Mamdani’s NYC Wealth Tax: Will the Rich Stay or Flee?
What’s Going On
The Atlantic article argues that while Zohran Mamdani rose to power on a “tax the rich and fund social services” platform, New York’s fiscal health remains heavily dependent on the city’s wealthy one-percent.
Under the current tax structure, the top 1% of earners in New York generate about 41% of state income-tax revenues, and around 40% of the city’s own income-tax revenue.
Mamdani proposes raising the city income tax for earners over $1 million annually (roughly the “top 1%”) by 50%. That, along with hikes in corporate taxes, is meant to fund universal child care, free buses, housing affordability measures, and other progressive social policies.
Why This Is Controversial and Risky
Heavy Dependence on a Fragile Top-Heavy Tax Base
New York has long relied on its wealthy elite to carry a disproportionately large share of the tax burden and, by extension, its social safety net.
The problem: many top earners aren’t billionaires immune to sticker shock. They may already feel they “pay enough,” and an extra bite could push them to reconsider whether New York remains worth it.
Evidence Suggests Taxes Drive Mobility Among the Wealthy
Academic literature increasingly shows that wealthy individuals are relatively mobile when faced with higher taxes. In multiple contexts (including U.S. states, and European jurisdictions), raising taxes on high earners has led to measurable migration among that group.
In New York’s case: because it’s a city, not a state or country, relocating doesn’t require uprooting completely. High-net-worth individuals can simply declare residence in a nearby suburb, or move to a state with no or low income tax (e.g., Florida or Texas), while still working (or spending) time in the city.
Also, remote work remains prevalent post-pandemic, further reducing the friction of relocating: wealthy professionals might keep earning NYC-scale wages while living wherever tax burdens are lighter.
Declining Appeal to New Wealthy Residents
The Atlantic notes that although the number of “income-millionaires” in New York has nearly doubled since 2010, this growth lags behind national trends: overall U.S. millionaires tripled in that period, with many clustering in no-income-tax states.
A nonpartisan watchdog group estimates that had New York maintained its 2010 share of national high earners, 2022 revenues would have been $13.2 billion higher, more than enough to fund many of Mamdani’s proposals without raising taxes.
This suggests a structural problem: New York is attracting fewer new high-earners, which makes increasing tax rates riskier.
Potential Consequences If Wealthy Residents Start Leaving
If a significant portion of high earners and capital departs the city, several developments are likely:
Revenue Shortfalls
The city may find itself unable to sustain expanded social programs. Losing just a fraction of the wealthy tax base could wipe out the extra revenue Mamdani aims to raise, and the city could even face a deficit if remaining tax contributions shrink.
Decline in Corporate Investment and Job Creation
Some firms might relocate or downsize NYC operations to avoid high corporate tax burdens, hurting job growth and shrinking opportunities for highly skilled workers.
Social and Economic Decay
If wealth concentration declines and corporate presence weakens, the city could enter a downward spiral similar to past decades: rising taxes, declining city services, deteriorating quality of life, and continued out-migration.
Greater Volatility
Because most wealth comes from capital gains and investments, which fluctuate more than wages, the city’s revenue base would become more unpredictable, tying social programs to market cycles.
Counter-Arguments and Reasons Why the Feared Exodus May Not Happen or May Be Limited
Several studies suggest migration out of high-tax areas among the rich is slower than popularly assumed, especially among those with deep community, business, and social ties.
According to Citizens Budget Commission, while New York’s millionaire population has shrunk relative to national growth, the city still maintains many millionaires, and the loss doesn’t automatically translate to empty luxury skyscrapers.
Some argue that if Mamdani invests tax revenues effectively by improving public transit, housing, childcare, the improvements could retain or attract residents (rich or working-class) who appreciate better services.
Also, out-migration tends to spike only under extraordinary circumstances (like pandemic-level disruptions). In normal times, social inertia tends to keep people in place.
What This Means for Ordinary New Yorkers and What to Watch
For middle- and low-income New Yorkers, Mamdani’s proposals may promise real benefits: affordable housing, better transit, universal childcare. But there’s a big if: the plan depends on wealthy residents staying in town and continuing to pay top-tier taxes.
Things to monitor over the next 2-5 years:
- Migration data among high earners and households making over $1 million/year
- Trends in luxury real-estate sales and occupancy
- Corporate relocation or downsizing announcements
- Budget performance
- Quality and outcomes of social programs funded by the tax
My Assessment
Mamdani’s agenda could work if the city invests wisely. But betting on wealthy residents staying no matter what is risky. Empirical evidence shows taxes influence mobility, especially when low-tax alternatives exist and remote work is viable. If enough top earners leave, NYC could face lower revenues and reduced economic dynamism, ironically undermining the social programs the mayor wants to expand.
References
- The Atlantic: Rich New Yorkers Leave – Mamdani Wealth Tax Consequences
- Forbes: If Mamdani Raises NYC Taxes Will the Wealthy Leave the City
- Forbes: Will Mamdani’s Proposed Millionaire Tax Save or Sink New York City
- Roosevelt Forward: The Rich Don’t Flee They Bluff
- Phys.org: New York Wealthy Tax Exodus Mamdani
