New York Mayor Mamdani presses tax hikes on wealthy as $12B budget hole looms

New York City Mayor Zohran Mamdani is pushing for plans to raise taxes on top earners to help plug a projected multibillion-dollar budget deficit, sharpening long-running debates over tax flight and the city’s long-term appeal to high-net-worth residents.

In an interview at City Hall, Mamdani said the $12 billion fiscal gap left by his predecessor is “at a scale that’s actually greater than what we saw here in New York City during the Great Recession.”

As reported by CNBC, he argued that the shortfall reflects “gross fiscal mismanagement” under former Mayor Eric Adams and former Gov. Andrew Cuomo, whom he defeated in last year’s mayoral race.

City Comptroller Mark Levine has estimated that New York faces a $12.6 billion budget shortfall over the next two fiscal years, counting a projected $2.2 billion hole in the city’s nearly $116 billion budget for fiscal 2026 and a further $10.4 billion gap for fiscal 2027.

Mamdani said his response will combine higher taxes on affluent households and corporations with targeted spending cuts and efficiency measures.

He cited the Adams administration’s roughly $600,000 spend on an artificial intelligence chatbot he described as “basically unusable” as the kind of project that will go under the microscope. The mayor said he has to show that city government is committed not only to public services but also to “public excellence and public efficiency,” and that “every dollar that’s being spent is actually being spent in a worthwhile way.”

On the revenue side, Mamdani campaigned on raising the city’s income tax on its richest residents from 3.9% to 5.9%, on top of the state’s 10.9% top bracket. He has also backed lifting the city’s corporate tax rate to 11.5%, in line with New Jersey, and imposing a flat 2% tax on New Yorkers earning more than $1 million a year. Those moves would entrench New York as the highest-tax jurisdiction for top earners in the country.

Read more: 'Another straw on the camel's back': RIAs weigh impact of Mamdani's NYC tax proposals

The agenda has alarmed parts of Wall Street and the broader business community. Hedge fund manager Bill Ackman has warned that businesses and wealthy residents “have already started making arrangements for the exits.” Cuomo quipped during the campaign that if Mamdani won, “even I will move to Florida.”

For now, however, the data offers a more nuanced picture for advisors trying to assess the risks of client flight. Research by Cornell University Associate Professor Cristobal Young and colleagues on millionaire taxes in New Jersey and California, global billionaire migration, and decades of Internal Revenue Service records suggests that high earners are far less mobile than public rhetoric implies. By their reckoning, only about 2.4% of Americans with million-dollar incomes move across state lines each year, roughly half the rate of low-wage workers, and just 15% of millionaire movers end up with a lower tax bill.

The pandemic was a notable exception: once offices, schools and in-person networks shut down, many top earners left high-tax states and favored lower-tax destinations. But migration patterns largely reverted to prepandemic norms by early 2023, according to that research, indicating that tax-driven flight is typically “a small fraction of a small fraction” of the affluent population.

Even so, New York’s tax competitiveness problems are real. In the Tax Foundation’s 2026 State Tax Competitiveness Index, the state ranks 50th overall, weighed down by a 10.9% top individual income tax rate, New York City’s progressive income tax with a top rate of 3.876%, high combined sales taxes, and elevated property taxes. The think tank also flagged the state’s “convenience of the employer” rule for remote workers and its estate and real estate transfer taxes.

For RIAs and other advisors with New York clients, the emerging Mamdani tax framework will raise fresh questions around domicile, estate planning, and the value of remaining in a high-tax city in exchange for services and amenities. Mamdani, for his part, argues that those public services are the point, pointing to sanitation workers who kept the city functioning during extreme weather and saying that is “only possible when you’re actually investing in public service.”