Zohran Mamdani Wants To Tax the Rich, but Kathy Hochul Opts for Restraint

Up against a $12.6 billion budget gap and big affordability promises, New York City Mayor Zohran Mamdani is pledging to tax the rich. Except he doesn’t control the state budget, and the person who does, New York Gov. Kathy Hochul, has just promised the opposite.

Facing her own projected revenue volatility, Hochul announced that she would not raise income taxes to balance her recently proposed $260 billion state budget.

But even she is up against the powers of her office. While Hochul and Mamdani set the budgets for the state and city governments, respectively, it’s the state legislature that ultimately has the power of the purse. 

It will be up to legislators to approve both the governor’s budget, as well as any proposals from Mamdani that make it to Albany. To that end, Mamdani has pledged to double down.

“Our administration is preparing to make the case that it is the time for New York’s most profitable corporations and wealthiest residents to pay their fair share,” he told reporters at a press conference announcing a new rule eliminating junk fees in hotel stays.

Hochul remains equally resolute in her promise not to raise taxes: “I know he’s calling for a tax increase. I’ve heard that,” she told Politico. “I’m sensitive to the impacts.”

The simmering tax hike debate between the mayor and governor seems headed for a showdown in Albany. The budget will be hashed out in the State Assembly in the coming months and is due by April 1.

NYC accounts for a majority of the state’s revenue, but gets less back 

Mamdani framed his call for greater revenue sharing as a matter of basic math: “The city makes up 54.5% of the state's tax revenue. It receives 40.5%,” he told reporters. 

He blamed former Gov. Andrew Cuomo for a “decades-long effort to shift cost burdens from the state to the city.”

“What we are looking to do is to tackle long-standing fiscal issues that both have to do with the need for more revenue from the highest earners, but also the relationship between city hall and Albany,” he added.

While part of that is aimed at balancing the share of revenue, it's equally aimed at generating more of it. His tax-the-rich vision includes both state and local proposals.

At the state level, he’s pushing to raise the corporate tax rate to 11.5%, which could generate around $5 billion in new revenue, to be shared between the city and state. Locally, he’s proposed a 2% increase in city income taxes for earners making over $1 million—a move projected to bring in $4 billion annually for New York City alone.

Affordability promises depend on cooperation in Albany—and Washington

At the heart of Mamdani’s push to raise taxes is a sweeping affordability agenda for working New Yorkers. He’s prioritizing universal day care, estimated at $6 billion annually, and fare-free buses, projected to cost $1 billion.

Housing remains the centerpiece of his campaign, with a push to build 200,000 deeply affordable units over the next decade that carries a $100 billion price tag. But unlike other parts of his platform, he’s proposed funding it without new taxes.

Instead, he’s focused on financing the project with municipal bonds—but he’ll need cooperation from Albany and Washington to help. Raising the city’s public debt ceiling requires state approval, while removing the federal volume cap on affordable housing bonds would require action from Congress.

While Mamdani and President Donald Trump had a friendly meeting in November, they've since clashed over several of the president's policies, casting uncertainty on how the mayor's requests would be received in Washington. Still, Trump has had a laser focus on affordability in recent months, in a potential sign this could be common ground for them to build from.

What may be the biggest question mark, though, is Mamdani's ability to bring home results. As a former assembly member, he sponsored more than 20 bills, but only three became law. Still, he enters this fight with a significant advantage: the backing of New York City, the state’s most powerful economic force.