Casino Mogul Leads Lawsuit Against Mamdani’s New York Tax

Several prominent businesspeople, including a casino mogul, are suing New York over Big Apple Mayor Zohran Mamdani’s pied-à-terre tax.

The tax applies a recurring surcharge to homes worth more than $5 million and co-ops and condominiums believed to be worth more than $1 million. A suit filed Monday in the Suffolk County Supreme Court by Wilbur Ross and Steve Wynn claimed the tax violated state and federal constitutions by targeting nonresidents.

The New York legislature approved that tax, which was a cornerstone of Mamdani’s mayoral campaign, in May.

Businesspeople want Mamdani’s tax gone

Mamdani’s pied-à-terre tax was implemented to help raise more revenue for the state. Individuals who meet the criteria for the charge could owe anywhere from 0.8% to 1.3% of the value of their home for 1-3-family houses, or 4% to 6.5% of the value of their condo or co-op.

The tax went into effect on July 1, roughly two months after it was approved by the state congress.

“The Legislature cannot determine the constitutional character of a tax by fiat; the substance of the charge, and not the label attached by the Legislature, determines its nature for constitutional purposes,” the lawsuit read. “A levy triggered by the ownership of real property, measured by the value of that property, and administered through the real property tax system is unquestionably a tax on real estate regardless of the label the Legislature assigns to it.”

Ross and Wynn both have primary residences in Florida, but own property in New York. 

Ross and his wife, Hilary Geary Ross, also listed as a plaintiff in the suit, own a house in Southampton and a co-op in Manhattan. Wynn, who invested heavily in real estate after leaving the casino business in 2018, owns a Ritz Carlton duplex he is attempting to sell for $70 million. He pays an estimated $565,000 annually just by owning the property without the additional tax.

Differing viewpoints

New York recently approved three casinos — Bally’s Bronx, Resorts World NYC and Metropolitan Park — for operation in New York City. Resorts World is already open after expanding its existing racino, while Bally’s Bronx and Metropolitan Park are both expected to welcome customers in 2030.

The decision to offer downstate casino licenses for the first time was led by Gov. Kathy Hochul (D). But despite opening its arms to the casino industry, and the tax revenue that will come with it, she is not siding with Wynn and Ross.

“When Steve Wynn and Wilbur Ross try to cast themselves as sympathetic figures in a fight over paying their fair share on multimillion-dollar second homes, they’re making the case for the pied-à-terre tax as well as anyone could,” a statement from Hochul read.

Notably, the tax doesn’t apply to individuals whose primary residences are in New York — even if they exceed the price minimum. That’s one of the main arguments behind the suit, which claims that the tax acts as a form of discrimination.

It also claims that real estate investors who don’t live in New York City are already providing tax benefits to New York by paying for the properties without needing many goods or services. 

“State lawmakers have made no secret that singling out nonresidents for disparate treatment was precisely the point of the PAT Tax,” the lawsuit reads. “Through the enacting legislation and countless public statements, the State has consistently reaffirmed that the purpose of the PAT Tax is to force nonresidents to bear more of New York City’s expenditure for municipal services provided predominantly for the benefit of full-time New York City residents, without adding to the tax burden of those residents.”