Zohran Mamdani’s Proposal For A Millionaire Tax

Zohran Mamdani against the background of New York City’s silhouette.

Zohran Mamdani has been all over the news for being put up as the Democratic nominee for the 2025 New York City mayoral election. He has seen incredible success so far in the city, but critics have already started to question some of his policy positions and future plans for NYC. 

One of the policies they have brought into the spotlight is his “Millionaire Tax.” Before getting into this, however, it’s important to have some background knowledge on Mamdani. Zohran Kwame Mamdani is 33 years old, and since 2021, he has served on the New York State Assembly. Born in Kampala, Uganda, in 1991, he moved with his family to New York City at the age of seven, shortly after which he was naturalized. Before getting into politics, Mamdani worked as a counselor for housing and preventing foreclosures. During this time, he first-hand got to see many of the challenges that low-income households faced, and he has admitted that this experience is what shaped many of his policy stances regarding housing, affordability, and wealth inequality.

Now, with some information on Mamdani, what exactly is this “Millionaire Tax,” and is it any good? Essentially, he plans to use this tax to raise the city’s revenue without affecting low and middle-income households. The Millionaire Tax will impose an additional 2% income tax on the top 1% in NYC, who are earning over $1 million per year. Mamdani and his team estimate that with this new tax in place, they can rake in close to $4 billion annually. 

To some, this may seem like a small amount, but in the 2022-2023 fiscal year, the whole state of New York collected $108.6 billion in state taxes and fees. Thus, considering that it’s just an additional 2% income tax on a couple thousand rich households in NYC, $4 billion is quite significant. This extra revenue will be used to fund social welfare programs, including more affordable housing, subsidized city-owned grocery stores, and free early childcare.

The Millionaire Tax doesn’t seem too bad on the outside, but many of Mamdani’s policies, including this tax, have come under fire from well-known figures. Bill Ackman, a billionaire hedge fund manager, acknowledged that Mamdani is “young and charming” and that “much about NYC is broken.” However, shortly after, he says that his policies would be “disastrous for NYC” and that “socialism has no place in the economic capital of our country.” The main point that Ackman makes in his statement is that Mamdani’s policies are simply too economically unviable. If enacted, especially the Millionaire Tax, they could drive wealthy individuals, along with their businesses, away from New York City to places like Florida or Texas, where taxes are much more lenient. Known as “capital flight,” this phenomenon would crush the economic backbone of the city, which is essentially made up of these rich individuals and their businesses. Another argument that critics of the Millionaire Tax make is that millionaires and billionaires already contribute a large portion of the city’s tax revenue, and imposing any more taxes and pushing them over the edge might discourage investment and job creation, further worsening the state of the economy.

Meanwhile, on the other side of the spectrum, the supporters of Mamdani argue that the city critically needs something like the Millionaire Tax. Whenever someone talks about New York City, wealth inequality is often up there among the more serious topics, and it has some merit to it. If you ever go to the city, it’s quite common to see homeless people or struggling low-income individuals walking right by investment bankers working for companies like Goldman Sachs. Even on his own website, Mamdani mentions that a “tiny share of the city population takes home 35 percent of all income earned by New York City residents.” It’s quite evident from all of this that wealth inequality is not a small issue in the city. As a result, supporters believe that Mamdani’s Millionaire Tax will help effectively address this problem of wealth inequality. Proponents also say that the revenue from this tax would be very helpful for funding public services and social welfare programs, taking some of the burden off the low and middle income households in NYC.

Regardless of the positive or negative comments Mamdani has received regarding his policies and future plans, he remains undeterred and continues to believe that the Millionaire Tax is a must for New York City. Obviously, whether or not people like it depends on their economic background and income class. With additional revenue that can revamp existing social welfare programs and public services, the Millionaire Tax is particularly appealing to low and middle-income households. However, the wealthy households are the ones that are going to have to take the hit for all of this, potentially driving them away from NYC altogether. If driven away, it could, as mentioned before, take away from investments and business opportunities. Even worse, with little millionaires to tax, the Millionaire Tax itself may become pointless! At the end of the day, whether Mamdani’s Millionaire Tax will become a success or a failure depends on many factors because it has both positive and negative aspects, as with any other policy. Before we get too ahead of ourselves, Mamdani first has to win the mayoral election. After that, he needs to head to the New York State Legislature to get the tax proposal approved. Only then can we see what happens with the Millionaire Tax.