Wilbur Ross and Steve Wynn filed a lawsuit against New York State on Monday, arguing that the state's new pied-à-terre tax is unconstitutional because it unfairly targets people who live outside New York City. The suit, filed in Suffolk County, comes as both men face steep new surcharges on their Manhattan properties under a law that took effect this summer.
According to Bloomberg, the lawsuit contends that New York City nonresidents already pay significant sums in property taxes, more than the vast majority of full-time residents, while using fewer municipal services. Ross, a Florida resident, and his wife Hilary Geary Ross own property in Southampton along with a cooperative apartment in Manhattan. Wynn, also a Florida resident, owns property in Manhattan as well.
The financial stakes behind the legal fight are considerable. The New York City Department of Finance notified the Rosses in July that an additional $83,000 would be tacked onto their annual property tax bill for their River House co-op, while Wynn received a notice adding an estimated $183,000 to his condo tax bill unless he secures an exemption, as reported by The Real Deal. The Rosses purchased their five-bedroom duplex co-op at 435 East 52nd Street, the well-known pre-war luxury building known as River House, for $7.8 million in 2016.
A Coordinated Legal Assault
The Ross and Wynn filing did not arrive in isolation. Attorney Randy Mastro filed a separate lawsuit against New York State on Tuesday on behalf of other homeowners, arguing the tax is a textbook example of a discriminatory state law that unconstitutionally targets non-voters, the same outlet's report notes. Mastro had already sued the city in August over its administrative rollout of the tax, meaning the new filing escalates what began as a procedural fight into a full constitutional challenge.
That escalation matters because the underlying legal theory is specific. A legal analysis by Hodgson Russ LLP found that constitutional challenges against non-resident second-home surcharges center on claims under the U.S. Constitution's Privileges and Immunities Clause and Dormant Commerce Clause, both of which restrict state laws that discriminate against out-of-state residents. Article IV, Section 2 of the Constitution protects non-residents from disparate state tax burdens, according to the firm's research.
How the Tax Came to Be
The New York State Legislature enacted the surcharge on May 26 as Part HH of the Fiscal Year 2027 Budget Bill, establishing Sections 1350 to 1356 of the state tax law, according to Holland & Knight. The law took effect July 1 and carries a sunset date of June 30, 2031, and Governor Kathy Hochul signed the bill on May 28. Phase 1 of the law, running through June 30, 2028, imposes annual surcharges between 4% and 6.5% on non-primary co-ops and condos assessed at $1 million or more, and between 0.8% and 1.3% on single-family homes valued at $5 million or more, per a regulatory summary from Hodgson Russ LLP.
State and city officials projected the tax would generate roughly $500 million annually for New York City by levying surcharges on an estimated 10,000 to 17,000 luxury second homes, according to Legal 500. The policy was heavily advocated by Mayor Zohran Mamdani and Hochul as the city sought new revenue to close budget deficits.
A Rocky Rollout Preceded the Suits
The tax's implementation has been messy from the start. After initially mailing notices to roughly 17,000 property owners in July, Mamdani's administration scaled back the potential target pool to 10,800 homeowners and extended the exemption filing deadline to October 6 due to tax record discrepancies, CBS News reported. The city had originally posted a database listing nearly 960,000 property records before clarifying the actual scope of the tax.
Those administrative stumbles had already drawn legal fire before Ross and Wynn's filing. A Staten Island Supreme Court judge issued a temporary restraining order in August halting the city's rollout after local homeowners sued, claiming the city improperly forced residents to prove exemption status rather than verifying primary residences beforehand, as Jurist.org reported at the time. The Staten Island plaintiffs included relatives of a local New York City Council member. Hoodline previously covered that earlier Mamdani tax letter fight in August.
Part of a Wider Legal Trend
New York is not alone in facing this kind of pushback. Fifty-one property owners filed a federal lawsuit in Newport County, Rhode Island, challenging that state's July 2026 luxury second-home tax on identical Privileges and Immunities and Commerce Clause grounds, TaxProf Blog reported. Rhode Island's tax applies to non-owner-occupied homes assessed above $1 million, placing New York's fight within a broader multi-state trend of litigation against second-home levies.
Meanwhile, other cities are watching closely rather than backing away. Washington, D.C.'s council has floated its own pied-à-terre tax modeled directly after New York's law, according to Hoodline's prior coverage. With the October 6 exemption deadline approaching and multiple lawsuits now pending, the fate of New York's tax, and the hundreds of millions of dollars it was designed to raise, remains unresolved.
