3 Key Issues Surrounding Zohran Mamdani's New York City Tax Increase

Forbes

6 hours ago

New York City mayoral candidate and Democratic State Representative Zohran Mamdani campaigns in New ... More York City on April 16, 2025. Voters will head to the polls on June 24, 2025, to vote in the Democratic primary in the New York City mayoral election. (Photo by ANGELA WEISS / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)
As reported by Forbes, Zohran Mamdani won the New York City Mayoral Democratic Primary and is poised to become one of the most powerful mayors in the US. What makes his campaign unique is that Mandani ran on a more socialist-type platform, which raises taxes on some to pay for enhanced services. This article discusses who Mamdani is, what Mamdani proposes to alter the tax landscape of New York City, and three key issues with his plans to increase taxes on New York City taxpayers.
Who Is Zohran Mamdani?
Mamdani is a 33 year old politician. He was born in Uganda, and his family moved to South Africa before moving to New York City at the age of seven. Mamdani spent much of his life in New York City before attending Bowdoin College in Maine.
Following college, Mandani started a hip-hop music career. According to Rolling Stone, he first appeared under the stage name of Young Cardamom and later changed it to Mr. Cardamom. The article also discusses that he did not become a rap sensation, but that Mamdani had many funny moments that showed that he was not taking himself too seriously.
After his time as a hip-hop artist ended, Mamdani campaigned to become a representative in New York's 36th State Assembly district. He won in 2020, defeating a four-term incumbent, and was re-elected without opposition in 2022 and 2024. According to the New York State Assembly records, Mamdani was the primary sponsor on 20 bills, three of which have become laws.
In 2024, Mamdani announced his candidacy for mayor of New York City in the 2025 election. He has defeated former Governor Andrew Cuomo for the Democratic nomination. As of the morning of June 25th, Polymarket estimates his lead over incumbent Mayor Eric Adams to be 52%.
Mamdani's Tax Plan
According to Mamdani's campaign website, he has big ambitions to alter New York City's socio-economic landscape. These plans include freezing rent, making bus transportation free, building dedicated priority lanes for busses, creating a new department focusing on community safety, providing free childcare at no cost for every New Yorker between six weeks and five years old, creating city-owned grocery stores designed to keep prices low, building new affordable housing, and many more. Mamdani estimates these spending increases will cost $10 billion annually. This marks a staggering increase relative to the city's $115 billion annual budget.
The New York Times reports that his socialist-leaning platform has drawn promotion from the likes of Alexandra Ocasio-Cortez and Bernie Sanders, both of whom have openly endorsed his candidacy.
Mamdani is also very transparent about how he plans to pay for these large spending increases. In his platform, he clearly lays out where $10 billion can come from. His two main funding sources are:
3 Key Issues Surrounding Mamdani's Tax Increase
1) The Numbers May Not Add Up
In his platform, Mamdani transparently suggests that at the current corporate tax rate of 9%, New York City collects $6.5 billion annually in corporate income taxes. However, his platform then claims that raising the rate by 2.5% will then increase collections to $11.5 billion. While Mamdani's platform can be applauded for transparency, it does not connect the dots on where the numbers come from.
Nationwide, collections from individuals tend to dwarf those from corporations. This notion is because of the simple fact that there are far more individuals and non-corporate owned businesses than corporate entities. Thus, even though major corporations earn significant amounts of money, it is unclear how a small increase in the corporate tax rate of 2.5% can have such a drastic effect on the tax collections for New York City.
2) Most Large-Scale Tax Changes Happen At The State Level
Very few cities enforce their own individual and corporate income tax, making comparisons to how this increase will affect taxpayers opaque. In Mamdani's platform, he calls the tax increases 'A Tried and True Approach' and references how Massachusetts, Washington DC, and New York have all raised taxes on the wealthy and done so successfully. Mamdani also cites how state taxation differentially taxes corporations in New York, and how New York has had a history of increasing taxes on its taxpayers throughout the years.
However, nowhere in the platform does Mamdani demonstrate a time when cities have done this effectively. As reported by The New York Post, the scale of Mamdani's plans rely on buyoff from the state legislature. In fact, The New York Times Podcast: The Daily discusses that providing free transportation and free childcare requires raising money from the state, and the state is very reluctant to do so at this time. Different from the Federal government, cities and states cannot go into debt. Thus, there is significant pressure on these spending increases to ensure that they are paid for, and the tax increases appear to require substantial state-level support. This notion has led outlets like Forbes to question whether Mamdani understands the realities of governance.
3) Wealthy Individuals And Corporations May Just Leave New York City
In an interview with PIX 11, New York Governor Hochul provided a stunning critique over Mamdani's tax plans. Hochul discusses the concerns with raising taxes at a time when affordability is low, as well as the notion that the heightened costs are 'pushing New Yorkers to Palm Beach.'
A natural question arises of whether New Yorkers would really leave because of taxes. While providing causal links to the question may be tricky, The Tax Foundation, points to the notion that most studies examining this topic suggest that state and local taxes affect migration. Academic work by Agrawal and Tester published in the American Economic Journal: Economic Policy, provides evidence that this does, in fact, happen and the risk of capital flight has grown over recent years due to increased technology.
A particularly problematic concern for New York City is that many of the academic studies in this realm focus on state taxation and how individuals and corporations might face a difficult decision of a physical move to an entirely different state. However, if New York City taxes become too high, the taxpayers might have a less tumultuous choice of simply relocating just outside of the city, a much easier move than moving to an entirely different state.
If wealthy individuals and corporations choose to depart New York City due to the tax hikes, then it is unclear where the funds to pay for the increased spending will come from. Despite the substantial transparency provided in his platform, Mamdani does not appear to consider this important notion.