According to Bloomberg Tax, tax experts are trying to convince businesses and wealthy individuals not to rush into leaving New York City due to Mayor-elect Zohran Mamdani's proposed tax policies, noting that Mamdani must secure state leaders' approval before any tax increases can take effect. This is a process that will take time.
Mamdani’s vow to raise statewide corporate rates as well as millionaire’s tax to pay for an affordability program was popular with voters in the Nov. 6 mayoral election. However, Mamdani’s proposals have pushed companies and wealthy individuals to make plans to leave the city with the help of their accountants and lawyers.
Clients have shown their disagreement with the incoming mayor’s economic proposals and what they view as the larger condemnation of the elite as responsible for the city’s problems, stated Aaron Shafer, principal in KPMG’s national state and local tax practice in New York City.
Mamdani’s proposal a statewide corporate tax increase to 11.5% from 7.25%, which would amount to the top combined state and local corporate tax rate of close to 19%.
Mamdani
also wants to increase the city’s personal income tax rate on annual incomes over $1 million to 5.9% from 3.9%
. Together with state taxes, the overall tax rate on those incomes could come up to 17%, Bloomberg Tax reported.
Chelsea Marmor, counsel at Eversheds Sutherland, has been warning clients to “step back and think” before rushing into any decisions.
“It’s a much longer process to make changes in the tax law than I think maybe came forward during all the political campaigning,” Marmor stated. “There’ll be a lot more discussion going on behind closed doors and in the public before major things happen. That would be my guess.”
Leaving the city’s deep market and talent roster is not that simple. Tax rates are merely a factor in the decision to exit New York City. Its residents would have to break ties and not just make a temporary move to a second home while Mamdani’s term plays out, which could result in charges for tax evasion, accountants cautioned.
“Most of our clients are positioned to wait and see,” noted Zal Kumar, a principal in Ernst & Young.
He added that firms are sensitive to small rate increases given they have to deal with dozens of various state and local taxes.
“I don’t know how much more the system can bear,” he said. “Increases in tax rates do compound the overall complexity of the tax structure in New York.”
Bloomberg Tax said that the initial proof will come out publicly in the state’s upcoming budget cycle, which usually starts in January with the governor’s budget proposal for the upcoming fiscal year beginning on April 1.
Hochul endorsing Mamdani in September when she wrote that affordability is “the No. 1 concern I share with Mr. Mamdani" has raised concerns among clients. Hochul i s up for re-election in 2026.
The governor “doesn’t seem like the firewall that people were hoping she would be,” Shafer stated. Clients are having to cope with the uncertainty of, of how strongly Hochul is going to push back. The question is whether she would stop Mamdani or she would compromise somewhere in the middle.
The predicament that corporations would face leaving New York City might provide the opportunity for policymakers to call their bluff while building momentum for tax reforms, Kumar noted.