Zohran Mamdani’s Radical Tax Plan Threatens NYC’s Economic Future

Democratic socialist’s proposed millionaire tax could drive out job creators, deepen fiscal instability, and deliver empty promises.

New York City Councilman Zohran Mamdani is pushing a deeply flawed plan that would slap a new 2% income tax on residents and small business owners earning over $1 million a year—an approach critics warn could destabilize the city’s already fragile economy.

Mamdani claims this extra tax will help fund a wide array of socialist-style programs, including government-run grocery stores, free bus service, universal childcare, and a $30 minimum wage. He also touts plans for rent freezes and expanded public housing—all funded, he says, by extracting more from high-income earners.

But what Mamdani fails to mention is that the city doesn’t even have the legal authority to impose such a tax hike on its own. Any increase to local income tax rates requires state-level approval through Albany’s budget process—meaning his campaign promises are not only economically reckless, they’re legally out of reach.

Even if the state did sign off, the plan would pile on top of what is already the nation’s heaviest tax burden. Millionaires in New York City currently face a combined tax rate that can exceed 50% when federal, state, and local taxes are added together. The city’s top local marginal rate of 3.9%, plus Mamdani’s proposed 2% penalty, would squeeze even more from the very people who fund New York’s economy.

Despite this, Mamdani shrugs off concerns, claiming that “new millionaires are minted every year.” But that ignores the outsized role high earners play in creating jobs, growing businesses, and funding the tax base. These individuals often include small business owners filing as individuals—people who would be directly hit by Mamdani’s tax.

According to the Citizens Budget Commission, although millionaires make up less than 1% of city residents, they pay 40% of New York City’s personal income taxes and 44% of the state’s. Nationwide IRS data shows the top 1% of earners already contribute 40.4% of all federal income tax revenue. Yet Mamdani continues to insist that the “rich don’t pay their fair share.”

The reality is stark: New York relies heavily on a small group of high earners to keep its budget afloat. If even a fraction of them leave the city for lower-tax areas, they take with them not just their income, but their businesses, their spending, and their job-creating potential. That kind of exodus could blow a hole in the city’s finances and decimate funding for the very services Mamdani claims he wants to expand.

While Mamdani’s rhetoric may appeal to far-left activists, his policies ignore economic realities and jeopardize New York’s future. In a city already saddled with debt and dependent on municipal bonds, adding more anti-growth measures is a dangerous move.

If New York wants to remain a global economic hub, it needs to retain the businesses and individuals who keep it running—not drive them away with ideological experiments and unattainable promises.