Governor Faces Pressure to Support Corporate Tax Hikes After Mamdani Victory
Governor Hochul Weighs Tax Increases to Fund Mamdani’s Ambitious Agenda
New York Governor Kathy Hochul is actively considering corporate tax increases that could reshape the state’s fiscal landscape and determine whether Mayor-elect Zohran Mamdani can deliver on his expansive affordability platform. Following Mamdani’s historic November 4 victorywhich handed him the mayoralty with 50.78% of the votestate officials are exploring potential revenue sources to fund his proposed universal childcare, free bus service, and other initiatives carrying an estimated $10 billion annual price tag. According to reporting from Bloomberg and Crain’s New York Business, Hochul is weighing increases to the state’s corporate tax rate, potentially raising it from its current 7.25% to 11.5%matching New Jersey’s rate. For New York City businesses, this would create a combined effective tax rate of approximately 19%, positioning New York as the nation’s highest corporate tax jurisdiction. The discussion represents a significant shift for Hochul, who previously rejected such measures during the affordability crisis.
The Pressure Campaign and Political Dynamics
The momentum behind tax increases became visible during a late October rally in Forest Hills, Queens, where supporters of Mamdani chanted “Tax the rich!” while Hochul attempted to address the crowd alongside Senators Bernie Sanders and Rep. Alexandria Ocasio-Cortez. Rather than resisting, Mamdani diplomatically deflected criticism of Hochul, telling reporters that discussions with the governor “always come back to affordability.” Political observers note this represents careful coalition management. Mamdani won with a young, progressive electorate while garnering support from figures like former FTC Chair Lina Khan, now serving as a transition co-chair. Yet Hochul must navigate her own 2026 gubernatorial reelection campaign, where she faces potential challenges from Republican Nassau County Executive Bruce Blakeman and others opposing tax increases. According to analysis from the Albany Institute for Public Policy, corporate tax increases typically face fierce opposition during election cycles, yet New York’s affordability crisis has shifted voter sentiment toward revenue-side solutions.
The Economic Counter-Arguments
Business advocates have mounted strong opposition. The Association for a Better Long Island led efforts to block similar proposals in 2021 and 2025, warning that tax hikes would accelerate an ongoing exodus of corporations and high earners to lower-tax states. Blakeman, in particular, characterized any corporate tax increase as a “disaster” for New York’s economy, pointing to existing federal challenges from tariffs and reduced Medicaid funding. Research from the Manhattan Institute suggests that New York already carries one of the nation’s highest combined federal, state, and local tax burdens, with marginal rates exceeding 50% for high earners in certain brackets. However, counteranalysis from the Center on Budget and Policy Priorities demonstrates that corporate tax revenue has declined as a share of state budgets nationally, with effective rates often lower than statutory rates due to deductions and credits.
Experts Debate Feasibility and Alternatives
Tax policy specialists interviewed across recent reporting noted that while Hochul has opposed broad increases, she has allowed certain extensions of temporary higher rates. Michael Hilkin, a state and local tax analyst, suggested that Hochul “may be less dismissive of the corporate tax increase proposal,” citing reporting indicating her potential openness. However, analysts emphasized that any personal income tax increase on high earners would require state legislative action. Some experts advocated for alternative approaches, including expanded tax enforcement on out-of-state sellersa position Mamdani’s campaign has specifically proposed. The New York Society of CPAs released analysis suggesting that compliance improvements could yield $2-3 billion annually without rate increases. Federal funding cuts under current federal policy reduce Medicaid and SNAP allocations to New York, adding urgency to new revenue discussions while complicating the political calculus.
Timeline and Next Steps
Mamdani takes office January 1, 2026, with his transition team preparing detailed implementation plans. Preliminary discussions between Hochul and Mamdani’s team have already begun, though no formal proposals have emerged. As voters assess the trade-offs between affordability investments and business retention, the outcome will signal whether New York’s Democratic leadership can forge consensus around transformational social spending. The answer will likely emerge during the 2026 state budget process, where the real negotiating begins. Both sides acknowledge that New York’s housing affordability, childcare costs, and transit needs are intractable without substantial new revenuethe debate centers on which revenue sources best balance public investment with economic sustainability.
