Zohran Mamdani has put forth many bold—and expensive—proposals in his New York City mayoral bid, including childcare for all, government-run grocery stores, and free buses. He’s planning to pay for these proposals with various tax hikes, including a large jump in the city’s corporate tax rate from 7.5 percent to 11.5 percent. He claims this will bring in $5 billion, and says New York City’s economy can “afford to support a stronger public sector.”
Unfortunately, raising the corporate tax rate could also hinder the job market, cause corporations to relocate, and decrease long-term government revenue, potentially damaging New York’s status as the financial capital of the world.
Corporations hit with higher tax rates would seek ways to cut costs, possibly harming workers through either layoffs or lower wages. Particularly in New York City, where corporations employ hundreds of thousands of workers, even modest cost cutting measures are bound to negatively impact the nearly 5 million local workers. In the United Kingdom, for example, around one in six British companies cut hiring in the fourth quarter of 2024 in anticipation of tax hikes that took place in April 2025. If New York employees aren’t directly laid off, they could face lower wages in the long run. Approximately 28 percent of the cost of higher corporate taxes is taken on by workers in the form of lower wages, further exemplifying the harsh effect that corporate tax hikes have on workers. Corporate tax hikes are generally never a good idea—even more so in a weak labor market where the national unemployment rate is the highest since the pandemic and job growth has consistently underperformed in the past few months…