Steve Wynn, Wilbur Ross Sue New York Over Pied-à-Terre Tax

Casino mogul Steve Wynn and former Trump administration secretary Wilbur Ross have joined forces to challenge New York City's tax on luxury second homes, arguing the surcharge is unconstitutional. The pair filed a lawsuit Monday against the state, asserting the tax discriminates against individuals who do not primarily reside in New York.

Wynn and Ross, both listed as Florida residents, face significant tax bills under the pied-à-terre tax. This tax is designed to generate revenue from wealthy individuals who own high-value properties in New York City but do not pay local income taxes due to residing elsewhere for most of the year. Ross, an investor and former commerce secretary under President Donald Trump, could owe over $83,000 on his Manhattan co-op, while Wynn, a casino developer, faces a potential charge exceeding $183,000 for his city residence.

The lawsuit, filed in a Long Island court, also contends that pied-à-terre owners already contribute substantially through property taxes and charitable donations to the city's cultural and charitable institutions. A spokesperson for New York Governor Kathy Hochul stated that Wynn and Ross's opposition highlights the necessity of the tax, suggesting their stance inadvertently strengthens the case for its implementation.

The pied-à-terre tax, a key initiative for New York City Mayor Eric Adams's administration to fund progressive agendas through taxes on the wealthy, has encountered implementation challenges. A prior lawsuit from a group of homeowners argued that the city failed to adequately define tax liability, placing the burden on property owners. A judge ruled against the city, ordering a restart of the process with greater due diligence.

Mayor Adams's office plans to appeal this ruling. "Today’s decision is wrong, and we will invoke a stay of the injunction," said spokesperson Matt Rauschenbach. "With a stay, we will continue implementing the surcharge fairly, efficiently and in full compliance with the law, as we have since day one."

The tax is projected to generate $500 million annually. It applies a surcharge to one-, two-, and three-family homes valued above $5 million, as well as condos and co-ops valued at $1 million or more, if they are not the owner's primary residence. The tax specifically targets second homes within New York City, excluding other affluent areas like the Hamptons, where Ross also owns property, according to his lawsuit.