Mayor Zohran Mamdani is haggling with Albany over every cent he can get for New York City in the state budget. But he is raising no objections as the state embraces a tax policy, widely criticized by economists, that will cost the city hundreds of millions of dollars.
Governor Kathy Hochul is proposing to eliminate state income taxes for tipped wages up to $25,000. The move followed pressure from her Republican challenger in this year’s election and would align New York with an identical change to the federal tax code enacted by President Donald Trump last year. The state Senate and Assembly are backing Hochul’s proposal, meaning it will likely be approved in the final state budget.
With its populist appeal, “no tax on tips” has enjoyed bipartisan support since Trump first proposed it during his 2024 presidential campaign; Democrat Kamala Harris quickly followed suit. But tax policy experts across the ideological spectrum are deeply skeptical, calling the policy unfair and potentially harmful to the workers who need the most help…