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Mayor Zohran Mamdani said a property tax increase is on the table as a “last resort” in New York City.
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Higher taxes on the wealthy are his preferred way to close the $5.4 billion budget deficit — but require state buy-in.
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Potential tax hikes could affect middle-class New Yorkers and renters.
New York City Mayor Zohran Mamdani says if the state doesn’t play ball on taxing the wealthy, it will have to impose higher taxes of its own — and that could hurt middle-class New Yorkers.
At a news conference Tuesday, he laid out two options for addressing the city’s $5.4 billion budget deficit left by the previous administration.
In an effort to balance his initial $127 billion budget, Mamdani outlined two possible paths forward. The first—and Mamdani’s preferred—depends on New York Gov. Cathy Hochul’s help: raising taxes on the wealthy and corporations, a cornerstone of Mamdani’s campaign. Hochul is warm to the idea.
Without Albany’s willingness to raise revenue or corporate taxes, Mamdani is signaling he will have to turn to other measures for his budget. He’s raising property taxes for city residents — which will kill the middle and working classes as much as his specific targets on Wall Street — drawing from funds the city holds in reserve in case of an economic downturn.
Mamdani called that option “painful” and “a tool of last resort” and said his administration would continue to work with Albany to avoid it.
At the press conference, he said, ‘This is the initial budget. “This is a budget that reflects the only tools the city has at its disposal.”
What New York City Property Tax Increases Mean
If Hochul or Albany don’t budge, Mamdani said he would raise property taxes to 9.5%.
At the press conference, Mamdani said the tax would hit middle-class New Yorkers the hardest. His office did not immediately respond to a request for comment on which income groups would be most affected or on the proposal’s potential impact on middle-income New Yorkers.
Multi-unit buildings — where tenants live — are taxed at a higher effective rate than single-family or low-density homes, where many wealthier New Yorkers live. While renters don’t pay property taxes directly, higher property taxes imposed on their landlords can, over time, translate into higher rents.
“New York’s property tax system has evolved since the 1970s, trying to balance the needs of outer borough homeowners with commercial and multi-family housing in Manhattan,” said Rita Jefferson, a local analyst at the Institute on Taxation and Economic Policy who focuses on equity. “As a result, property tax rates on single-family homes are much lower than rates on multi-family units, leading to very different bills for properties with the same market value.”
New York City Comptroller Mark Levin, an elected position not appointed by the mayor, said Mamdani proposed a budget that “honestly and transparently presents the scale of our challenges” and that the city “clearly” needs more support from Albany.
“Relying on property tax increases and a significant depletion of reserves to close our gap will have dire consequences,” Levin said in a statement. “Our property tax system is deeply unfair and inconsistent, and an across-the-board increase in this tax would be regressive. Depleting reserves during periods of economic growth will leave us vulnerable to economic turmoil next year.”
The proposal was blasted by U.S. Rep. Nicole Malliotakis, whose district includes parts of Staten Island and southern Brooklyn.
“Year after year, City Hall has put more of a squeeze on the middle class by raising property taxes, and now Mamdani wants to raise rates, making the American dream of homeownership less attainable and housing costs even more pressing for property owners and renters,” Malliotakis said in a statement.
Mamdani’s proposal doesn’t mean that renters or property owners will immediately be hit with a bigger tax bill. He told the press conference that the budget has not been finalised. Hochul reportedly said at an unrelated event that she doesn’t think a property tax increase is necessary.
“It’s something we don’t want to do,” Mamdani said, “and it’s something we’re going to use every option to make sure doesn’t happen.”
Read the original article on Business Insider
