Why the gap between taxing millionaires and taxing middle-class homeowners could define the Mamdani era
Two Taxes, Two Very Different New Yorks
At the center of New York City’s current budget debate is a deceptively simple question: who pays? Mayor Zohran Mamdani has proposed two paths to close a $5.4 billion gap in the FY2027 budget. The first is a tax on the city’s wealthiest residents — a 2% surcharge on incomes above $1 million. The second, floated as an alternative if Albany refuses, is a roughly 9.5% property tax increase. These are not equivalent policies. They target different New Yorkers, carry different economic consequences, and reflect fundamentally different theories of who bears responsibility for funding the city’s public services. Understanding the difference matters for anyone who owns property, rents an apartment, or simply pays taxes in New York City.
Who Actually Pays a Property Tax Hike
Property taxes in New York City are notoriously complex. The system, largely unchanged since a major reform effort in the 1980s, taxes different classes of property at different rates and with different assessment methodologies. The result is a structure that critics across the political spectrum have described as inequitable, often burdening outer-borough homeowners — who tend to be working and middle-class — more heavily per dollar of market value than owners of high-end Manhattan condominiums or commercial real estate. A household earning $122,000 per year is nowhere near rich in New York City — yet that is the approximate median income of homeowners who would be affected by the proposed property tax increase. Council Member Selvena N. Brooks-Powers made this point forcefully in an op-ed, noting that these are not the people Mamdani campaigned against. They are nurses, teachers, tradespeople, and small business owners who bought homes in neighborhoods that have appreciated in value but whose incomes have not kept pace. The New York State Department of Taxation publishes detailed data on how property tax burdens fall across income levels — and the pattern is not kind to lower-income homeowners.
Who Pays a Wealth Tax
By contrast, a 2% surcharge on incomes above $1 million would affect approximately 33,000 New Yorkers. These are people earning, in many cases, hundreds of thousands of dollars above the threshold — financiers, tech executives, real estate investors, and others who have accumulated significant wealth in a city that has generated extraordinary returns for those at the top. The economic case for taxing this group, rather than homeowners, is grounded in both fairness and economic efficiency. High-income earners have a lower marginal propensity to consume — meaning an extra dollar taxed from a millionaire displaces less economic activity than a dollar taxed from a working-class homeowner who spends most of their income locally. Research from the Center on Budget and Policy Priorities has consistently found that well-designed taxes on high incomes can raise substantial revenue without significant economic disruption, particularly in major metropolitan areas where high earners have strong incentives to remain.
The Albany Obstacle
The catch is that New York City cannot unilaterally impose a new income tax on high earners. That requires state legislation — which means Governor Hochul’s cooperation, which has not been forthcoming. Hochul’s budget director has stated publicly that the state sees no need for a tax hike under current fiscal conditions, a position that reflects both the governor’s political positioning ahead of her re-election campaign and genuine disagreement about the urgency of the city’s fiscal needs. Without Albany’s sign-off, Mamdani is left with the property tax as his primary lever — a tool that serves his budget math but undercuts his political message.
What Critics on the Right and Left Both Get Wrong
Conservative critics of the property tax proposal are correct that it falls on a broader swath of New Yorkers than a wealth tax would. But their alternative — severe cuts to public services — would fall even more heavily on low- and middle-income residents who depend on those services. Progressive critics who want only a wealth tax are correct that it is more equitable, but dismissing the property tax option entirely without a viable Albany strategy leaves the city without a plan. The honest answer is that New York City needs both better revenue tools AND a governor willing to use them. Mamdani’s task is to build sufficient pressure on Albany to make the wealth tax a reality — or to find a property tax structure that genuinely protects working homeowners from the worst of the burden.
What Comes Next for Homeowners
The budget process runs through June, and nothing has been finalized. Residents who want to track the debate can access NYC Office of Management and Budget documents directly. What is certain is that the choice between these two paths is not just a budget question — it is a statement about values. Taxing millionaires to fund public services is one kind of city. Taxing the homes of working families to fund those same services is another. Mamdani campaigned on the first vision. Whether he can deliver it remains the central question of his mayoralty.
