Mamdani Win to Bring Tax Shift to New York’s Wealthy, Businesses

New York City Mayor-elect Zohran Mamdani campaigned on promises to tax the rich and re-engineer the city’s economy with free buses, city-run grocery stores, and rent freezes to create more equity.

Today, the question isn’t whether Mamdani’s proposals are politically resonant—they are—but whether he can deliver his menu of promises and how they may affect city-based businesses. Prudent business leaders can prepare by matrixing scenarios to account for areas of particular concern.

Businesses and wealthy city residents should establish a risk factor for each component of exposure—such as individual and corporate tax surcharges, real estate, and employment costs—that accounts for the likelihood of implementation and magnitude as applied to their footprint. A timeline for anticipated changes should also be established, and the model revisited regularly.

A risk-based analysis may, for example, initially score a low probability to proposed individual and corporate tax increases because the mayor can’t implement these on his own, but assume the likelihood that state opposition will diminish over time especially as the mass of voter sentiment continues to favor these proposals.

Taxation and spending, which are the blood supply for much of Mamdani’s agenda, depend on Albany. Gov. Kathy Hochul (D)—who has described herself as a “staunch capitalist” opposed to higher taxes for the wealthy and for New York businesses—cautioned that “any tax increase has to come across my desk first.” As the state faces unpredictable downward fiscal pressure from the federal government, many legislators have campaigned on a platform of no new broad-based taxes.

Conventional wisdom therefore says Mamdani is unlikely to achieve state cooperation, but history and the political momentum that has carried him this far suggests the dynamic could change.

Both the state’s Senate Majority Leader and Assembly Speaker have signaled an openness to tax increases for the rich to help pay for childcare—a broadly popular issue—which could be a door-opener that lets in Mamdani’s proposed 2% tax on residents earning more than $1 million a year and raises the state’s corporate tax rate to 11.5%. As a state assemblyman, Mamdani understands how Albany works and the tug-of-war that tends to move politicians past campaign promises.

Property Tax Focus

In the meantime, companies with a city real estate footprint should pay close attention to the likelihood of property tax hikes. Commercial owners should review opportunities for abatements and exemptions that may have been overlooked or might be available in connection with planned property expansions and changes.

The city’s Department of Finance sets tax assessments, and city council establish tax rates. Sudden changes are unlikely, and under the current property classification system, a rate increase that squeezes more out of successful top-level retail, office, and industrial buildings will gouge the large group of struggling retailers and pandemic-legacy office buildings with record-level vacancy rates. The mayor’s and city council’s property tax rate levers are also constrained by state law limitations that can be expected to slow any short-term increases.

The greatest property tax risk doesn’t stem from Mamdani as much as from ongoing litigation that has gained traction and could reengineer the way that residential properties are taxed. The city has for years acknowledged that homes in wealthier neighborhoods and many condos and co-ops are receiving undeserved breaks at the expense of others.

Property tax fixes notoriously favor voters, which means residentially classed properties in general as against commercial. Within that group there will likely be an added tax burden on upper-end residential properties.

But the bulk of the shift will probably go to commercial properties that are nonresidential. This shift won’t directly add revenue to pay for Mamdani’s proposals, but it will be disruptive enough to find, say, another $500 million to pay for free bus ridership.

Rent and Policies

Rent constraints should be considered a high-risk probability for landlords. Rent-stabilized apartments make up about 28% of overall housing stock, and freezing these rents is within the mayor’s ambit because the mayor appoints the members of the Rent Guidelines Board.

The de Blasio administration’s appointees froze rents three times. The new mayor may be slowed by outgoing Mayor Eric Adams’ 2025 appointments to the board, packed specifically to block freezes, but this will be of limited duration. The longer term could include rent rollbacks instead of freezes.

City employers can assume a high probability of mayoral influence on private sector employment policies and costs. For example, companies that contract with the city may be required to meet higher employee pay standards.

In the recent past, the city has created laws and advanced bills that govern employer job advertisements, the reporting of employee demographic and pay data, and requiring increased disclosure of employee protections under federal, state, and local law.

The most significant headwind the new mayor faces is the tipping point at which wealthy New Yorkers, businesses, and commercial owners decide that remaining here is more costly than it’s worth. On top of that, Mamdani enters with an immediate budget shortfall of reportedly $6 billion to 8 billion, plus cuts related to federal grants. He will immediately need to figure out where to cut rather than where to spend.

Mamdani’s victory crystallizes a push toward more progressive taxation and economic reform in New York, as well as the failure of centrist voters to advance a viable voice for their concerns. The extent of change under the new administration will hinge on state cooperation and fiscal realities. Businesses and wealthy residents should monitor developments closely to adapt to what may become a significantly altered financial landscape.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

David C. Wilkes is property tax and valuation strategy partner in Cullen and Dykman’s corporate department in New York.

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