Mamdani Can Scrap Wealth Tax Hike, Keep Buses and Childcare—Efficiency, Not Emotion, Requested

Mayor Mamdani’s push for progressive reforms meets the intractable arithmetic of New York City’s tax base and budget realities.

In the city that claims to never sleep, $7 billion is just the figure needed to keep the lights on next year. This spring, New York City’s budget planners face a gaping deficit—an unlovely number looming over services and civic ambition, and a test of the new mayor’s mettle as well as his campaign promises. Zohran Mamdani, the city’s first avowedly left-wing mayor in decades, swept into office last year on a promise of fare-free buses, universal childcare, and a call to “tax the rich.” Reality, as ever in Gotham, now bites.

The specifics are unglamorous but important. The city’s 2024 budget prevails at a buoyant $118 billion—hardly puny by global standards. Yet ballooning costs, pandemic aftershocks, and uncertain tax receipts threaten to leave New York perilously short. Mamdani, a Democratic Socialist, pledged to rewrite the city’s fiscal contract by tapping its wealthiest denizens—those who have benefited from the city’s pandemic-era wealth surge—to finance progressive programs aimed at closing inequality’s stubborn gap.

His logic is not unsound: The top 1% of New Yorkers earn a hefty fraction of the city’s income, and their fortunes have soared even as wage growth for most residents has limped along. On these grounds, “tax the rich” finds ready resonance among voters, especially those feeling the pinch of sky-high rents, sticky inflation, and the unequal recovery from Covid-19. Yet, as the Citizens Budget Commission (CBC), the city’s independent fiscal watchdog, reminded the mayor in a recent letter, better intentions do not override arithmetic.

State and local taxes are already formidable in New York. The city’s combined state and local income tax is the highest in America—topping 14% for some fortunate taxpayers. The CBC and a chorus of business groups reckon further hikes portend only a brain drain of wealth, talent, and employers to less taxing havens—Miami, Austin, or, less glamorously, White Plains. The city’s pandemic-era population drop, and a tepid return of office workers, already bode ill for a robust tax base. Piling on could push things from manageable to outright precarious.

Mamdani, facing a stubborn budget shortfall and chilly prospects for Albany support, now confronts an awkward pivot. Governor Kathy Hochul has made it clear, to the mayor and his left-wing supporters alike, that she will not countenance higher taxes on the wealthy while seeking re-election this autumn. Her message? Progress must proceed less by populism and more by pragmatism—a gospel New Yorkers have heard before, even if the city seldom lives up to it.

In her early alliance with the mayor, Hochul has sown a possible path forward. Rather than big new taxes, the duo brokered an expansion of universal childcare—beginning this autumn—by leveraging existing state and city budgets. The move, although modest in scope, hints at a broader model: collaborative bargaining, leveraging state muscle and fiscal shuffling, rather than outright redistribution.

Public transit, Mamdani’s other signature pledge, presents a similar test. Buses in New York, lifeline for over two million daily riders, remain burdened by fares most acutely felt by the city’s working class. The mayor pitched fare-free buses as both economic balm and climate measure. Yet here, too, the solution may lurk in institutional reorganising. The Metropolitan Transportation Authority (MTA), gripping new revenue from upcoming congestion pricing, can in principle foot the bill for free buses—provided the mayor musters support in Albany. It is poised to try, if the political will materialises.

Efficiency, not ideology, must drive the next act

The CBC’s open letter offers a roadmap most private-sector executives would find familiar, but City Hall often eschews: a relentless focus on recurring savings, service redesign, and evidence-driven triage. At $118 billion, the city’s operating budget is ripe for careful pruning—waste and redundancy are not in short supply. Administering these cuts in a city still addicted to patronage, however, requires fortitude and a modicum of old-fashioned luck.

None of these local dramas play out in a vacuum. Progressive politicians from Seattle to London have floated similar plans to address urban inequality by taxing the wealthy more heavily and offering universal services. But as high-income mobility grows, and cities jostle for capital and talent, budgeters everywhere discover that too much zeal in redistribution prompts its own kind of flight. As San Francisco and Toronto have demonstrated, lofty social ambitions can founder when the tax base sours.

New York, ever exceptionalist, could chart a different course—if only out of necessity. Mamdani’s challenge is to fulfil a left-leaning mandate within the hard lines of a competitive, mobile economy. Expanding social provision without driving away the city’s fiscal foundation, and without inviting state or federal intervention, will demand dexterity. Ironically, it may force the mayor into the role of a fiscal conservative, whatever the pageantry of campaign slogans.

Despite grumbling from progressive quarters, Mamdani’s retreat from “tax the rich” is not an abject betrayal but a rational response to a tricky milieu. The city’s working classes, who stand to gain most from expanded buses and childcare, also risk the most if a flight of capital leads to shrinking services down the line. In urban governance, arithmetic is less forgiving than Twitter.

All told, if Mamdani can deliver on his social promises through creative budgeting and partnership with Albany, he will prove that good government trumps campaign theatre. It would be a rare thing: a city hall that keeps its ambitious word without driving its wealthiest—and the taxes they pay—across the Hudson. For New Yorkers, such parsimony may prove more valuable than another rallying cry. ■