Mayor proposes 2% income tax increase on millionaires and corporate tax hike to address $7B budget shortfall
Mayor Proposes Aggressive Tax Approach to Address Unprecedented Budget Crisis
New York City Mayor Zohran Mamdani has doubled down on his campaign promise to reshape the city’s tax code, calling on state lawmakers to approve a 2 percent income tax increase on residents earning more than $1 million annually and a corporate tax hike to address a projected $7 billion budget shortfall over two fiscal years. The mayor’s fiscal strategy represents a sharp departure from the incrementalist approach that characterized previous administrations, instead embracing the controversial “tax the rich” framework that became central to his mayoral campaign. Speaking before state legislators at the Joint Legislative Budget Hearing in Albany, Mamdani articulated a moral case for wealth-based taxation while defending his position against criticism from business leaders and fellow Democrats.
The Scale of the Crisis and Its Roots
The budget crisis confronting the city is historic in scope. City Comptroller Mark Levine estimated the deficit at $12.6 billion across the next two fiscal years, comprising a $2.2 billion hole in the current fiscal year and a $10.4 billion gap in the following year. Mamdani subsequently revised the estimate downward to $7 billion after incorporating additional revenue projections and implementing targeted efficiency measures. The mayor blamed the fiscal deterioration on decisions made by his predecessor, Eric Adams, including systematic underbudgeting of critical services such as rental assistance, homeless shelters, and special education programs. Additionally, Mamdani pointed to what he characterized as a chronic fiscal imbalance between the city and state. He noted that New York City contributes 54.5 percent of state tax revenue but receives only 40.5 percent in return, a disparity he attributed to policies enacted during former Governor Andrew Cuomo’s tenure.
The Millionaire Tax Framework
Mamdani’s proposal would impose a flat 2 percent personal income tax increase on all New Yorkers earning in excess of $1 million annually. Combined with existing state and city taxes, this would result in a top marginal rate approaching 17 percent, the highest in the nation. The mayor further proposed raising the corporate tax rate to 11.5 percent, aligning New York City with New Jersey’s rate and creating additional revenue streams. Campaign estimates suggest the personal income tax increase would generate approximately $4 billion annually, while the corporate tax hike could produce an additional $5 billion. Together, these measures would address nearly half the remaining budget shortfall without resorting to service cuts. The mayor directly addressed critics’ concerns about capital flight, citing data from the Fiscal Policy Institute and economic research. He noted that a person earning $1 million annually could absorb an additional $20,000 in annual tax liability without undue hardship, especially considering that federal tax cuts signed into law will save wealthy New Yorkers roughly $12 billion per year.
Philosophical Underpinnings and Political Reality
Speaking at various legislative forums and press conferences, Mamdani stressed that his administration will balance tax increases with demonstrated commitment to operational excellence and public service. He cited the previous administration’s $600,000 investment in an artificial intelligence chatbot that proved “basically unusable” as an example of wasteful spending his team would eliminate. The mayor emphasized that tax increases must be paired with efficiency gains and service improvements to maintain public support. Governor Kathy Hochul has signaled reluctance regarding the tax increase proposal, stating plainly that she does not intend to raise taxes as she campaigns for reelection. The divergence between the mayor and governor underscores the political complexity of Mamdani’s tax agenda, which ultimately requires state legislative approval. For detailed information about New York City’s budget process, visit NYC Comptroller’s Office. The Fiscal Policy Institute has published analysis on tax policy implications. Citizens Budget Commission research is available at CBC New York. For information on state budget processes, consult New York State Assembly.
