New York mayor Zohran Mamdani ran on a “democratic socialist” platform of free services like transport and childcare. Now, four months after taking office, he is warning of “a budget crisis of a historic magnitude”, and he’s blaming his Democrat predecessor for the city’s financial shortfall.
Far-left Mamdani won his election last year on the back of promises to provide City-owned grocery shops, free city-wide bus travel, and freeze rent on over a million rent stabilised apartments.
Now, speaking at a press conference this week, he claimed that his administration had “inherited a deficit larger than any since the Great Recession” and that “years of mismanagement and chronic underbudgeting” have “taken a toll” on the city’s resources.
“We cannot close this deficit with savings alone – we need new revenue,” he said.
“And we need a structural reset in our relationship with the state. That is the only way to meet our legal obligation to pass a balanced budget, and to do so without imposing a financial burden onto the backs of working people.”
He said that while the city was looking for ways to cut spending, and that officials had “already identified meaningful savings”, “a crisis of this scale cannot be solved without state action”, as he called on the State government to tax higher earners more.
Specifically, he called on them to reduce the “Pass-Through Entity Tax Credit”, or PTET, calling it “a loophole that allows high-income earners to reduce their federal tax burden.”
“Who benefits? Millionaires and multimillionaires,” he said.
“More than 95% of PTET credits go to those making more than $1 million a year. More than 80% go to those earning more than $5 million a year. The PTET, in short, is a tax cut for the rich.”
He said that this measure, if approved, would generate almost $1 billion in additional revenue for the city.
Despite the Budget crisis, NBC New York reports that Mamdani does not plan to row back on any of his campaign promises, despite the fact that those measures would require additional funding far beyond the existing $12 billion deficit.
Budget issues has been flagged since Mamdani took office in January, with the new Democrat mayor blaming his Democrat predecessor, Eric Adams for the failure.
“There is a massive fiscal deficit in our City’s budget to the tune of at least $12 billion.,” he said at the time.
“…former Mayor Eric Adams handed the next administration a poisoned chalice. He systematically under-budgeted services that New Yorkers rely on every single day. Rental assistance, shelter, and special education, while quietly leaving behind enormous gaps for the future. And knowing his time in office was likely coming to an end, Mayor Adams chose political self-preservation over fiscal responsibility.”
He added: “This is not just bad governance. It is negligence.”
At the time, Adams shot back, on social media, slamming Mamdani and his politics in general.
“Bond raters gave my administration one of the strongest credit ratings in NYC history because we governed with discipline, not fantasy economics,” Adams said in January.
“I didn’t leave a ‘budget hole’ – I left over $8 billion in reserves. Only someone who can’t read a balance sheet would call that a crisis.
“Every budget passed under my administration was approved by the City Council, including Mayor Mamdani’s City Council comrades. And thank God I was there, because their reflex has always been to spend first and ask questions never.”
He also highlighted his handling of the Covid-19 pandemic and a $9 billion migrant crisis.
“Here’s the part socialists hate saying out loud: ‘Free’ is a lie,” he said.
“Every so-called free program comes with a price tag, and someone always pays for it.”
During his speech earlier in the year, Mamdani also blamed previous New York Governor Democrat Andrew Cuomo, for allowing a situation in which New York City sent $21.2 billion more to the State than it received back.
“That $21.2 billion gap occurred because over the decade Governor Cuomo was in office, the state saw our city as a place from which wealth could be extracted without recognising the needs of that same place,” he said.
Notably, New York has been run by Democrats for decades, and is one of the party’s major deep blue political strongholds.
As part of his policy platform, Mamdani has highlighted the significant “wealth” disparity between white households and black households, saying he wants to pursue wealth “equity” along racial lines due to New York’s “long history of racism”.
He has also drawn criticism for saying he would like to institute a “pied-à-terre” levy as a form of wealth tax. The new tax plans to “levy an annual surcharge on one to three family homes, condominiums and co-ops valued above $5 million when owners have a separate primary residence outside of New York City”. According to Mamdani’s office, this is to force the “ultrawealthy and global elites to pay their fair share.”
Mamdani estimates that this will generate $500 million in revenue for the city.
In a video promoting the policy in which he pledged to “tax the rich”, Mamdani specifically called out hedge fund billionaire Ken Griffin, who has a $238 million penthouse in Midtown, as an example of the kind of person who would be targeted by the measure.
In response, Griffin’s company, Citadel LLC, said it was “shameful” to imply that Griffin did not pay his fair share in tax, noting that the company was about to invest $6 billion in a project in New York City which would create 6,000 “highly paid construction jobs” and “support the creation of more than 15,000 permanent jobs in mid-town New York”.
The company implied that they may not go ahead with this investment plan in response to Mamdani’s “ignorance and disdain” for business.
Wealth taxes are often proposed by advocates who believe they will lead to fairer distribution of wealth in society, while critics of such policies often argue that they simply lead to capital flight and drive money and business out of a jurisdiction, leading to long-term economic hardship.