Mamdani’s Tax Surge Triggers Wealthy Flight from New York

New York City Mayor Zohran Mamdani has proposed raising the city income tax rate for earners exceeding $1 million annually by two percentage points, increasing it to 5.86% from 3.86%. This adjustment represents a 52% increase in the tax rate for million-dollar earners.

The change would bring the combined city-state income tax rate for high-income residents to 16.76%, plus a federal rate of 37%, totaling nearly 54% on all earnings above $1 million.

Mamdani claims that the top 1% of New York City taxpayers can afford an additional $20,000 in annual taxes. However, residents earning $10 million annually would face a $200,000 hike, and those making $25 million would pay an extra $500,000 each year.

The proposal comes as the city faces a $7 billion shortfall over the next two years. Mayor Mamdani has also abandoned plans to expand a billion-dollar program that provides rental assistance to 140,000 households across 65,000 homes—a program set to add nearly 50,000 new households annually and reach $17 billion in city funding within five years.

The move follows reports of California losing prominent tech founders Sergey Brin and Larry Page last year, and Facebook founder Mark Zuckerberg purchasing a riverside Miami mansion from the founder of the Jersey Mike’s sandwich chain for $150 million to $200 million.

As a result, the city’s tax hikes are expected to trigger an exodus among its wealthiest residents. A writer who recently relocated from Brooklyn to South Florida noted that the move would effectively reduce his income tax burden by 14.8%, as New York state and city taxes vanish in his new location.

In Oregon, one of the nation’s highest-tax states, high-income earners are leaving at an alarming rate. The Portland metropolitan area has lost $1 billion annually in income due to departures. A business owner earning $10 million yearly discovered he owed $40,000 for a new tax funding homeless services and relocated to rural Oregon.

Multnomah County, which includes Portland, implemented a 2020 tax to fund “free” preschool for 3- and 4-year-olds. The tax requires 1.5% of income over $125,000 and 3% of income over $250,000. Tracking the 1,000 wealthiest taxpayers who paid this tax in 2021 revealed that 310 had disappeared by 2023—a 31% defection rate within three years.

The program, which serves only about 3,500 children annually and has seen just 11% of preschools sign up, is now under scrutiny. Last June, Oregon Governor Tina Kotek called for reforming the initiative due to “at least $485 million in unspent funds” combined with implementation challenges. That figure has since grown to over $600 million.

Meanwhile, Mayor Mamdani has launched a new preschool plan extending coverage to 2-year-olds, enrolling 2,000 children at a cost of $75 million per year—$37,500 per student. The program is projected to grow to 10,000 students annually.

New York Governor Kathy Hochul has agreed to cover the city’s initial costs for this initiative but warned that taxpayers will eventually bear the burden again. As New York City struggles with snow removal, the writer notes that his new home in South Florida has been warm and inviting.