Show Mam the Money: How New York’s Tax Hike Could Trigger a Wealthy Exodus
NEW YORK, NY, UNITED STATES - 2025/08/17: New York State Assembly member and democratic socialist running for Mayor, Zohran Mamdani, attends a campaign canvas re-launch event at Prospect Park Brooklyn. (Photo by Michael Nigro/Pacific Press/LightRocket via Getty Images)
By Dennis Kneale
Friday, 13 February 2026 02:42 PM EST
New York City Mayor Zohran Mamdani has proposed raising the city income tax rate for individuals earning $1 million or more from 3.86% to 5.86%, a two-percentage-point increase representing a 52% rise in the tax burden for such earners.
This adjustment would bring the combined city and state income tax rate for high-income residents to 14.76%, raising it to 16.76% when federal taxes of 37% are added. Mayor Mamdani asserts that “the top 1% of New York City can afford to contribute $20,000 more in taxes.” However, taxpayers earning $10 million annually would face a $200,000 annual increase, while those with $25 million in income would see an additional $500,000 each year.
Despite New York City’s $7 billion budget shortfall over the next two years and Mayor Mamdani’s decision to freeze a billion-dollar rental assistance program for 140,000 households, his administration claims that its socialist initiatives—including free bus service, government grocery stores, free preschool, and housing assistance—will be funded.
The mayor’s tax policies mirror trends in Oregon, where high-income residents have fled due to costly programs. In Multnomah County, a 2020 tax initiative for “free” preschool for children aged 3-4 led to the departure of 31% of the wealthiest taxpayers within three years. Oregon Governor Tina Kotek recently acknowledged these challenges, noting that unspent funds had ballooned to over $600 million and implementation was inadequate.
Mayor Mamdani’s own preschool plan, which extends coverage to 2-year-olds, will enroll 2,000 children at a cost of $75 million annually—$37,500 per child. The program is expected to grow to 10,000 students the following year.
While New York Governor Kathy Hochul has pledged initial state funding for the city’s preschool initiative, residents may soon face further tax burdens as the city grapples with financial challenges and winter weather disruptions.
