Mamdani floats New York City property tax raise if state won’t tax millionaires

Zohran Mamdani, New York’s democratic socialist mayor, has unveiled two new budget proposals for the city – one to raise income and corporate taxes, or another to raise property taxes – triggering resistance from some political figures in and out of the state.

Mamdani’s two proposals include either raising taxes on the city’s wealthiest residents – which would require approval from New York’s governor, Kathy Hochul – or a “last resort” measure of a 9.5% property tax increase, which could affect “more than 3 million single-family homes, co-ops and condos and over 100,000 commercial buildings”, according to the New York Times.

“The first path is the most sustainable and fairest: raising taxes on the wealthiest and corporations, and ending the drain by fixing the imbalance between what the City provides the State and what we receive in return,” said Mamdani.

“If we do not go down the first path, the City will be forced to go down a second, more harmful path of property taxes and raiding our reserves – weakening our long-term fiscal footing and placing the onus for resolving this crisis on the backs of working- and middle-class New Yorkers … The second path is painful. We will continue to work with Albany to avoid it.”

The threat to raise property taxes puts pressure on Hochul, who is seeking re-election this year, to move toward Mamdani’s campaign promise to make the city’s top earners and corporations pay more to fund an ambitious slate of programs that includes free childcare, free buses and rent freezes for 1m rent-stabilized apartments.

Mamdani’s message comes as Hochul, who has ruled out income tax rises, said the state would contribute $1.5bn to help reduce the city’s budget deficit, which is expected to rise to $7bn gap from $5.4bn over the next two years. Mamdani notably inherited a larger deficit than expected from his predecessor, Eric Adams.

The fallback proposal to raise property taxes has, unsurprisingly, provoked a swift response from city lawmakers.

“We do have a big gap to fill, and he’s put a pretty extreme option on the table, which is a combination of raising property taxes and taking money from reserves and relying on some pretty aggressive revenue projections to boot,” the city’s comptroller, Mark Levine, told local paper The City.

Hochul told reporters she does not believe a property tax increase is necessary.

Julie Menin, city council speaker, and Linda Lee, chair of the finance committee, said in a press release on the proposals that at a time “when New Yorkers are already grappling with an affordability crisis, dipping into rainy day reserves and proposing significant property tax increases should not be on the table whatsoever”.

The Queens borough president, Donovan Richards, said raising taxes of property would be a setback: “A property tax hike upwards of 9.5% is a nonstarter. Under no circumstance should we consider balancing our budget on the backs of working-class New Yorkers, especially seniors on fixed incomes and workers who keep our city running.

“Raising property taxes has got to be among the worst ideas imaginable to make our budget gap smaller,” the Republican council member David Carr told City & State. “The reality is, it’s among the most regressive taxes that the city levies on New Yorkers. And to say that we have a progressive administration that actually thinks that’s something they may need to do is ridiculous.”

Senator Rick Scott of Florida, whose state is anticipating a wave of wealthy New Yorkers to relocate, said: “Surprise, surprise … it took Mamdani less than 3 months to demand a massive tax hike. It’s the same old story where socialists promise everything for “free”, then demand hardworking Americans pay the price. Socialism NEVER works.”

But Mamdani’s budget proposals are merely the first steps in what is likely to be a protracted dance of proposals and counter-proposals between the new mayor and the city council.

“I think the budget dance is that: It’s somewhat of a dance, which is unfortunate,” Menin told City & State last week. “It always would be better if there could be more coordination and not so much of that back-and-forth. I do believe we can do that. I’ve been talking very constructively with the mayor about that.”