If you were trying to identify the spiciest policy affecting the fewest Americans, you’d struggle to do better than New York City’s pied-à-terre tax.This spring, Mayor Zohran Mamdani and Governor Kathy Hochul agreed on a plan to target extremely valuable homes. As of this fiscal year, homeowners will have to pay up to 6.5 percent tax on condos and co-ops assessed at more than $1 million; and up to 1.3 percent on multifamily houses assessed at more than $5 million. The out-of-town owners of a $10 million single-family home would pay $80,000 a year, on top of standard property taxes, for instance. Although the new fee is expected to hit only about 11,000 of the city’s 3.7 million housing units, it has dominated nightly newscasts and fronted tabloids (PIED-A-TERROR, HOLD IT RIGHT TERRE!) for weeks. A city-council hearing on the policy stretched for hours, with resident after resident complaining that it was confusing, unfair, invasive, confiscatory. New Yorkers have every right to criticize the rollout, which left a lot to be desired. Still, this controversy is a tempest in a walk-in closet. The pied-à-terre tax is a sound progressive option for a city with an excruciating housing shortage and obscene wealth inequality. More than that, it is a policy meant to make the city a city—populated by, enjoyed by, and built for people.Right now New York does not always feel that way. The brutal cost of housing has strained or wholly priced out many artists and care workers, retirees and young parents, blue-collar types and entrepreneurs.[Richard Florida: The one tax the rich can’t escape]When wealthy families actually live in the units they own, they invest in the city in many ways. They pay income taxes. They buy bacon-egg-and-cheeses at the deli down the block. They volunteer at nonprofits. They eat at restaurants. They put their kids in school. If they don’t live in their units, they pay property taxes without making extensive use of city services. Still, they contribute to rising housing prices without paying income taxes, spending at local businesses, or filling classrooms with children. They turn homes into safety-deposit boxes, “zombifying” their neighborhoods. No vacancies, no residents—it’s not a great scenario for a city as wonderful and in demand as New York.Local legislators have kicked around the idea of taxing pieds-à-terre for years. At first glance, the structure seems to hit apartments owned by members of the upper middle class harder than it hits brownstones owned by billionaires. In reality, the different rates are meant to equalize the burden. The city values houses by looking at comparable sales, yet state law prevents it from valuing apartments the same way; instead, buildings are appraised by estimating the amount of income they would generate if their units were rented out. The calculation tends to work out to a fraction of the actual market value, particularly for expensive units, hence the higher tax rate and lower threshold. (A condo that sold for $4 million would likely be assessed at about $800,000.) In two years, the city is expected to update its assessment system and apply a uniform set of rates.It’s confusing, and the complex tax has gotten a baffling rollout. The city’s Department of Finance published a roster of close to 1 million properties, along with their estimated market value and owner’s name. Anna Wintour, Cynthia Nixon, Deepak Chopra, Darren Aronofsky, and two city-council members were on the rolls. So were tens of thousands of middle-class homeowners, some of whom felt like Mamdani had personally doxxed them—even though property records were already public and city hall was legally obliged to publish the list.The DOF then sent 17,000 homeowners a letter asking them to prove that they were residents or to get ready to pay up. At the city-council hearing, an Upper East Side retiree described getting a notice saying that he might owe $52,000 on top of his current property-tax bill next year. “I filed an exemption,” he said. “The point is the government is assuming that I’m guilty unless I can prove myself to be innocent.”[Annie Lowrey: How the richest people in America avoid paying taxes]He has a point. To prove residency, the city is asking homeowners to furnish a federal or state tax return, a valid driver’s license, or a voter-identification card. These are records the government already has. Then again, filing for an exemption isn’t exactly hard. It certainly isn’t as hard as registering a kid for school, applying for food stamps, or purchasing a $5 million townhouse. And if city residents do not manage to get their paperwork done by the September exemption deadline, they will still be able to file an appeal with the tax commission at any point in the next six months.Concerns about the validity of the law have snuck through the turnstile along with concerns about the technicalities of the law. At the city-council hearing, a former union leader praised the politicians for asking the super-rich to pay their fair share. Still, he said, he worries about a friend who had purchased a townhouse four decades ago, and is now retired and living in the South. The friend “kept his brownstone here so that he can keep in touch with his kids and his grandkids,” he said. “It’s not only billionaires that are concerned. It’s the everyday, hardworking New Yorkers who’ve dedicated themselves to making this city work.”But, remember, the tax on brownstones applies exclusively to homes valued at more than $5 million. Is this friend really a hardworking New Yorker who had the good fortune to buy low? Or is he a millionaire who actually lives in Boca and thus might benefit from Florida’s homestead exemption? Such policies reduce or eliminate property taxes on primary residences, and may also protect them in bankruptcy proceedings. They’re exceedingly common. And they’re an analogue to New York’s pied-à-terre tax. (This specific kind of fee is sui generis in the United States, as far as I can tell, but popular, in both senses of the word, in foreign jurisdictions. Vancouver and Paris are among the cities imposing them, without obvious ill effect.) Plus, the former union leader’s friend does not necessarily have to pay the tax. He can reside in the brownstone. He can let one of his kids or grandkids live there. He can rent it out. Or he can sell it to someone who wants to live here.Any of those choices would benefit New York, in the form of tax revenue, foot traffic, consumer demand, housing supply, or community investment. That’s the thing about the pied-à-terre tax. Instead of approaching the city as a collection of investments and assets, the policy treats the city as a collection of people—Chanel-clad couples, T-ball-playing preschoolers, subway breakdancers, financiers, socialist politicians, and high-net-worth investors—who are welcome to be part of the city too.