New York Mayor Zohran Mamdani offered voters a simple proposition: let him punish “the rich,” and he could deliver a socialist utopia. The city’s residents are quickly learning that their inexperienced mayor had a more expansive definition of rich than they realized.
Facing a $7.3 billion budget deficit, Mamdani wants the state to cut its estate tax exemption threshold from $7.3 million to $750,000 while raising the top estate tax to 50 percent from 16 percent. That modest one-bedroom apartment an older New Yorker wanted to leave her family to help them get on the property ladder? The mayor will take half of it, thank you very much.
The good news is that even the New York state legislature, not exactly populated with fiscal hawks, is unlikely to consider the proposal. New York is already one of few states to have a state-level estate tax on top of the federal one. If Mamdani’s plan passed, the Empire State would have one of the lowest estate tax exemption thresholds in the country.
A high estate tax on top of New York’s high income tax would almost certainly drive more wealthy New Yorkers out of the state, exacerbating Mamdani’s revenue problem. The mayor has threatened that, if the state isn’t willing to raise taxes on the wealthy, the city will raise property taxes and drain reserves.
Of course, New York doesn’t need more revenue — the city could simply cut expenditures, starting with Mamdani’s $127 billion spending plan for fiscal year 2027.
At least Gov. Kathy Hochul (D), up for reelection, seems to understand that Albany can’t indefinitely bankroll a socialist laundry list if it wants to maintain its tax base. She said that it’s important the Empire State isn’t just “taxing for the sake of taxing,” but the governor would have more crediblity if she offered real spending cuts as well. A good start would be rejecting a recent union effort to undo pension reforms that save taxpayers billions of dollars.
Moody’s downgraded New York City’s credit rating from stable to negative on March 11, citing “the emergence of sizable and persistent projected budget gaps.” The mayor swore the oath of office less than three months ago, and there is still plenty of room to fall further. It’s going to be a long four years.
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