New York City Mayor Zohran Mamdani is proposing property tax hikes unless the state levies a wealth tax on the city’s richest residents. The proposal is part of the mayor’s first preliminary budget.
Mamdani proposal
Mamdani said either further taxing the rich or raising property taxes is necessary to fill a $5.4 billion budget gap.
“It’s not an enormous percentage gap,” Jan Brueckner, professor of economics emeritus at the University of California, Irvine, told Straight Arrow News. “You wonder why a gap that’s that small is an issue. It seems like something that could be papered over or managed without doing anything.”
But Mamdani insisted that a wealth tax or an increase in property taxes is the only way to fill the hole.
“If we do not go down the first path, the city will be forced down a second, more harmful path,” Mamdani said. “Faced with no other choice, the city would have to exercise the only revenue lever fully within our own control. We would have to raise property taxes.”
Under the proposal, property taxes would go up 9.5%.
Download the SAN app today to stay up-to-date with Unbiased. Straight Facts™.
Point phone camera here
“I took a look at New York’s property tax rules,” Brueckner said. “They’re certainly complicated, quite amazing, really. So as far as raising the property tax, well, that goes against Mamdani’s goals to foster housing affordability.”
Mamdani acknowledged who it would hurt the most.
“This would effectively be a tax on working and middle-class New Yorkers,” Mamdani said.
The city has not raised property taxes since the late 2000s under former Mayor Michael Bloomberg.
Reaction
Fellow politicians across the city have reacted negatively to the notion of a property tax increase, though none offered an alternative to close the budget gap.
“You’re going to force people out of their homes,” Donovan Richards, Queens borough president, said to reporters, including Annie McDonough.
New York City Council Speaker Julie Menin and Finance Chair Linda Lee put out a joint statement on the proposal.
“At a time when New Yorkers are already grappling with an affordability crisis, dipping into rainy day reserves and proposing significant property tax increases should not be on the table whatsoever,” the statement reads. “The Council believes there are additional areas of savings and revenue that deserve careful scrutiny before increasing the burden on small property owners and neighborhood small businesses, which could worsen the affordability crisis.”
They went on to say the council plans to release its own projections ahead of budget hearings.
Meanwhile, Gov. Kathy Hochul has repeatedly said she has no plans to levy a wealth tax on the richest New Yorkers.
“It’s a bad idea for any state or local jurisdiction in the United States to do that, because there’s mobility, right?” Brueckner said. “And people leave. If it were done at the national level, then leaving is a little more dramatic, because you have to go to another country. But in the United States, you can leave New York and go somewhere else.”
That’s an idea that’s been floated in California as well, with significant pushback.
Hochul recently announced she’d help bail out the city with an additional $1.5 billion and told NBC 4 New York, “I’m not supportive of property tax increase, I don’t know that that’s necessary.”
The Citizens Budget Commission, a nonprofit watchdog group that makes recommendations on New York City and state fiscal responsibility, released a statement to SAN regarding Mamdani’s proposals.
“The best choice is to eliminate spending that does not improve New Yorkers’ lives and make government more efficient and effective,” Andrew Rein, president of the CBC, said in the statement. “The Mayor should ensure that every one of the people’s $127 billion is used well, before asking them to dig into their pockets.”
What it means
If the mayor were to raise property taxes, it could have a significant impact on everyone in the city, including renters. Roughly 44% of all apartment rentals in the city are rent-stabilized, meaning landlords cannot just raise rent even though they’ll be paying more in property taxes.
“One thing landlords do when their costs go up is they try to save money elsewhere,” Brueckner said. “And one of those places could be maintenance things like that, fixing things that are broken.”
For those not under rent control, rent would likely go up.
“The landlords for free-market rent dwellings can raise their rent in response to the higher property tax,” Brueckner said.
For homeowners, they would certainly see the increase, but Brueckner said at 9.5%, it may not be that dramatic.
“It’s not stunning,” he said. “It’s not huge. If my property tax went up 10%, it would be something to note, but it’s not a killer.”
