The nation is abuzz with the most exciting kind of news: a local tax policy. 

New York City Mayor Zohran Mamdani and Gov. Kathy Hochul last week introduced a pied-à-terre tax on second homes valued over $5 million in the city. The proposal generated countless headlines, online discourse, and ire from the president, who wrote in a Truth Social post, “the TAX, TAX, TAX Policies are SO WRONG.” 

New York City is facing down a grim budget deficit and hopes this tax, which would levy an annual surcharge on one-to-three-family homes, condos, and co-ops when owners’ primary residence is outside the city, can generate hundreds of millions in annual revenue. The city is a major wealth center with many luxury penthouses and vacation homes. And it has a history of producing bold progressive policy ideas. Sound familiar?

In the wake of Mamdani’s announcement, some have wondered whether California might implement a similar tax. The answer is: probably not. Understanding why starts with San Francisco.

“SF was ahead of New York on something not dissimilar,” said Darien Shanske, a state tax expert and law professor at UC Davis. He’s referring to the Empty Homes Tax, a residential vacancy tax that San Francisco voters passed with Proposition M in 2022. The tax, which was intended to deter real estate speculators and force landlords to rent, required owners to pay fees of $2,500 to $20,000 for any apartment vacant for six months or more.

It was supposed to generate up to $60 million per year for affordable housing, but before the city could collect any revenue, a coalition of landlord groups sued to stop it, and a judge struck down the tax as unconstitutional. The city appealed this decision, and the litigation is ongoing.

Progressives in California have never attempted a residential vacancy tax at the state level. Qualifying a measure for the ballot is incredibly expensive, and organizations like the California Apartment Association and the Howard Jarvis Taxpayers Association (opens in new tab) would likely challenge such a tax in court if it passed. At the same time, much of the progressive taxation energy in California right now is focused on the Billionaire Tax, a one-time 5% tax on the net worth of all the state’s billionaires, so a residential vacancy tax isn’t an immediate priority.

“Pretty much everything you pass that overcomes the will of the real estate industry, they will challenge in court,” said former District 5 Supervisor Dean Preston, who wrote Prop. M. Some political experts expect the same to happen in New York — if the tax measure passes at all.

Still, Preston has faith that San Francisco’s appeal will be successful and the city will eventually be able to collect a tax on empty apartments. He added that in Mamdani, New York City enjoys a mayor dedicated to taxing the super-wealthy.

“We don’t have that same push in San Francisco under Mayor [Daniel] Lurie,” he said. “That, to me, is the lesson: Push aggressively in your progressive cities for the taxation of billionaires and the ultra-rich.”

It’s up to the court, not Lurie, to decide whether to approve the city’s appeal. But the political contrast is stark. While Mamdani pushes to tax the rich, Lurie is trying to roll back a tax on multimillion-dollar real estate deals.

Oakland passed a vacant homes tax (opens in new tab) in 2018, which is much narrower than San Francisco’s and has only modestly increased local housing availability. Berkeley also passed one (opens in new tab) in 2024, which generated just over $4 million in its first year. But collecting and verifying vacancy data in cities of a few hundred thousand people is much easier than doing so for 15 million Californian housing units, many of which are owned by limited liability corporations. 

San Francisco also passed a commercial vacancy tax in 2020, which has generated approximately $5 million since it took effect in 2022 (the ordinance’s authors originally said it could generate that amount each year). Critics point out that the tax relies on property owners to self-report vacancies, which many have failed to do, and that vacancies have continued to rise since the city implemented the tax.

Amanda Fried, San Francisco’s chief assistant treasurer, was skeptical that a vacancy tax could force owners to fill vacant units at all.

“There is a disconnect between the tax code and behavior, and I think the policy goal is to use taxes to change behavior,” Fried said. “I don’t know if we’ve yet established whether, at the local level, that’s realistic.”