Eve, here. Your humble blogger is far away from most wealthy people in New York, or for that matter anywhere, and has no direct insight into the headline question. However, we live in a world where the concentration of billionaire income and assets continues to increase. This, of course, further strengthens their ability to obtain policies that increase their advantage. They live in a world isolated from the lower orders. Even when they fly on a private jet, the sense of distance between them is only vague. More and more restaurants are offering experiences tailored to the wealthy. They meet Dr. Moonbeams, who oversees life-prolonging experiments, including regular blood transfusions from the young man. But increasingly, this lifestyle also includes facilities surrounded by panic rooms and underground bunkers.
So if Mamdani raises taxes, why do the super-rich, top professionals, and corporate executives stay in New York? New York City’s corporate taxes were already tough. If we raise it, some companies will be forced out. But I’m not sure if this situation is so clear-cut for individuals. Large cities have large network effects. For those with means, New York offers elite schools, opera, ballet, symphony orchestras, and theater (although the latter is not what it used to be). It is also a paradise for gourmets.
We also have top doctors on staff. Even if rich people prefer longevity charlatans, if you have a serious illness, you want a medical practitioner who has treated it many times. That means doctors who treat more than just rich patients. The dirty secret of concierge practitioners, as I once heard from someone in a family of doctors, is that they are usually not as good as mainstream practitioners. Another reason is that they do a lot of hand-holding rather than treatment (as there is a significant level of anxiety in their clinics) to justify accusations. This is an example of the important value of treating disadvantaged patients. When Ronald Reagan was shot, the hospital’s surgeon general wanted to operate on him. Since he has operated on the most gunshot wounds, he was persuaded to let the ER surgeon take over.
Despite its post-COVID-19 decline, New York City remains a gathering place for many of America’s top professionals in finance, law, consulting, and other fields. High-level sales still occur primarily in person. You can’t successfully conduct complex negotiations over Zoom. So are boring big corporate meetings to develop strategy. Others are best done in person for confidentiality reasons.
As in California, it is difficult to terminate your tax resident status in New York, especially if you own or rent a residence there.
Now, Mr. Mamdani may not be able to pass income tax and corporate tax. And perhaps many very wealthy people may retire. However, at first glance, this is not as dangerous a move as it may seem.
Written by Greg David. First published on THE CITY on February 18, 2026
New York state has some of the highest taxes in the nation, and city residents especially bear the burden of additional local taxes.
And those taxes could rise even further as Mayor Zoran Mamdani and Governor Kathy Hochul continue to spar over whether and how to raise taxes.
Mamdani’s preference is to raise income taxes on the wealthiest people and businesses, which are the biggest source of income. But that would require consent from the city of Albany, which Hochul has long maintained is off the table, despite Hochul recently awarding the city an additional $1.5 billion in state aid over the next two years.
On Tuesday, Mamdani reversed tactics, threatening to raise property taxes by 9.5% across the board to close the budget gap, calling it “the only tool currently available” to the city. Hochul responded that there was no need to raise property taxes.
Mamdani’s preferred path is arguably the most progressive, hitting high earners and corporate profits, but raising property taxes across the board would cause widespread pain and would provoke a broader political backlash.
But if a state’s already high taxes are increased, will its wealthiest residents and largest companies flee to other states? Or will it simply be accepted as part of doing business in the financial capital of the global economy?
Shoppers leave the Hermès luxury store opposite the Stock Exchange on February 17, 2026. Credit:Ben Fractenberg/THE CITY
“No one should believe that if taxes were raised tomorrow, all of a sudden people and businesses would leave the country in droves,” said Andrew Lane, chairman of the Citizens’ Budget Committee, a business-funded financial watchdog that opposes Mamdani’s income tax plan. “But doing so will cut into our competitive base over time.”
Not so, said Nathan Gusdorf, executive director of the Fiscal Policy Institute, a progressive group that supports Mamdani and has been pushing for higher income and corporate taxes for years.
“The strongest local economies have the highest tax rates,” he said, citing New Jersey, Massachusetts and California. “Based on our research, we seem to be in the zone where raising tax rates will not have an impact on transfers.”
One way to assess the total tax burden is to take the average of state and local taxes and divide that number by per capita income. This is what the Tax Foundation does. By this measure, the average New Yorker pays 15.9% of their income in state and local taxes, long the highest in the nation. (Due to tax data lags, this number is for 2022; other numbers in this article are from one to three years ago.)
The key is the state’s income tax, which tops out at 10.9% for incomes of $25 million or more, making it the third-highest rate after California and Hawaii. But New York City residents making more than $90,000 pay an additional 3.876% on top of the state tax rate. The total rate of highest income earners in cities (14.8%) is the highest in the nation, with California in second place at 13%.
As a result, the billionaire paid 41% of his total New York state income taxes, according to the state Department of Treasury’s Tax Facts. The top 200,000 taxpayers paid 50%, and the bottom 50% paid just 0.2%.
“A lot of the discussion focuses on tax rates for the wealthy,” Gusdorf said. “The state’s average income tax rate is actually the national average.”
The city’s tax system is less progressive, with the top 1% paying about a third of the city’s income tax revenue, according to 2023 data released last week by the Independent Budget Office. According to IBO research, it took an income of $906,677 to be in the top 1% that year, and the number of millionaires in the city was about 34,000, which has remained relatively stable since 2020 despite the high tax rate.
When it comes to fairness, New York has the fourth most progressive tax system in the nation, behind Washington, D.C., Minnesota and Vermont, according to the Institute on Taxation and Economic Policy.
The burdens placed on businesses and the potential escape risks are even more complex. The top corporate tax rate is 7.75%, but Mamdani wants to raise it to New Jersey’s level of 11.5%.
Businesses in the city already pay a tax rate of 17.44% in municipal and MTA taxes, according to a recent study by the Citizens’ Budget Committee. If New York state’s top tax rate were raised to the same level as New Jersey, New York City’s top tax rate would total 22.48%, almost twice as much as the Garden State.
But under the 2015 reforms, companies are required to pay these taxes on sales within the state, so moving headquarters elsewhere won’t reduce the amount owed to New York state, which collected about $20 billion last year.
Academic research does not provide a definitive answer to the question of how much impact taxes have on where people live and work.
A 2024 report from the Tax Foundation, which generally opposes higher taxes, cites three academic studies that show “the consensus in the academic literature is that high-income earners are highly sensitive to tax increases.”
A 2023 report from the liberal Center on Budget and Policy Priorities, based on other research, headlines, “State taxes have minimal impact on people’s interstate movement.”
In making the case that taxes matter, the CBC points to a study of billionaires. Although the number of billionaires in New York is increasing, it is smaller than in other parts of the country, so the relative proportion of billionaires in New York is decreasing. The same goes for the financial sector, where employment numbers are near record levels, but the city’s share of those jobs is at an all-time low.
Anna Champenney, research director at CBC, argues that when executives decide where to locate a company, they consider not only the company’s own tax burden, but also the tax burden of its employees.
“All of those taxes flow in, which results in jobs and lower prices. That’s why it’s cheaper to buy groceries in the suburbs where I live than in the city, and that’s why we’re seeing an exodus.”
The Fiscal Policy Institute says states with lower taxes also have weaker economies.
“If there is a strong correlation between tax rates and the business environment, the Dakota economy will be strong,” Gusdorf said.
But he acknowledged that this is not the case in Texas and Florida, which are particularly fast-growing states in financial services. In the Tax Foundation rankings, Texas ranks sixth from the bottom and Florida ranks 11th.
Not surprisingly, the mayor believes tax increases do not mean flight from the city, especially businesses.
“I don’t think there’s going to be an exodus,” he told lawmakers during a recent visit to Albany. “And I think what we’re facing now is offshoring because there’s no affordability agenda.”
