What are Mamdani’s plans to tax the rich?

One of New York City mayoral nominee Zohran Mamdani’s campaign promises has been to increase taxes on the wealthy and use that revenue to fund the ambitious social programs that make up his campaign platform. The only hitch is that New York City needs state approval in order to increase local income taxes, and Gov. Kathy Hochul has been steadfast in her opposition to the prospect of increasing income taxes. 

Hochul’s gubernatorial primary challenger, Lt. Gov. Antonio Delgado, backs the idea of raising taxes, but he’d need to win an uphill battle for the executive mansion to help push it through. The state’s legislative leaders also support raising taxes. For years, the Assembly and state Senate’s one-house budget proposals have included tax increases. Former Mayor Bill De Blasio supported raising taxes on the wealthy during the Cuomo administration, the last time the top tax rate in the state was changed. 

Before 2021, the state’s highest marginal tax rate was 8.82%, which applied to income exceeding $1,077,550 for single filers, $2,155,350 for married joint filers and $1,616,450 for those filing as the head of a household. In 2021, to deal with the fiscal crunch brought on by the pandemic, this tax rate was raised in 2021, the rate was increased to 9.65% and two new tax brackets were added for even wealthier taxpayers: single and married filers with more than $5 million in income are taxed at a top marginal rate of 10.3%, while those with more than $25 million of income pay a top marginal rate of 10.9%. 

Lawmakers and advocates originally pushed for more extensive revenue-raising legislation before coming to a compromise with former Gov. Andrew Cuomo. That followed earlier  attempts to increase taxes on the rich to fund specific programs – such as de Blasio’s attempt to fund universal Pre-K in New York City by raising the income tax rate on New York City residents with income over $500,000 from 3.9% to 4.4%. Cuomo eventually funded the universal pre-K program in the 2014 budget, but he didn’t use revenue raisers to do so.

In the most recent state budget, Hochul extended the 2021 surcharges to 2032. Though she kept the current rates in place, the state Legislature has consistently proposed even higher taxes on wealthy New Yorkers. This year, the state Senate proposed bumping up the marginal tax rates on the top two tax brackets by 0.5% (to 10.8% on income over $5 million and 11.6% on income over $25 million) while the  Assembly proposed adding a new tax bracket for income over $100 million with a 12% marginal tax rate. Hochul rejected the proposed tax increases, citing the specter of tax flight from New York, before agreeing on budget language that focused on lowering taxes for the middle and low-income tax brackets.

Mamdani has proposed various policies that would require large levels of funding, including city-wide free buses, universal child care and city-owned grocery stores. To pay for them, he has proposed creating an additional tax bracket for New York City residents with income over $1 million, which would be taxed at 5.9%. Doing so would require the inclusion of legislation in the state budget, but he may already have allies on that front. Both Assembly Speaker Carl Heastie and Senate Majority Leader Andrea Stewart Cousins have already said they support tax increases, and Delgado’s campaign platform also calls for raising taxes on the rich.. 

But unless Delgado’s campaign yields a similarly surprising victory to Mamdani’s, Hochul will remain a barrier to any legislation that raises taxes on the wealthy. Hochul’s tax policy has been less focused on raising revenue than on providing tax relief. Some have criticized her approach for not sufficiently easing the financial burden on state residents, given the general absence of revenue raisers, aside from targeted tax schemes like the plan to fund the MTA’s capital plan via an increased payroll mobility tax.  

Proponents of raising taxes on wealthy New Yorkers have pointed to the impact of President Donald Trump’s “One Big Beautiful Bill,” which kept tax rates in place that are seen as favorable to the wealthy.  At the same time, New York’s high state taxes have seen both Democrats and Republicans back federal legislation that would eliminate or raise the cap on State and Local Tax deductions.

Some argue that New York’s high taxes are driving people out of the state, and  out-migration is expected to cost the state representation in Congress in the long term. But others have suggested that the high cost of living poses a greater threat than high taxes to residents hoping to build a life in New York. Hochul has focused on making New York more affordable, while also warning that raising taxes on the wealthy could cause them to decamp to Florida.

The 2021 push to raise taxes on the wealthy came as the state grappled financially with the pandemic and faced a budget deficit. Now, New York is dealing with newer concerns of federal funding cuts and inflation, while sporting a healthy surplus. Mamdani and supporters of taxing the rich hope that if he wins in November, next year  will serve as a similar inflection point for the state.