Zohran Mamdani's $5 Billion Corporate Tax Hike Threatens NYC's Status as the World's Financial Capital
Billions of dollars are at stake in New York City’s mayoral election.
Zohran Mamdani has put forth many bold—and expensive—proposals in his New York City mayoral bid, including childcare for all, government-run grocery stores, and free buses. He's planning to pay for these proposals with various tax hikes, including a large jump in the city's corporate tax rate from 7.5 percent to 11.5 percent. He claims this will bring in $5 billion, and says New York City's economy can "afford to support a stronger public sector."
Unfortunately, raising the corporate tax rate could also hinder the job market, cause corporations to relocate, and decrease long-term government revenue, potentially damaging New York's status as the financial capital of the world.
Corporations hit with higher tax rates would seek ways to cut costs, possibly harming workers through either layoffs or lower wages. Particularly in New York City, where corporations employ hundreds of thousands of workers, even modest cost cutting measures are bound to negatively impact the nearly 5 million local workers. In the United Kingdom, for example, around one in six British companies cut hiring in the fourth quarter of 2024 in anticipation of tax hikes that took place in April 2025. If New York employees aren't directly laid off, they could face lower wages in the long run. Approximately 28 percent of the cost of higher corporate taxes is taken on by workers in the form of lower wages, further exemplifying the harsh effect that corporate tax hikes have on workers. Corporate tax hikes are generally never a good idea—even more so in a weak labor market where the national unemployment rate is the highest since the pandemic and job growth has consistently underperformed in the past few months.
Some corporations will also deem the tax hikes as too imposing to pay altogether, forcing them into relocation to another city, state, or even country where they can operate with lower costs. Already, the exodus of banks from Wall Street to corporate tax havens, such as Elliot Management's relocation to Florida, has cost the city millions in managed assets. New York City simply cannot afford to watch other businesses follow. Already, New York has an estimated budget gap of $4.22 billion in 2026, and a massive $8.83 billion gap is projected for 2027.
Consider the possible damages. The U.S. Chamber of Commerce recently estimated the economic effects of a mere one percentage point increase in the federal corporate income tax rate from 21 percent to 22 percent. That increase would cost New York's 10th congressional district, home to the Financial District and southwest Brooklyn, approximately $1.3 billion over 10 years. The rest of the city would be harmed too, of course—yet Mamdani proposes an even more drastic increase of four percentage points. "Businesses have only three options to pay for higher taxes: raise prices; reduce costs; or lower returns to investors," as the authors of the U.S. Chamber of Commerce report wrote. "In reality, they do all three." The fourth option, one even more feasible if a tax hike only hits New York City, is that businesses will flee.
New York City's economy cannot afford higher corporate taxes. All of America benefits from the city's status as the financial center of the world. Mamdani's proposed tax policies would threaten that reign.
