The one percent make for good campaign villains, but the city can’t thrive without them.

December 8, 2025, 8:30 AM ET

Fourteen years after Occupy Wall Street, Zohran Mamdani’s campaign radiated the spirit of the 99 percent: The mayor-elect promised to pay for free buses and universal child care by raising corporate taxes and increasing the city income tax by 50 percent for New Yorkers earning $1 million a year—roughly, the top one percent. In his victory speech, Mamdani railed against the “billionaire class” and promised that the richest New Yorkers would soon have to “play by the same rules as the rest of us.”

In fact, New York City’s one percent already pay taxes at the single highest marginal rates in the country. They play by very different rules indeed: 41 percent of New York State’s income-tax revenue is generated by the top one percent of earners, a share matched only in California. Unusually, New York City then adds an income tax on top of the state rates, and 40 percent of that revenue comes from the one percent as well.

Michael Powell: Zohran Mamdani is about to confront reality

New York’s current tax structure is a progressive success story, in which private wealth subsidizes one of the most expansive social safety nets in the country. The city rests on a simple bargain: Wealthy New Yorkers find it such an appealing place to work and live that they’d rather pay extraordinarily high taxes than save money elsewhere.

Mamdani seems to think this arrangement is preordained: More can be squeezed from the rich because they aren’t going anywhere. Leaving aside the question of whether he can actually change the tax structure—he’d need support from Albany—that is a dangerous assumption. Some New Yorkers are indeed too rich to notice higher tax rates, but the top bracket isn’t made up only of billionaires with infinite resources. It includes ambitious earners who already know they’re paying a high price for living in New York, and could be taxed into feeling that the calculus doesn’t make sense anymore. Mamdani seldom talks about how much the city already depends on the wealthiest New Yorkers (“Tax the rich” is a better slogan than “Tax the rich even more”). But that reliance makes the city vulnerable. A top-heavy tax base is the kind of thing one misses only when it’s gone.

Concerns about high-net-worth migration are easy to dismiss because they have been cartoonishly inflated by a vocal few. The Trump-aligned hedge-fund manager Bill Ackman, for one, spent almost $2 million to stop Mamdani’s election and warned about how much New York would lose if “100 or so” of his peers left town. Hours after the election, though, Ackman congratulated the mayor-elect on his victory and offered his assistance to the incoming administration.

Many on the left took Ackman’s reversal as proof of what they’d always known—that New York’s billionaires were going nowhere. The Daily Show put together a montage of clips showing right-wing media personalities making the same prediction about New York losing its wealth every year since 2009, the implication being that if it didn’t happen then, it won’t happen now.

In one sense, they’re right: The number of New Yorkers earning at least $1 million a year (a set known as “income-millionaires”) has almost doubled since 2010. But this growth is sluggish relative to other parts of the country; in that same period, the number of income-millionaires across the U.S. tripled, with the biggest increase in states, including Texas and Florida, which have zero income tax. The nation’s general prosperity is therefore masking a more localized problem: Americans as a whole are getting richer, but New York’s growth is slowing down relative to other states’.

According to the Citizens Budget Commission, a nonpartisan think tank, New York City’s share of the nation’s highest earners dropped by 35 percent in 15 years. In 2010, the city had about as many income-millionaires as the entire state of Florida; it now has less than half as many.

Part of the explanation for this relative slowdown is that, whatever Daily Show montages would have you believe, high earners have in fact, been leaving New York. Some of those departures—such as Paul Singer and Carl Icahn, who moved to Florida—made headlines, but the trend is otherwise fairly quiet. Goldman Sachs estimates that 10 percent of New York City households making more than $10 million left from 2018 to 2023.

Overall, the city is simply not attracting high-income residents at the rate it once did—and that’s a huge problem for its ability to provide robust social services to the rest of its population. The Citizens Budget Commission report estimates that if New York had simply maintained its 2010 share of the nation’s millionaire earners, its 2022 revenue would have been $13.2 billion higher than it was—without raising taxes by a penny. According to Mamdani’s own estimates, that boost would be enough to pay for his most expensive proposal, universal child care, more than twice over. It would also dwarf the $4 billion he hopes to raise with the millionaire tax increase.

Tax policy is just one of many variables that can affect migration and economic growth.

But the general trend is hard to deny: High-tax blue cities have been bleeding residents to low-tax, red ones. Tax hikes of the sort Mamdani is proposing may continue to dull New York’s competitive advantage.

Enrico Moretti, a UC Berkeley economist who studies economic migration, told me that when states increase taxes, they lose both private wealth and corporate investment to low-tax states. Under Mamdani’s plan, Moretti predicts that more high-income New Yorkers will leave the city, and fewer from elsewhere will move in, although the effects might be relatively modest. Studies suggest that the number of high-income earners decreases by about 2 percent for every 1 percentage point raised in taxes, and the effect usually takes four or five years to peak.

Moretti warns, though, that most of these data come from state-tax policy, and out-migration from a smaller jurisdiction—a city—is likely to be much more pronounced. When a city raises taxes on its top earners, those affected don’t need to move out of the region entirely—they can simply decamp to the suburbs. The really effective way to tax millionaires and billionaires, Moretti said, is federally, because leaving the United States is a lot harder than leaving New York City for Westchester or even Houston.

New York City’s dynamism depends not just on the tax dollars of high-net-worth individuals, but also on corporate investment. Chang-Tai Hsieh, an economist at the University of Chicago, told me that despite high real-estate costs and corporate taxes (which Mamdani also plans to increase), the country’s most profitable companies have historically chosen to set up shop in New York. They are “not in Alabama, they’re not in Mississippi, they are not in Oklahoma,” he noted. They follow human capital to New York, where many of the most ambitious employees want to live. “If they were located somewhere else,” Hsieh said, “they wouldn’t be able to get the kind of people that they need in order to make their business thrive.”

This virtuous cycle—in which highly skilled workers move to New York for good jobs, and companies locate good jobs in New York to attract highly skilled workers—is not a given. Already, evidence indicates that it is slowing down. New York has been struggling to maintain its population of highly skilled workers, especially since the pandemic-induced revolution in remote employment. And companies are starting to respond. In the past five years, only 8 percent of new jobs in finance were created in New York. In 1990, 11.7 percent of New Yorkers worked in finance or insurance; now only 7.7 percent do, whereas more and more work in low-wage service industries. JP Morgan Chase recently built a flashy new office in Midtown Manhattan, but it now employs more staff in Texas than in New York.

New York still has a lot going for it. Many high earners consider it “the best city in the world to live in,” Hsieh said. He cautioned that what matters in this regard is less the tax rate than “what the higher taxes are spent on, and more importantly how effectively they are spent.” If Mamdani uses people’s tax dollars to make the city a better place, Hsieh said, the call of the low-tax states may go unanswered. If, however, a rent freeze raises housing costs for nonstabilized units, and if streets get less safe, upper-middle-class New Yorkers may leave, and billionaires and corporate employers could follow. This, Hsieh said, was the story of New York in the 1960s and ’70s: “Taxes kept rising, services were going downhill, and the wealthy people and the businesses were leaving.”

Jerusalem Demsas: How Florida beat New York

Then, as now, New York’s reliance on the finance industry made the city sensitive to fluctuations in the markets. The stock market crashed in 1973, and the city could no longer pay for the ambitious social programs it had funded. By 1975, New York was bankrupt. Today, New York’s tax base is even more top-heavy than it was in the 1970s, and a financial crash could be that much more devastating. The richest Americans make most of their money not from salaries but from capital gains and investment income; the more the city depends on those gains, the more volatile its revenue becomes.

Mamdani’s campaign tapped into legitimate and widespread dissatisfaction with affordability and housing, but those problems are more complex than just a few greedy billionaires not paying their share. The rich make for good campaign villains, but the city can’t thrive without them. New York’s economic compact is a monument to the efficacy of progressive taxation, but it’s a fragile thing.

“You look at New York and it’s a vibrant place, so that seems far-fetched,” Hsieh said. “But nothing is guaranteed.”

About the Author

Elias Wachtel is an assistant editor at The Atlantic.

Explore More Topics