{"id":17369,"date":"2025-06-27T15:12:57","date_gmt":"2025-06-27T15:12:57","guid":{"rendered":"https:\/\/finderica.com\/?p=17369"},"modified":"2025-06-27T15:12:57","modified_gmt":"2025-06-27T15:12:57","slug":"heres-how-mamdanis-proposed-nyc-millionaire-tax-would-work-if-it-even-passes","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=17369","title":{"rendered":"Here’s How Mamdani\u2019s Proposed NYC Millionaire Tax Would Work\u2014If It Even Passes"},"content":{"rendered":"\n
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NEW YORK, NEW YORK – JUNE 24: Mayoral candidates State Rep. Zohran Mamdani (D-NY) and NYC Comptroller Brad Lander speak with members of the press and greet voters on Broadway.<\/p>\n

Michael M. Santiago\/Getty Images<\/small><\/figcaption><\/figure>\n

What\u2019s would be the real result of a new millionaire tax in New York City?<\/p>\n

Billionaire Bill Ackman, founder and CEO of Pershing Square Capital Management, suggests the answer is that wealthy taxpayers will flee. In a post on X (formerly Twitter), Ackman lamented Zohran\u202fMamdani\u2019s Democratic primary win in the New York City mayoral race, by stating, \u201cNew York City under Mamdani is about to become much more dangerous and economically unviable.\u201d<\/p>\n

Ackman\u2019s post, which has garnered more than four million views, was a direct response to Mamdani\u2019s surprise Democratic primary win in the Big Apple. The 33-year-old Democrat garnered 44% of the vote running on a progressive agenda focused on making life in New York City more affordable.<\/p>\n

Mamdani\u2019s Millionaire Tax Plan<\/h2>\n

Funding that agenda will take money\u2014and Mamdani has a plan to raise revenues without tapping the middle class. In addition to bumping up the corporate tax, Mamdani has proposed a 2% tax on what his campaign calls \u201cthe wealthiest 1% of New Yorkers\u2014those earning above $1 million annually.\u201d His platform estimates this \u201cmillionaire tax\u201d will raise $4 billion annually to help fund projects like universal free early childcare, free bus rides and more affordable housing.<\/p>\n

The numbers, Mamdani says, mean that the tax would impact about 34,000 households. \u201cThis tiny share of the city population,\u201d he says on his website<\/a>, \u201ctakes home 35 percent <\/em>of all income earned by New York City residents.\u201d<\/p>\n

That same 1%, he explains, also benefited from a tax cut under President Trump\u2019s 2017 Tax Cuts and Jobs Act (TCJA) which cut the top marginal rate from 39.6% to 37%. (It\u2019s worth noting that the TCJA reduced the rates in almost all brackets, from 10%, 15%, 25%, 28%, 33%, 35%, and 39.6% to 10%, 12%, 22%, 24%, 32%, 35%, and 37%, respectively.)<\/p>\n

The proposed surtax\u2014the 2% extra tax rate would only apply to earnings over $1 million\u2014would, Mamdani suggests, make New York\u2019s tax more progressive.<\/p>\n

The federal income tax system, he points out, is progressive. With a progressive tax, rates go up as income increases, but everyone pays the same rate for the same income. That means that you pay the same 10% as every other person until you hit the top of the bracket\u2014then you pay 15% on that income until you hit the top of that bracket, and so on.<\/p>\n

New York state has a similar system, with rates ranging from 4% to 10.9% for the 2024 tax year.<\/p>\n

However, Mamdani claims that the New York City income tax is essentially a flat tax of 3.9%. \u201cWhether you make $50,000 or $5 million,\u201d Mamdani explains on his website, \u201cyou pay practically the same tax rate.\u201d That\u2019s true\u2014sort of. New York City\u2019s tax rates start at 3.078% and only climb to 3.876%, a small uptick. In addition, the brackets are somewhat compressed, climbing quickly at lower rates, and then leveling off once taxable income exceeds $50,000. But that still doesn\u2019t qualify as a pure flat tax.<\/p>\n

(New York City\u2019s income tax was a flat 2% when it began in 1966.)<\/p>\n

Under Mamdani\u2019s plan, the tax would be tacked on at the top, taking an additional 2% of incomes over $1 million, making the tax more progressive.<\/p>\n

Will It Work?<\/h2>\n

Mamdani says the plan will work, pointing to millionaire taxes in states like Massachusetts. In November 2023, Massachusetts voters approved the Fair Share Amendment, a 4% surtax on personal income exceeding $1 million. The tax raised $1.8\u202fbillion in its first three quarters of collections, with revenues funding school lunches, transportation, and education.<\/p>\n

Some feared that the tax might cause ultra-wealthy residents to flee. While Massachusetts residents did leave the state in 2023, the year the bill passed, most were upper-middle-class taxpayers, not millionaires. That\u2019s consistent with historical data. Massachusetts has been losing individuals across all income levels since 2009, with more concentrated losses among middle- and high-income earners. One reason may be housing costs\u2014as those shot up, lower-cost housing in other states, combined with remote work opportunities, may have wooed middle-class residents away from the Bay State.<\/p>\n

As for those millionaires? An analysis of data from the IRS\u2019s Statistics of Income program<\/a> revealed that the number of tax returns that reported an adjusted gross income (AGI) of a million dollars or more in Massachusetts grew by 36% between 2018 and 2023 (tax stats from the IRS for 2023 were not available at the time of the report). Wealth data from Wealth X also indicated that the number of millionaires in Massachusetts rose by 38.6% between 2023 and 2024, while their collective wealth increased from $1.6 trillion to $2.2 trillion.<\/p>\n

The success of that tax has encouraged other states to consider similar moves. In Illinois, a bill proposing a 3% surcharge on incomes over $1 million is currently under consideration after voters approved the measure in November 2024. In Maryland, Governor Wes Moore, a Democrat, has proposed increasing the top tax bracket to 6.5% for taxpayers earning over $1 million in order to lower taxes for low- and middle-income taxpayers. And in Hawaii, some lawmakers are also targeting the ultra-wealthy\u2014a proposed 1% wealth tax on assets above $20 million is slated for review by the legislature.<\/p>\n

Even states that don\u2019t have a personal income tax are getting into the game. In 2023, Washington began taxing capital gains at the state level, targeting capital gains over $250,000. As of January 1, 2025, an additional 2.9% surtax applies to net gains above $1\u202fmillion, pushing the top capital gains tax rate to 9.9%.<\/p>\n

The tax was thought to be a factor in the state\u2019s richest man, Amazon founder and CEO Jeff Bezos, relocating to Florida. However, Bezos, the fourth richest man in the world according to Forbes Real Time Billionaires List, with an estimated worth of $231.4 billion, claimed in a 2023 Instagram post<\/a> that he moved to be closer to both family and Blue Origin operations in Florida.<\/p>\n

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Screenshot of Jeff Bezos Instagram post<\/p>\n

Kelly Phillips Erb<\/small><\/figcaption><\/figure>\n

That squares with a 2016 review of IRS data<\/a> that found that only 0.3% of millionaires move across state lines each year, lower than the general population\u2019s mobility rate. The study, which looked at 45 million tax records, suggested that most millionaires simply absorb the cost or hire great tax planners to help reduce their tax bills.<\/p>\n

(The same paper noted an outlier in top soccer players moving away from teams in high-tax countries\u2014sports figures are often highlighted as examples of tax flight. However, the authors found that athletes are not representative of top income-earners in general, and are \u201cprobably an especially mobile segment of elite earners\u201d due to their occupation.)<\/p>\n

That doesn\u2019t mean that all states are equally enthusiastic about raising taxes at the top. In 2013, North Carolina replaced its graduated income tax with a top rate of 7.75% with a flat tax of 4.5%, while voters in California rejected a surtax on millionaires in 2023. In both cases, those opposed to increasing tax rates cited concerns about retaining rich taxpayers within their borders.<\/p>\n

Will Mamdani\u2019s Millionaire Tax Pass?<\/h2>\n

That\u2019s difficult to say. Despite Mamdani\u2019s enthusiasm for\u2014and arguably, that of his supporters\u2014for taxing the rich more, New York City residents don\u2019t get the last word on this issue. Income tax rates are set by the state, which means that Gov. Kathy Hochul, a Democrat, would have to sign off on a bill that is passed by the state legislature. Earlier this month, Hochul rejected the plan, saying<\/a>, \u201cI don\u2019t want to lose any more people to Palm Beach. We\u2019ve lost enough. We had a major out-migration when Republicans in Congress eliminated the state local tax deduction\u2026Driving them to Florida does not help us, so let\u2019s be smart about this.\u201d<\/p>\n

Still, Mamdani is hopeful, claiming in his victory speech, \u201cWe have won because New Yorkers have stood up for a city they can afford, a city where they can do more than just struggle.\u201d<\/p>\n

Mamdani now faces Republican nominee Curtis Sliwa and current Mayor Eric Adams (who is running as an independent)\u2014among others\u2014in the general election in November. He could also face an as yet unknown challenger\u2014in response to Mamdani\u2019s primary win, Ackman has offered to help fund a suitable opponent.<\/p>\n<\/div>\n