Mayor leverages property tax increase as pressure tactic but risks shattering coalition if Albany refuses to raise wealth taxes
Mayor Zohran Mamdani’s preliminary budget released February 17 proposes a nine point five percent property tax increase as “last resort” if New York State refuses to raise taxes on wealthy individuals and corporations. The threat is shaking political foundations of his coalition. Middle-class homeowners, particularly those who voted for Mamdani based on affordability promises, are now confronting painful reality: if Albany resists wealth taxes, they will absorb substantial cost increases. The proposal would generate three point seven billion dollars in revenue while affecting over three million residential units and more than one hundred thousand commercial properties citywide. While Mamdani frames this as pressure tactic to force state action on wealthy tax brackets, political analysis suggests his strategy contains fatal contradictions. The very constituency most likely to support state-level wealth taxesurban renters and service workersare not primary property tax payers. Meanwhile, property owners, including many small landlords and homeowners who supported Mamdani for his housing and affordability agenda, face direct financial blow.
The Homeowner Backlash: Who Pays Depends on Ownership Structure
Impacts of property tax increase would ripple throughout city economy. Owner-occupied single-family homes and small apartment buildings would see immediate tax increases. A homeowner with property assessed at five hundred thousand dollars paying current rate of 12.28 percent would see annual tax bill rise by approximately four thousand six hundred dollars. This translates to roughly three hundred eighty-five dollars monthly in additional expensesa significant sum for household budgets already stressed by inflation, insurance costs rising thirty percent annually, and food prices elevated since pandemic. For landlords of market-rate apartments, property tax increases will be passed through to tenants. Real estate experts warn that landlords will raise rents to cover new costs, potentially year-round increases rather than seasonal adjustments. Since pandemic, most landlords have already raised rents annually to cover rising insurance, maintenance, and capital costs. Adding property tax increases creates additional pressure on tenant affordability.
The Political Calculation: Whose Ox Gets Gored
Mamdani’s budget strategy reveals uncomfortable political math. The constituency most supportive of wealth taxes on high earnersrenters, service workers, young peopledo not own property. They are unlikely to suffer directly from property tax increases. Rather, property tax increases will be shifted to them as rent increases. Conversely, homeowners and small landlords, more likely to have supported Mamdani based on pro-housing messaging, will absorb direct costs. Mamdani’s core coalition of progressive voters and socialist sympathizers skews younger, more urban, and more likely renters than owners. Yet middle-class homeowners, particularly in communities of color where property ownership represents generations of family wealth accumulation, provided critical electoral support. These voters now feel betrayed. Deputy Council Speaker Nantasha Williams, representing Southeast Queens where homeownership is particularly important to community wealth, called property tax increase “absolutely tone-deaf.” She emphasized that homeowners of color have long paid disproportionately high effective property tax rates. Black homeowners in predominantly Black neighborhoods often pay double the effective tax rates of white homeowners in white neighborhoods, despite identical property values. Adding nine point five percent increase compounds this systemic inequity.
The Governor’s Resistance: Why Albany May Not Budge
The fundamental obstacle is that Governor Kathy Hochul controls state tax policy. She has repeatedly declined to approve higher taxes on wealthy New Yorkers, signaling such increases are not part of her budget plans. Hochul has faced criticism from business interests and is sensitive to accusations that New York’s high tax burden drives out wealthy residents and businesses. While Trump’s federal tax cuts are reducing federal taxes paid by wealthy New Yorkers, state taxes remain significant. Hochul fears that state income tax increases targeting millionaires will trigger relocations to low-tax states like Florida and Texas, reducing state revenue and economic activity. This fear may be overblowneconomic research suggests tax-driven migration is modestbut Hochul appears to believe it. Without gubernatorial support, City Council may resist approving property tax increases. City Council Speaker Julie Menin immediately called property tax increase “non-starter.” Council members representing homeowner constituencies have similarly objected. If City Council refuses, Mamdani would need to find alternative revenue sources or accept service cuts.
The Rent Freeze Contradiction: You Can’t Freeze Rent and Raise Property Taxes
Mamdani campaigned on freezing rents for the city’s approximately one million rent-stabilized units. This represents deep commitment to affordability and tenant protection. Yet property tax increases, even if nominally applied to owners, inevitably result in rent increases for tenants. Landlords facing nine point five percent property tax increases will seek rent increases to maintain profitability and cover operating costs. The city’s Rent Guidelines Board, to which Mamdani appointed new members, will face pressure to approve above-inflation rent increases to allow landlords to recover costs. So Mamdani’s budget simultaneously proposes freezing rents while implementing policies that will force rent increases. This contradiction cannot be resolved without subsidizing affordable housing at scale or restricting landlord ability to pass through costs. The preliminary budget contains no such provisions.
The Inequality Angle: Property Tax System’s Structural Unfairness
Mamdani frequently highlights that the city’s property tax system, unchanged for forty-plus years, systematically advantages single-family homeowners and luxury condo purchasers while burdening multi-family buildings housing renters. This distributional unfairness is well-documented. Yet Mamdani’s property tax increase proposal does nothing to address underlying system architecture. It applies the same nine point five percent increase across all property classes and assessments, perpetuating existing inequities. Progressive tax reform would restructure assessment methodology and relative tax rates across property classes before implementing increases. Applying increases to unjust system simply deepens injustice.
Alternative Revenue Sources: Other Options on the Table
City officials have suggested alternative revenue mechanisms: congestion pricing expansion (charging vehicles entering Manhattan), parking meter increases, commercial vehicle registration fees, expanded use of real estate transfer tax, or sales tax increases. None generates sufficient revenue alone to replace nine point five percent property tax increase. Combinations might approach the target. The preliminary budget also proposes what Mamdani calls “aggressive posture on savings” with “chief savings officers” in each city agency charged with identifying budget reductions by March twenty. These savings mechanisms could reduce revenue need. However, critics note that if the city can simply find three to five billion dollars in savings and revenue improvements, then the property tax increase becomes politically optional rather than necessary. This raises question of whether the increase is genuine requirement or political pressure tactic.
The Political Endgame: What Actually Happens
Budget negotiations will occur through spring, with final budget due July first. If Governor Hochul authorizes higher taxes on wealthy New Yorkers or if City Council-sponsored revenue measures pass, property tax increase could be avoided. Multiple scenarios remain possible. Alternatively, City Council may force Mamdani to accept smaller property tax increase, raid more reserves, or implement service cuts as compromise. History suggests that after months of negotiations and compromise, final budget will look substantially different from February preliminary proposal. The question is whether Mamdani’s threat will generate sufficient political pressure on Hochul to approve wealth taxes, or whether homeowner anger will fracture his coalition. Early polls show declining support among homeowners and those concerned about affordability. If property tax increases ultimately occur despite wealth tax negotiations, Mamdani’s credibility on affordability issues will suffer lasting damage. See Center on Budget and Policy Priorities on property tax systems. Review NYC budget documents for complete details.
