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What makes a big city great? Museums? Restaurants? A population of extremely wealthy financiers? New York may be about to find out. The Democratic party’s pick for the upcoming mayoral election has triggered a wave of hand-wringing from the Wall Street elite, and predictable concerns that, if the eventual mayor isn’t someone they can talk turkey with, they will up sticks and take their fortunes elsewhere.
Certainly, Zohran Mamdani, the democratic socialist who won last week’s primary, ran on a platform inimical to the city’s rich. He wishes to raise the corporate tax rate from 7.25 per cent to 11.5 per cent and increase the city income tax on those who earn $1mn or more by two percentage points Despite his chief rival Andrew Cuomo raising far more funding, Mamdani prevailed easily on a platform of fixing what he calls an “affordability crisis” for the working class.
The rich matter, especially in a city like New York. According to the city government, the top 1 per cent of tax filers paid nearly just about half of the city’s income tax. The Park Avenue jet set is a demographic not to be trifled with.
Nonetheless, that slice of the Big Apple has proven surprisingly hard to dislodge. True, during the pandemic, it was the wealthiest who were most able to leave town and work remotely. But before and after that period, the top 1 per cent — those earning more than $815,000 — left the city at just a quarter of the rate of everyone else, according to the Fiscal Policy Institute. Tax increases in 2017 and 2021 had no meaningful effect.
That is not to say that Florida and Texas would not be more enticing this time around. But for the people who can afford big cities, the amenities and conveniences often prove worth the extra tax burden.
For other parts of the city’s population, things look less encouraging. Last year, the Washington DC-based Economic Innovation Group released a report that showed what it described as a “shocking” post-pandemic decline in the population of children under age 5 in major American cities, including an 18 per cent drop in New York City. The city’s current overall 8.5mn population is, despite net migration, slightly smaller than in early 2020.
Mamdani’s plan is to make life easier for families, by helping with housing and universal access to childcare. That, of course, would be subsidised in part by the Wall Street elite. They might want to remember that their own businesses require a steady stream of young, potentially child-raising talent. Given how much the masters of the universe benefit from and enjoy a healthy, thriving Big Apple, there ought to be room for some kind of cohabitation.