Rule Relating to Surcharge on Certain Non-Primary Residences

Online comments: 35

• S

  Communism at its finest. This law will ensure that anyone with a second home here will be driven out of NYC if they have not already left. You are chasing your tax bases away.

  Comment added June 10, 2026 12:31pm

• Mohamed Fathelbab

  As a real estate agent, I’m telling you all, this tax will not chase a single multimillionaire or billionaire away from the city. And the revenue that’ll come in will be of great benefit.

  Comment added June 10, 2026 3:00pm

• Adrian Jones

  I support a surcharge on certain properties in NYC that do not serve as a primary residences. Too many expensive apartments are sitting empty in this city while many residents struggle to be able to afford rent and basic necessities.

  Comment added June 10, 2026 3:18pm

• Sheila Jamison

  In favor of this surcharge proposal. We need to strengthen our communities by supporting the businesses and neighbors who actually live here.

  Comment added June 10, 2026 3:34pm

• Kikelomo Amusa-Shonubi

  It is no secret that wealthy people often use purchasing a secondary (or tertiary) resident as a way to invest wealth. One of the many problems is that these apartments then sit empty when there is such a desperate need for housing. A surcharge on these residences could help to not only build true affordable housing in working class neighborhoods, but also help to strengthen our city’s social services at a time when drastic, damaging cuts are being made to the federal social safety net.

  What has always made New York City a place to be is our amazing diversity in class, culture and race. We should be doing everything we can to protect and stregnthen our unique society so that ALL people who want to live here can choose to “Be a part of it, New York, New York.”

  Comment added June 11, 2026 7:32am

• Maureen Godwin

  I am 100% in favor of this surcharge.

  Comment added June 12, 2026 9:44am

• Anonymous from Queens Village

  Re: Proposing changes to the rule relating to surcharge on certain non-primary residences

  To whom it may concern,

  I appreciate the opportunity to comment on the implementation of the new non-primary residence surcharge. I am a lifelong resident of New York City and a data scientist working in the nonprofit sector, and I recommend that the Department of Finance (DOF) make two changes to the surcharge rules:
  – Amending the “arm’s length” definition in section 62-01 to exclude leases where the owner holds a majority economic interest in the lessee
  – Applying a uniform penalty rate to total surcharge avoided in section 62-04 instead of the current two-tier penalty

  If adopted, these changes will ensure that:
  – the surcharge applies equally to all covered owners, regardless of how their ownership is structured
  – penalties deter fraud in proportion to the magnitude of the attempted fraud

  Recommendation 1: Amending the “arms length” definition

  DOF should amend the “arm’s length” definition in section 62-01 to exclude leases where the owner holds a majority economic interest in the lessee, closing a self-rental loophole. Currently, a leasing agreement “between two informed and willing parties, where neither is under any compulsion to participate in the transaction” exempts the owner from the surcharge as long as there is no “reasonable possibility” that the lease is intended to avoid the surcharge. This does not explicitly cover the case of an LLC renting to another LLC that it owns; analysis by the Comptroller’s office states that “it may be possible for some LLC owners to rent to themselves and avoid the tax.”

  DOF can simply add a single additional exclusion to the “arm’s length” definition saying that a lease or sublease is not “arm’s length” if the owner is an entity that holds a majority economic interest in the lessee. With this small change, LLCs could no longer avoid the surcharge by renting to LLCs that they control, closing an unintended loophole in the rules. Without the fix, the Comptroller’s revenue projection of $340-380 million is at risk because the kinds of owners capable of using the loophole are the ones with the legal resources to do so.

  Recommendation 2: Applying a uniform penalty rate to total surcharge avoided

  DOF should replace the two-tiered penalty structure in section 62-04 with a single rate applied to the total surcharge avoided. This would eliminate a perverse incentive that currently makes large fraud as expensive as small fraud, thus inadvertently incentivizing larger fraud. The two tiers currently are:
  – When a false filing would result in full exemption, a penalty of 50% of the full surcharge
  – When a false filing would result in a lower surcharge, a penalty of 300% of the surcharge difference (capped at 50% of the full surcharge)

  Here is a scenario that exemplifies the perverse incentive: Suppose there is a property whose surcharge would be $180,000.
  – An owner who falsely claims primary residence to avoid the entire surcharge would face a penalty of 50% of the surcharge, or $90,000
  – The same owner who does not claim primary residence, but only misrepresents their property value so that their surcharge is reduced by $30,000 to $150,000, would face a penalty of 300% of $30,000, which is the same $90,000 as above.

  The result is that someone who attempted to avoid paying $180,000 faces the exact same penalty as someone who only attempted to avoid paying $30,000. The owner would not lose anything by trying to dodge the entire surcharge instead of just some of it, so they are incentivized to attempt larger fraud rather than smaller fraud.

  The DOF should replace the two-tier penalty structure with a uniform penalty rate (such as 50%) applied to the total surcharge avoided. This ensures that the penalty scales with the amount of fraud attempted, eliminating the perverse incentive above.

  Comment added June 16, 2026 12:31am

• Anonymous

  Why not provide that if the unit is rented by the owner to a full-time user, the tax surcharge is either reduced or eliminated? If the purpose of the tax is in part to free up some rental units or reduce the price, while this may be at the top of the market, it would create more available units potentially driving down the price of some rentals. To the folks that own these units for investment purposes (not so much as a pied a terre), this would be an attractive opportunity.

  Comment added June 17, 2026 10:21am

• Anonymous NYer

  I am in favor of this surcharge for certain real estate not being used as primary residence.

  Comment added June 21, 2026 9:13pm

• LT

  Finally! This is right and equitable.

  Comment added July 1, 2026 1:02pm

• Mordechai from NYC

  Hi,
  Why isn’t the IDNYC Card accepted as proof of residence for this law??
  IDNYC is New York City’s own ID Card for residents. Read about it here, https://www.nyc.gov/site/idnyc/about/about.page
  Please add IDNYC Card to the list of documents accepted as proof of residence.
  Thank you!!!

  Comment added July 7, 2026 12:29pm

• Eric H. Berger, Esquire

  I have three comments:
  1. Individual coop owners should have the right to show that their market value is less than $5 million for 2026 and 2027;
  2. Multiple coop owners in the same building should be permitted to join their appeals together for hearings;
  3. Section 1354(c) should be clarified to automatically amend all proprietary coop leases so the Board can pass through the surcharge through the proprietary lease without amending the proprietary lease.

  First, individual coop owners should have the right to show that their market value is less than $5 million for 2026 and 2027. The statute provides that for 2026 and 2027 for coop units there is a formula based upon the building assessed value divided by the number of building shares multiplied by the number of shares for each unit, with a value above $1 million potentially subject to the surcharge, and value below $1 million not subject to the surcharge. For 2028 and thereafter, coop units are valued at market value with the cutoff being $5 million rather than $1 million. The reason for the difference is because coop buildings are assessed at 20% of true value. The formula for 2026 and 2027 is a crude way to determine whether coop units really have a market value greater than $5 million, so individual coop owners should be able to file an appeal to show that in fact their value is less than $5 million. Otherwise, for 2026 and 2027 the surcharge will hit some coop owners in coop units with a market value less than $5 million.

  Second, multiple coop owners in the same building should be permitted to join their appeals together for hearings. Joinder is permitted if there is a penalty proceeding brought by the City, but not if the challenge as to primary residence or market value brought by the property owners. Joining the appeals in a single building is more efficient for the litigants as well as the board hearing the appeals. Moreover, the statute requires that the board take into account the board’s market value determination of other units in the same building in determining market value so it only makes sense to allow multiple owners in the same building to join their appeals.

  Third, Section 1354(c) should be clarified to automatically amend all proprietary coop leases so the Board can pass through the surcharge through the proprietary lease without amending the proprietary lease. Amending proprietary leases is arduous and expensive, which expense is passed on to unit owners, including those whose primary residence is in the building. The statute as written requires coop boards to pass through the surcharge to the owner of the unit subject to the surcharge. However, if the coop unit owner refuses to pay, a case would have to be brought in the Supreme Court. Also, since the failure to pay would not be a lease default, the corporation could not recover its attorneys’ fees.

  Thank you for considering my comments. I am available should further clarification assist in the rule-making process.

  Comment attachment
  Proprietary-Lease-Rule-Comments-7-7-26.pdf

  Comment added July 7, 2026 5:51pm

• Jim

  This is a ridiculous tax. Tax the people who don’t use the services that the said taxes are supposed go towards (schools mainly) is just wrong.

  Comment added July 8, 2026 10:29am

• Anonymous

  Many states across the U.S. already have policies that impose higher property taxes on second homes than on primary residences. The rationale behind these policies is that a primary residence is considered a necessity, while a second home is viewed as a discretionary asset. As a result, many jurisdictions offer tax benefits, exemptions, or lower assessment rates to homeowners who occupy a property as their primary residence, while applying higher tax rates or limiting exemptions for secondary properties.

  For this reason, the concept of taxing second homes at a higher rate is not new. It has been part of the property tax framework in various states for many years and is generally intended to encourage owner occupancy, improve housing affordability for local residents, and generate additional revenue for public services without placing the same burden on primary homeowners.

  Comment attachment
  

  Comment added July 8, 2026 10:46am

• Roberts & Holland LLP

  The attachment reflects our comments to the Proposed Rule Relating to Surcharge on Certain Non-Primary Residences. Our comments request a fuller explanation of the mechanics and timing relating to the determination of “primary residence” and clarification of certain provisions to ensure that persons who are paying their share of income and sales taxes and are contributing to the City’s economic well-being are not covered by the surcharge. Roberts & Holland LLP respectfully requests that the New York City Department of Finance address these issues before adopting final regulations. Thank you for your consideration.

  Comment attachment
  Roberts-Holland-LLP-Comments-to-Proposed-Regulations-07.08.26.pdf

  Comment added July 8, 2026 11:59am

• LZ

  Please see attached for some suggested regulatory exceptions to the pied-a-terre tax’s primary residence requirement.

  Comment attachment
  pied-a-terre-tax-comment.pdf

  Comment added July 8, 2026 1:38pm

• Anonymous

  This surcharge on non-primary residences is a terrible idea. The owners of these properties receive few, if any, government services and already pay property taxes so they are a significant net plus for the city. The only reason this is being done is because these people can’t vote in NYC. The continued expansion of government services with no regard to cost will ultimately backfire. No amount of money is enough!

  Comment added July 8, 2026 4:24pm

• Council of New York Cooperatives & Condominiums (CNYC Inc)

  Fundamentally, CNYC supports the stated goal of the pied-a-terre tax of raising needed funds without making housing less affordable for homeowners who have participated in stabilizing New York City’s neighborhoods and/or pay New York City income taxes.

  However, CNYC is concerned that portions of the enacting legislation will cause unintended hardships for New York Homeowners due to:

  (i) the requirement that cooperatives be held responsible for collecting and paying a tax surcharge on behalf of individual shareholders, an issue which is compounded by the lack of a provision providing satisfactory enforcement mechanisms,
  (ii) the use of an imputed $1 million market value for inclusion in the pied a terre tax and the lack of the exemption suggested in the NYC Comptroller’s report for units appraised for less than $5 million, when New York City’s rolling sales data shows many of these same apartments have recently sold for less than $5 million, particularly in cooperatives and condominiums with fewer than 11 units,
  (iii) critical ambiguities in the definition of a primary-resident and the failure to define statutory residents of New York City, who pay New York City income tax, as primary-residents, and
  (iv) the retroactive nature of a tax of this magnitude, given the effective date of January 2026 for determining residency during this first year of the tax, which denied long-term homeowners the opportunity to weigh potential repercussions when making residency decisions.

  CNYC recognizes that the Department of Finance cannot change the existing legislation. Therefore, CNYC’s comments, attached below, do not address these legislative concerns, and focus solely on the draft rules.

  CNYC’s comments are targeted to ensure implementation of the legislation is consistent to the fullest extent possible with the clearly articulated legislative intent that the burden of the pied a terre tax fall on second homeowners of homes worth in excess of $5 million and not impact those homeowners who contribute to New York City.

  Please see the attached file for CNYC’s comments.

  Comment attachment
  CNYC-Comments-on-Surcharge-on-Property-that-Does-Not-Serve-as-a-Primary-Residence.pdf

  Comment added July 8, 2026 4:42pm

• Laurie Schuster

  How could this possibly be considered to be implemented retroactively?!? That gives people no ability to plan. 4% is incredibly aggressive. I had heard the minimum threshold might be $5,000,000 but $1,000,000? I thought the City was going after billionaires. But doing this and making it retroactive kills people. If you don’t want empty apartments, that is fine but then implement it effective Jan 1 2028 so people can sell.

  Comment added July 8, 2026 7:34pm

• Andreas Combuechen

  Appreciate the intent behind this but this implementation is flawed. First, the Governor has been public that the floor would be $5,000,000. Now it is $1,000,000? How is that even possible with no public announcement or awareness? And this cannot be retroactive. This leaves no ability to plan. Implement in 2027 sure but not retroactive. Good intention and idea but keep to what was stated with $5,000,000 as $1,000,000 was never publicized. And implement moving forward.

  Comment added July 8, 2026 8:12pm

• P from Brooklyn

  As a decades-long primary resident and shareholder in a small (4-unit) cooperative, I have several concerns, but two most particularly:
  First, our market value, when allocated by shares, translates to about one-third of sales value, not one-fifth. For example, the most recent apartment sale in our building was $1.6 million for an apartment with a 2027 market value per DOF of $551,850. Reviewing more sales history for our building turned up more sales-to-market ratios of similar values.
  Second, making the cooperative the responsible party for collecting this pied-a-terre tax puts a terrible potential burden on all of the shareholders, when that burden should be limited to the wealthy owners of the highly valued pied-a-terres. Having to potentially assess many people of modest means for whom these are their primary (and mostly, only) residences is an unreasonable burden. How many of us may be forced from our own homes because we can’t afford to pay the wealth taxes owed by the intended targets of this tax? Why must WE have this responsibility? Especially in very small cooperatives with very few people to share this burden, this feels very wrong.

  Comment added July 8, 2026 11:01pm

• Benjamin Williams - Rosenberg & Estis, P.C.

  Since 1975, Rosenberg & Estis, P.C. has represented owners, developers, cooperative and condominium boards, managing agents, and other stakeholders in connection with New York City real estate matters. As the largest law firm in New York City focused exclusively on real estate law, we have extensive experience with the legal, practical, and administrative issues affecting New York City property owners. I submit the attached comments based on my experience representing taxpayers in New York City property tax matters, including thousands of appearances before the New York City Department of Finance and the New York City Tax Commission.

  Comment attachment
  RE-Comments-to-Proposed-PAT-Tax-Rules.pdf

  Comment added July 9, 2026 9:11am

• Philip Tucker, Esq.

  This comment pertains to the application of “excluded property” to any parties selling condominium units or cooperative apartments pursuant to an offering plan.

  Administrative Code Section 11-3205(i)(1)(iv) authorizes the department of finance to promulgate rules necessary for implementation of the non-primary residence surcharge, including to establish when the sale of a residential condominium dwelling unit, or a transfer of an economic interest in a residential cooperative dwelling unit, has occurred for purposes of whether such residential condominium or cooperative dwelling unit constitutes “excluded property”.

  The definition of “excluded property” under Section 11-3201 includes a class one or class two property that is a residential condominium dwelling unit or residential cooperative dwelling unit that is subject to an offering plan required by section 352-e of the General Business Law and such unit has not been sold, or an economic interest in such unit has not been transferred, by the person, partnership, corporation, company, trust or association who has filed such plan.

  It seems clear that the legislature intended for a party that is offering residential condominium units or residential cooperative dwelling units pursuant to a duly filed offering plan to be exempt from the surcharge. Such an exemption applies because the unsold dwelling units in question remain empty not because the owner has elected to make his or her primary residence outside of New York City, but because the dwelling unit needs to remain empty in anticipation of sale. As sales volume varies from season to season, it is possible that unsold dwelling units may remain vacant for an extended period.

  The department of finance should use its authority under 11-3205(i)(1)(iv) to eliminate any risk of confusion and explicitly provide that a sale or transfer of an economic interest from (a) the sponsor entity that originally filed the offering plan, to (b) a successor sponsor or holder of unsold units or unsold shares that continues to offer the unsold units or unsold shares to residential purchasers pursuant to a duly filed amendment to the offering plan, does not constitute a “sale” or “transfer” for purposes of loss of the exemption, and that such successor sponsor or holder of unsold units or unsold shares remains exempt from the surcharge.

  Without clarification of the occurrence of an exempted sale or transfer under an offering plan, which clarification the department of finance has been expressly authorized to make, the legislation would have an unintended and burdensome impact on parties who have succeeded to the interest of a sponsor under a duly filed offering plan, without furthering the stated intent of the surcharge.

  Thank you for your consideration of this issue.

  Philip Tucker, Esq.

  Comment added July 9, 2026 10:14am

• june barwick, treasurer, 14th Ward Industrial Building

  Small cooperative buildings (class 2C, less than 10 units) should not have PAT eligibility and tax amount calculated at $1 million and 4% of market value. this tax is meant to tax high-end properties with absentee owners.

  In addition, most tax changes are published in advance. the new tax should be based on status as of January 5, 2027 and implemented during the NYC 2027-28 tax year to allow taxpayers time to adjust their taxable status if they choose.

  Comment added July 9, 2026 10:32am

• Warren Dubitsky

  I am a partner at the firm Herman Katz LLP, and my practice is primarily devoted to property tax. I also serve as Chair of the NYC Bar Association’s Tax Certiorari & Condemnation Committee.

  I submit the following comments regarding the proposed rules from the Department of Finance (“DOF) regarding the administration of the newly enacted tax on certain non-primary residences:

  1) Communication Issues:
  While the proposed rules require DOF to transmit notice to covered unit owners, the notices should be required to provide specific information to the affected owner including but not limited to:
  -The basis for DOF’s belief that the property is not a primary residence
  -An explanation of the determination of value that the City relied upon to establish that the property met the required valuation threshold
  -The projected amount of the tax
  -Describe the administrative and legal appeal options available to an owner affected by the tax and the deadlines to file those appeals

  2) Clarification regarding “edge” case scenarios:
  DOF should provide rule guidance regarding specific edge cases that are likely to arise while administering this tax. These include but are not limited to:
  -How an innocent purchaser who intends to use a property as a primary residence can avoid being subject to the tax upon purchase of a property that had previously been subject to the tax, including clarification that the new owner would not be subject to retroactively applied taxes or penalties based on the actions/residency status of a prior owner. This is especially important given the 6 year lookback audit provision in the statute.
  -Clarification regarding the treatment of a property subject to the tax when an owner who uses the property as a primary residence dies or is ill.
  -Rules regarding the treatment of a property that is under construction/renovation by an owner who intends to use the property as a primary residence once the construction work is complete.

  3) The City needs to provide guidance regarding the administrative review process for the application of the tax:
  While the Rules that are the subject of the comment period today are being issued by DOF, the statute that authorizes the tax specifically designates the NYC Tax Commission as the body charged with reviewing and correcting assessments made pursuant to the administration of this tax. To my knowledge, the Tax Commission has not yet proposed any rules regarding how that process would be conducted and we are less than 60 days away from the deadline for DOF to issue initial determinations regarding this tax.

  Comment added July 9, 2026 10:46am

• Nicholas R. Combs, Esq and Jarrett Kalish, Esq

  Re: Comments on Proposed Rules Implementing the Pied-à-Terre Surcharge

  We respectfully submit the following comments on the pied-à-terre surcharge.

  We recommend that DOF establish a streamlined private letter ruling process so that subjected taxpayers may seek expedited clarity on or challenge the surcharge, supported by additional staffing and approved overtime for City attorneys and staff.
  An expedited process would provide taxpayers with timely certainty rather than allowing disputes to accumulate over time. It would also reduce downstream costs to the City, including fewer audit-stage disputes and less strain on the Law Department, and would improve the likelihood that the surcharge is implemented successfully.
  Mechanisms of this kind exist in some capacity at the state, city, and federal levels. This administration has demonstrated a willingness to create mechanisms that expedite administrative matters, as evidenced by Mayor Mamdani’s SPEED Task Force, and we believe the same approach is warranted here.
  At the federal level, the IRS permits expedited handling of letter rulings upon a showing of compelling need (Rev. Proc. 2026-1, § 7.02(4)). Following the Tax Cuts and Jobs Act, the IRS also issued rapid safe-harbor guidance rather than relying solely on case-by-case rulings, an approach DOF may wish to consider alongside the expedited track proposed above.

  Jarrett Kalish, Esq
  Managing Member

  Nicholas R. Combs, Esq
  Of Counsel

  Comment attachment
  Comments-on-Proposed-Rules-Implementing-the-Pied-a-Terre-Surcharge.docx

  Comment added July 9, 2026 10:52am

• Tener Consulting Services

  Please see attached comments to the proposed rule.

  Comment attachment
  TCS-PAT-DOF-Rules-Comment-7.9.26.pdf

  Comment added July 9, 2026 10:54am

• Beth Haroules, President, 120 West 70 Owners Corp.

  Please see our attached comments. We also join in the comments submitted by Roberts & Holland, as well as those submitted by CNYC. We also note that, while property tax reform has long been considered one of NYC’s multiple 3rd rail political issues, there is no disputing that the current property tax system in NYC is entirely inequitable. Prior reform work including a number of boro by boro public meetings and expert panel convenings, under the DiBlasio mayoral administration, was derailed by the COVID-19 pandemic. The pied a terre legislation, negotiated behind completely closed doors by the Hochul and Mamdani administrations and giving broad regulatory authority to the NYC Department of Finance, appears to be working towards property tax reform without any public inputs.

  Comment attachment
  2026.7.9-120W70-Owners-Corp-Comments-to-DOF-re-NYC-Admin-Code-Part-32-Pied-a-Terre-Tax.pdf

  Comment added July 9, 2026 11:03am

• anonymous

  There should be a proration applied to this tax during any year. For example, if a person moves into a second home as a primary resident (i.e. son moves to New York to work in June 2026 and moves into the second home of his parents. The son becomes a primary resident of New York and will pay city and state taxes for a portion of 2026). That residence is now a primary residence for an immediate family member, the son. The owner of the home should only be liable for the pied a terre tax for the portion of 2026 when the home was not used as a primary residence by his/her son. Instead, the law reads as if the owner of the second home will owe the pied a terre tax for the entire year. This is not in line with how regular state and city taxes are applied

  Comment added July 9, 2026 11:59am

• Mary Ann Rothman (CNYC Inc)

  Please see attached testimony.

  Comment attachment
  Pied-a-Terre-Testimony-M.A.-Rothman.pdf

  Comment added July 9, 2026 12:00pm

• Anonymous

  The tax should be prorated for instances where a second home becomes a primary residence during any particular year. For example, the adult son of a second home owner moves to New York in June 2026 to start working in New York City. The son moves into the second home owned by his parents. The son becomes a New York resident and will owe city and state taxes for a portion of 2026. The second home is now the primary residence of the son of the owner of the home. The way the current law reads is that the owner of the second home will pay tax for the entirety of 2026 based on the fact that the home was not a primary residence as of January 5, 2026. The pied a terre tax should be prorated for the time when the home was not used as a primary residence (from January to June 1, 2026).

  Comment added July 9, 2026 12:05pm

• Resident of NY

  Dear NYC Department of Finance,

  I respectfully submit this comment to request that in-laws be recognized and treated as “immediate family member” for purposes of policies, exemptions, and determinations administered by the Department.

  Thanks for your consideration.

  Best,

  Comment added July 9, 2026 4:08pm

• Anonymous

  Tax, Tax, Tax – that is all these blue cities do and it’s never enough. The budget has exploded in recent years and quality of life has gone down. Anyone who thinks giving this govt more money will actually improve anything is a fool. The city has huge budget deficits in lucrative years for Wall Street (where most of the tax $ comes from), should be interesting in the not so good years. CUT THE BUDGET!

  Comment added July 9, 2026 5:04pm

• Jeff Rose, President 36 West 88th Street Owners Corp

  I share the concerns and comments provided by the Council of New York Cooperatives and Condominiums. In particular, I want to flag issues involving (i) deaths of owners/shareholders; (ii) issues surrounding the gap between purchase of an apartment and occupancy and (iii) concerns related to some of the requirements for proof of primary residence status. As an overall guiding principle, I also wish to draw the attention of the Department of Finance to the intent of the legislature that this tax be imposed on second homes and non-resident New Yorkers and not inadvertently be imposed on New York residents.

  Comment added July 9, 2026 5:14pm

• Norman A Ellis

  As happened with the AMT (Federal Alternative Minimum Tax administered by the IRS), originally designed to tax the wealthy, inflation will eventually turn this into a tax on the middle class and eventually even moderate and lower income owners. This is called Bracket Creep. Even if indexed to inflation, governments incapable of keeping to a rational budget will legislate ways around it.

  I advocate for the elimination of all graduated taxes, including graduations on real estate and transfer taxes.

  Bracket creep inevitably occurred with the Federal Income Tax itself, which when originally proposed was supposed to be temporary, and later when re-imposed was supposed to affect only the “robber barons” and wealthiest citizens. It now strangles everyone and is added to by state and local government income taxation along with burdensome and unequally apportioned real estate taxes and elevated sales taxes.

  The federal income tax in the United States traces back to two foundational proposals: the Civil War-era Revenue Act of 1861 (the first U.S. income tax) and the Revenue Act of 1913 (following the ratification of the 16th Amendment).

  1. The Revenue Act of 1861 (Civil War)The very first federal income tax was proposed to fund the Union’s Civil War effort.
  Rate: A flat rate of 3% on incomes.
  Amount: Applied only to annual incomes over $800. (At the time, this exempted roughly 97% of the American population).
  Permanence: Designed explicitly as a temporary emergency measure.

  2. The Revenue Act of 1913 (The 16th Amendment) After an 1895 Supreme Court ruling struck down a later income tax attempt, Congress passed the 16th Amendment in 1909 and ratified it in 1913. Rep. Cordell Hull then introduced the first permanent income tax law under the new amendment. Proponents framed the tax as a way to force wealthy “robber barons” to pay their fair share.
  Rate: A graduated (progressive) tax starting at 1%. The base rate was 1% on net personal income up to $20,000. It included progressive surtaxes that increased up to a maximum of 7% for the ultra-wealthy.
  Amount: Enormously generous exemptions were put in place to ensure everyday citizens were completely shielded from the tax. It was levied only on incomes: Over $3,000 for single individuals. Over $4,000 for married couples.(Because the average American family made a fraction of this, less than 1% of the population was required to pay it).
  Permanence: The ratification of the 16th Amendment established the income tax as a permanent and lasting part of the United States Constitution.

  Comment added July 9, 2026 8:16pm