one, almost private, mansion.

The NoMad is a 1912 building (formerly industrial/commercial) overlooking Madison Square Park. Bezos’ penthouse features huge verandas, extravagantly high ceilings and is considered one of the most desirable properties in the area.

It is emphasized that Bezos bought these properties while Amazon had already canceled plans for the headquarters in Long Island City (the famous HQ2). Thus, these purchases were made for purely personal use, as a pied-à-terre in New York, despite the fact that he himself spent most of his time at his other properties.

Accordingly, Jay-Z and Beyoncé, although residents of California, where they own a $200 million mansion in Malibu, maintain their iconic loft in Tribeca. This property, which Jay-Z bought in 2004 for $6.85 million, is now worth well over $20 million due to the boom in prices in the area.

It is a 743 square meter apartment. meters with 279 sq. meters extra for the huge terrace, where the couple got married in 2008, while their neighbors are the couple Hailey and Justin Bieber.

Howard Schultz, on the other hand, CEO of Starbucks and originally from Brooklyn, owns an ultra-luxurious maisonette in the West Village, although he now resides in Miami. The property occupies the 16th and 17th floors of the building at 155 West 11th Street and includes a 130 sq. ft. terrace. meters.

The Trump Tower penthouse in Mamdani’s sights

Even the American president probably won’t spare her from Mamdani. Donald Trump, who was born and raised in New York, and has linked his name – himself, as well as his father – to the city’s real estate market, now has Mar-a-Lago in Florida as his official headquarters.

Despite this, he maintains his famous three-story penthouse in Trump Tower on 5th Avenue. Decorated with 24-karat gold and precious marble covering everything from floor to ceiling, this apartment spans 1,022 sq.ft. meters and offers views across Manhattan.

The decor draws inspiration from classical Greece and French history, with the ceilings painted with frescoes depicting Greek myths, with the figure of Apollo predominating. The furniture follows the style of Louis XIV.

Despite the extreme luxury, like the breakfast table where even the juice glass has a gold rim or the $15,000 book that adorns the living room, there are also some more personal touches. Photographs of his father and his children take center stage, while Melania’s desk features boxes of colored pencils, a detail that hints at the presence of their son, Barron.

However, even if the planet lord has to pay additional tax for his real estate, one thing is certain, that both he and all those who own such apartments, will not understand the difference, as it will constitute a negligible percentage of their untold wealth. Now it remains to be seen if they see it that way too or if they will react, and how.