New York City mayor Zohran Mamdani promised at his inauguration to govern “expansively and audaciously.” In practice, that promise means governing expensively, too, and paying for it would require higher taxes on both individuals and corporations. Individuals can dodge Mamdani by moving to Florida, and some undoubtedly will. When it comes to taxes, though, corporations are largely stuck—for reasons that have gotten little attention in Mamdani’s rapid political ascent.
Depending on your perspective, that makes corporations either a tempting target or an unfortunate victim.
The hurdle for Mamdani’s agenda—from universal childcare to fare-free buses to city-owned grocery stores—is a lack of funds. Mamdani must rely on Democrats in Albany to come up with a substantial part of the money. While New York governor Kathy Hochul has resisted tax increases, the populist wave may have pushed her into an uneasy alliance. And just last week, Hochul promised $500 million in funding for the New York City mayor’s planned childcare program for 2-year-olds. Though she has opposed higher personal income taxes, Hochul hasn’t ruled out raising the state’s corporate income tax. That would have ripple effects throughout the state’s economy.
The reason corporate income taxes are hard to escape is that both the state and the city tax corporations on the basis of how many of their sales are generated locally. They don’t take into account how many people the corporations employ locally or how much property they have locally. If a corporation has half of its sales in New York City, half of its profit will be subject to state and city income taxes, end of story. (This system of corporate taxes is typical; 35 states tax corporations in this way.)
