A High Corporate Tax Rate Would Heighten NYC Unaffordability

New York Mayor-elect Zohran Mamdani won his election running on affordability, and pledging to make New York City more affordable for working people. Yet one of his core campaign promises—increasing the New York corporate tax rate—would actually make New York City and State less affordable, leading to lower wages, fewer jobs, and higher prices.

Although it likely sounded appealing to his supporters, economic studies show that raising the corporate tax rate is the most economically harmful tax to increase. A higher corporate tax rate would make New York employers less competitive throughout the country and around the world, directly threatening New York wages and jobs.

The Mayor-elect has said he would raise the top New York State corporate tax rate from 7.25% to 11.5%, the same as the current New Jersey rate. This would increase the tax on New York companies by nearly 60%, and give both New York and New Jersey the highest tax rate in the nation, 5 percentage points higher than the national average, and one of the highest in the developed world.

The New York tax rate, which would have to be approved by the New York State legislature and the Governor, would be significantly higher than neighboring states and much higher than the tax rates in the midwest and throughout the south, especially states like Nevada and Texas, which have no corporate tax.

Aside from New Jersey, neighboring states such as Connecticut, Massachusetts, and Pennsylvania have corporate tax rates aligned with New York’s current tax rate. An 11.5% New York rate would be about 40% higher than these neighboring states. The New York rate would be more than twice as high as southern states like North Carolina, South Carolina, Georgia, and Florida, which have corporate tax rates in the 2-5.5% range. And it would be 30% higher than high-tax California’s corporate rate.

Raising the rate to 11.5% would force New York companies to pay a combined federal -state tax rate of more than 30%, one of the highest corporate tax rates in the developed world. New York’s tax rate would be one-third higher than the average corporate tax rate in Europe, Asia, and the Scandinavian countries.

 Numerous studies show that this high rate would make New York less affordable for its residents. Economic experts agree that working people bear the burden of a higher corporate tax rate. Studies show that a corporate rate increase would lead to lower wages, fewer jobs, and higher prices.  One Federal Reserve Board study found that a higher corporate tax rate would cost a typical American household thousands of dollars a year.

A corporate tax hike might sound good in an election campaign. But there is overwhelming evidence that a corporate tax rate increase would be harmful to working people, and make life less affordable to New Yorkers.