The Cost of Mamdani’s Top Policies

Accounts in the media regarding the cost of Zohran Mamdani's proposed policies for New York City have been confusing. He claims that he'll be able to pay for all of it with a 2% increase in city income tax and a similar increase in the corporate income tax. I didn't think that this rang true.

By my reckoning—or, to be more correct about it, @grok's reckoning—Mamdani's proposed tax increase would raise about 15 billion in additional revenue per year.

Mamdani's top priorities, aside from the rent freezes, are new housing for all who need it, free bus rides, and free childcare. The annual cost of these policies would be $45 billion, $0.8 billion, and $1.5 billion, respectively, for a total of $47.5 billion per year.

The city income tax in New York City generated $18.7 billion last year. Corporate income tax generated $8 billion. Marginal rates of both of these taxes would have to be increased by 7% (from 3.8% and from up to 8.8%) to cover the cost of just these three policies. It's likely to require an even higher increase in tax rates than that since many people and corporations are likely to flee the city in the face of these tax hikes. Denizens of NYC would have the pleasure of paying the highest total tax as a percentage of their income of anyone in the USA, a privilege that many of them would probably choose to forgo.

There are other problems, of course. Making buses free would likely just convert them into rolling homeless shelters. Nobody has figured out how to avoid all the problems associated with government housing with a poor and ethnically diverse population (among them, crime, segregation, and social isolation). Government-funded childcare has been a cause of behavioral problems in kids. It is often of poor quality, causes the spread of infectious disease due to the size of the childcare centers, and can be hard to access with long wait lists.

My guess is that Mamdani will have to settle on fewer big changes in policy for the city, the ones that can be easily paid for, and no matter how bad things get, he and his supporters will call it a success. Mamdani is a utopian idealist, and utopian idealists from Hitler to Lenin to Pol Pot have been the biggest mass murderers the world has known. They are not the type to be bothered by the adverse effects of their ideas.