Will Mamdani’s Proposed Millionaire Tax Save Or Sink New York City?

Forbes

Zohran Mamdani won over New York City voters by promising to make the city more affordable with a rent freeze and free services funded in part with an added tax on the rich.  Read the full story on Forbes: https://www.forbes.com/sites/kellyphillipserb/2025/06/27/will-mamdanis-proposed-millionaire-tax-save-or-sink-new-york-city/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, Will Mamdani's Proposed Millionaire Tax Save or Sink New York City?

00:08What would be the real result of a new millionaire tax in New York City?

00:12Billionaire Bill Ackman, founder and CEO of Pershing Square Capital Management,

00:17and a Trump and Cuomo backer, suggests the answer is that wealthy taxpayers will flee.

00:23In a post on X, Ackman lamented Zoran Mamdani's Democratic primary win

00:28in the New York City mayoral race by stating, quote,

00:31New York City under Mamdani is about to become much more dangerous and economically unviable.

00:38Ackman's post, which has garnered more than 4 million views,

00:41was a direct response to Mamdani's surprise Democratic primary win in the Big Apple.

00:46The 33-year-old Democrat garnered 44% of the vote running on a progressive agenda

00:51focused on making life in New York City more affordable.

00:54Funding that agenda will take money, and Mamdani has a plan to raise revenues

01:00without tapping the middle class. In addition to bumping up the corporate tax,

01:04Mamdani has proposed a 2% tax on what his campaign calls, quote,

01:09the wealthiest 1% of New Yorkers, those earning above $1 million annually.

01:14His platform estimates this so-called millionaire tax will raise $4 billion annually to help fund projects

01:22like universal free early childcare, free bus rides, and more affordable housing.

01:27The numbers, Mamdani says, mean that the tax would impact about 34,000 households.

01:34On his website, he says, quote,

01:35This tiny share of the city population takes home 35% of all income earned by New York City residents.

01:43That same 1%, he explains, also benefited from a tax cut under President Trump's 2017

01:49Tax Cuts and Jobs Act, which cut the top marginal rate from 39.6% to 37%.

01:55The proposed surtax, the 2% extra tax rate would only apply to earnings over $1 million,

02:02would, Mamdani suggests, make New York's tax more progressive.

02:08The federal income tax system, he points out, is progressive.

02:12With a progressive tax, rates go up as income increases,

02:15but everyone pays the same rate for the same income.

02:19That means that you pay the same 10% as every other person until you hit the top of the bracket,

02:24then you pay 15% on that income until you hit the top of that bracket, and so on.

02:29New York State has a similar system.

02:32However, Mamdani claims that the New York City income tax is essentially a flat tax of 3.9%.

02:38He explains on his website, quote,

02:40Whether you make $50,000 or $5 million, you pay practically the same tax rate.

02:46That's true, sort of.

02:49New York City's tax rates start at 3.078% and only climb to 3.876%, a small uptick.

02:57In addition, the brackets are somewhat compressed, climbing quickly at lower rates and then leveling

03:02off once taxable income exceeds $50,000. But that still doesn't technically qualify as a pure flat tax.

03:10Under Mamdani's plan, the tax would be tacked on at the top,

03:13taking an additional 2% of incomes over $1 million, making the tax more progressive.

03:20Mamdani says the plan will work, pointing to millionaire taxes in states like Massachusetts.

03:25In November 2022, Massachusetts voters approved the Fair Share Amendment,

03:30a 4% surtax on personal income exceeding $1 million. The tax raised $1.8 billion in its first three

03:38quarters of collections, with revenues funding school lunches, transportation, and education.

03:44Some feared that the tax might cause ultra-wealthy residents to flee.

03:48While Massachusetts residents did leave the state in 2021, the year the bill passed,

03:53most were upper-middle-class taxpayers, not millionaires.

03:58That's consistent with historical data.

04:00Massachusetts has been losing individuals across all income levels since 2009,

04:05with more concentrated losses among middle- and high-income earners.

04:08One reason may be housing costs. As those shot up, lower-cost housing in other states,

04:14combined with remote work opportunities, may have wooed middle-class residents away from the Bay

04:18State. As for those millionaires?

04:21An analysis of data from the IRS's Statistics of Income program revealed that the number of tax

04:27returns that reported an adjusted gross income of $1 million or more in Massachusetts grew by 36%

04:34between 2018 and 2022. Tax stats from the IRS for 2023 were not available at the time of the report.

04:42Wealth data from WealthX also indicated that the number of millionaires in Massachusetts

04:47rose by 38.6% between 2022 and 2024, while their collective wealth increased from $1.6 trillion to $2.2 trillion.

04:57For full coverage, check out Kelly Phillips Erb's piece on Forbes.com.

05:05This is Kieran Meadows from Forbes. Thanks for tuning in.

Category

Transcript

Recommended