Riding a wave of surplus tax revenue generated largely by a finance-sector boom that won\u2019t last forever, Gov. Kathy Hochul is continuing to spend like there\u2019s no tomorrow.<\/p>\n
The $260 billion state budget<\/a> she presented last week contains plenty for New York City, including increased child-care funding, renewed state support for cops in subways and added transit capital.<\/p>\n Despite the much-hyped threat of federal aid cuts, the state\u2019s core Medicaid budget will continue bursting at the seams \u2014 much of the money inevitably headed to city hospitals and health-care providers.<\/p>\n In his initial reaction to the plan, Mayor Zohran Mamdani duly tipped his cap to \u201cmeaningful investments that move us closer to an affordable and livable New York.\u201d<\/p>\n But pointing to the $12 billion city budget shortfall he\u2019s inherited from Eric Adams, Mamdani also made it clear he\u2019ll continue to push his favorite hobby horse<\/a> \u2014 raising taxes on city residents<\/a> with income over $1 million, to ensure they pay a \u201cfair share\u201d of the city\u2019s enormous budget.<\/p>\n Citing a conversation with an unnamed $1 million earner who expressed surprise that the tax hike might come to as little as $20,000 (\u201cThat\u2019s all?\u201d he quoted the guy as replying), Mamdani cited \u201ca lack of understanding as to what exactly we are talking about.\u201d<\/p>\n Speaking of lack of understanding \u2014 Mamdani and his tax-the-rich allies in the Legislature regularly ignore the wider economic and fiscal context for what they\u2019re proposing.<\/p>\n Here are the basics.<\/p>\n In 2021, as part of then-Gov. Andrew Cuomo\u2019s last budget, New York state raised its tax rate on million-dollar incomes from 8.82% to 9.65%, adding higher rates of up to 10.9% on multimillionaire earners.<\/p>\n The city\u2019s tax rate of 3.88%, which begins at much lower income levels, is essentially a surcharge atop the state\u2019s more steeply graduated rate schedule.<\/p>\n But the two taxes are collected together.<\/p>\n \t\t\t\t\t\t\tGet opinions and commentary from our columnists\t\t\t\t\t\t<\/p>\n \n\t\t\t\t\t\t\tSubscribe to our daily Post Opinion newsletter!\t\t\t\t\t\t<\/p>\n \t\t\t\t\t\tThanks for signing up!\n\t\t\t\t<\/p>\n An increase in one rate is an increase in the total cost of living and doing business in New York City, the heaviest-taxed jurisdiction in the country.<\/p>\n Thanks to the 2017 federal tax law eliminating state and local tax deductions, millionaire earners already are subject to the highest effective income tax rates ever imposed by New York state \u2014 which, given its high-tax history, is really saying something.<\/p>\n The combined top federal, state and local tax rate on salary and bonus income for New York City residents has risen above 50% for the first time since the early 1980s \u2014 to the highest level in the country.<\/p>\n At the same time, the federal-state-city tax on long-term capital gains is nearly 39% \u2014 not just the highest in the United States, but one of the highest in the world. \u00a0<\/p>\n Capital-gains income directly reflects the distribution of financial-asset wealth around the country.<\/p>\n Just as New York\u2019s share of all US taxpayers earning $1 million or more dropped sharply between 2010 and 2022, the state\u2019s relative share of millionaire capital gains income has fallen steeply as well.<\/p>\n During the same period, there was a notable shift<\/a> to (where else?) Florida.<\/p>\n The average millionaire tax hike under Mamdani\u2019s proposal would be several times the $20,000 the mayor cited in his anecdote about the million-dollar earner \u2014 running well into six figures for the mega-earners who generate a hugely disproportionate share of city income taxes.<\/p>\n