Mamdani pushes forward with higher taxes for the rich

Mayor Zohran Mamdani is moving ahead with higher taxes on New York City’s wealthiest residents and corporations, dismissing concerns about triggering an exodus of millionaires from the nation’s financial center.

What he’s saying: Mamdani framed the tax plan as expanding freedom for working families at his inauguration Thursday. “The cost of childcare will no longer discourage young adults from starting a family — because we will deliver universal childcare for the many by taxing the wealthiest few,” he said, adding that such policies are “not simply about the costs we make free, but the lives we fill with freedom.”

The 34-year-old democratic socialist also rejected pressure to scale back his agenda. “I have been told that this is the occasion to reset expectations, that I should use this opportunity to encourage the people of New York to ask for little and expect even less. I will do no such thing,” he said. Sen. Bernie Sanders (I-Vt.), who administered the oath at City Hall, endorsed the tax plan, saying that demanding the wealthy to start paying their “fair share” of taxes is “not radical” and “exactly the right thing to do.”

Do the math: Mamdani’s plan would raise city income tax on earnings above $1 million by two percentage points to roughly 5.9%, while raising the corporate rate from 7.25% to 11.5%. The campaign projects $9 billion in annual revenues, including $4 billion from income taxes and $5 billion from corporate levies.

Some analysts are skeptical. The conservative Cato Institute, for one, estimates that corporate taxes would generate closer to $3.8 billion and warns of suburban migration. Incoming Deputy Mayor Dean Fuleihan, however, dismissed such concerns, telling the Financial Times that New Yorkers who are leaving are “those who can’t afford New York, not the millionaire class.”

Academic research supports his view. In a Jacobin report, Harvard economics doctoral student Martin Bernstein noted that typical relocation patterns would reduce income tax revenues only slightly, from $4 billion to between $3.97 billion and $4.01 billion. Cornell sociologist Cristobal Young also found that just 2.4% of millionaires move annually, with only 15% relocating for tax reasons. Millionaires represent about 1% of city residents but pay 40% of income taxes, a share projected to reach 60% under Mamdani’s proposal.

What this means: The revenues would fund universal childcare for children ages six months to five, costing $6 billion annually, plus fare-free buses at $700 million per year and 200,000 affordable housing units over a decade. For Asian American and immigrant families facing high living costs, these programs could provide significant relief.

However, major hurdles remain. Mamdani inherited budget deficits between $4.7 billion and $10.4 billion and needs approval from Gov. Kathy Hochul and Albany lawmakers. While Hochul opposed income tax increases during last year’s campaign, she has since expressed support for corporate tax hikes and childcare expansion, telling WABC in late December that “employers in New York are really going to benefit when their own employees don’t have the stress of worrying about who’s taking care of their children.”