Mamdani Again Asks to Raise Taxes on Rich, Hochul: ‘It’s not happening’

NEW YORK CITY—New York City Mayor Zohran Mamdani is renewing his request to raise taxes on the rich, cutting a tax credit used by business owners to reduce their federal tax burden.

The mayor is asking to reduce the pass through entity tax credit, known as PTET.

“The PTET is essentially a loophole that allows high-income earners to reduce their federal tax burden. Who benefits? Millionaires and multimillionaires,” Mamdani said at New York City Hall on April 28.

City Council Speaker Julie Menin joined the mayor to call on Albany to help New York City balance its budget by changing the PTET. Menin has been at odds with the mayor over protest buffer zone legislation that he vetoed last week, as well as disagreements over how to balance the budget. On April 28, she joined the mayor to ask the state for help and to announce an extension for the city’s executive budget until May 12. By law, the executive budget is due on May 1.

“The mayor and the council are continuing to work together to reach agreements on savings within our own budget,” Menin said, responding to calls by Assembly Speaker Carl Heastie and Gov. Kathy Hochul, who have called on Mamdani and Menin to find savings to balance the budget.

The mayor estimates that cutting this credit from 100 percent to 75 percent could generate $1 billion in revenue for the city. According to the mayor, 95 percent of people who opted for the pass through entity transfer tax credit had incomes of $1 million or more.

However any such change in income tax law would require approval at the state level. Both the State Senate and the Assembly have included this PTET credit reduction in their fiscal year 2027 budgets. But when asked on April 28, Hochul gave a resounding no about changing the PTET credit.

“It’s not happening. We are not changing PTET,” Hochul, speaking in Colonie, New York, said at a press conference highlighting her efforts to make New York affordable.

The governor also rejected Mamdani’s and Menin’s request for more assistance from the state, saying that the state has already provided billions in assistance to New York City.

“They have to do what every other city has to do—look at your expenses,” Hochul said.

The benefit of the pass through entity tax credit is greater for business owners with higher incomes who are allowed to pay their personal federal income tax through a pass through entity, such as their LLC or S corporation. They can thus deduct the full amount of their New York City income tax from their federal taxable income. This can greatly reduce their federal tax burden.

However, the current 100 percent rebate means that they can take the full credit of their city income tax off federal taxes. If the tax credit is reduced to 75 percent, they would have to pay New York City an extra 25 percent of their city income tax.