Two weeks after winning the state’s first pied-à-terre tax, the mayor is back in Albany with City Council Speaker Julie Menin, going after a Cuomo-era tax break that mostly benefits earners making more than $1 million a year.
Mayor Zohran Mamdani is calling it a “hedge fund handout.” Now he and City Council Speaker Julie Menin want Gov. Kathy Hochul to claw a billion dollars of it back before the state budget is finalized.
At a joint press conference Tuesday morning, the mayor and speaker pushed Hochul to scale back New York’s Pass-Through Entity Tax credit. PTET was signed into law by former Gov. Andrew Cuomo in 2021 after the first Trump administration’s 2017 tax law capped federal deductions for state and local taxes at $10,000, gutting a benefit that had long mattered to high earners in blue states. New York’s version lets wealthy owners of pass-through businesses, typically hedge funds, private equity firms and major law partnerships, lower their personal federal tax bills, with the state currently refunding 100 percent of the benefit. The mayor’s office says 95 percent of that benefit goes to people earning more than $1 million a year, and over 80 percent goes to those earning more than $5 million. Reducing the credit to 75 percent, Mamdani and Menin argue, would generate roughly $1 billion in annual revenue and help close the city’s $5.4 billion budget gap without forcing the cuts to childcare, transit and sanitation that hit our neighborhoods first.
“This isn’t about small businesses,” Menin said. “It’s about high-earning partners at the very top.” Menin has been cooler on Albany tax hikes in the past, so her presence Tuesday lined up both heads of city government behind the same ask in the final days of budget negotiations.
The push builds on the first-ever pied-à-terre tax that Mamdani secured earlier this month, an annual fee on luxury second homes worth more than $5 million whose owners don’t actually live in New York. That measure is projected to bring in more than $400 million a year for the city. Among the properties it targets: hedge fund CEO Ken Griffin’s $238 million Manhattan penthouse, which Mamdani used as a backdrop when announcing the new tax. “Pied-à-terre was the first step. PTET is the next,” Mamdani said Tuesday. Other states have already gone smaller on their own PTET credits. Connecticut caps its version at 87.5 percent. Massachusetts caps its at 90 percent.
Last week, a coalition of labor unions representing more than 300,000 workers statewide sent a letter urging Hochul and legislative leaders to deliver a final budget that taxes the wealthiest New Yorkers and prevents service cuts. Signatories included DC37, the New York State Nurses Association, the Hotel and Gaming Trades Council and PSC/CUNY. Both houses of the State Legislature included similar revenue raisers in their one-house budget proposals.
The $5.4 billion shortfall the city inherited has already put pressure on public school funding, afterschool programs, sanitation, library hours and subway service across Bushwick, East Williamsburg, Ridgewood and the rest of the five boroughs. Federal cuts are making it worse: roughly 450,000 New Yorkers recently received notice that they’ll lose their Essential Plan health coverage this summer, and around 200,000 are at risk of losing SNAP benefits. A Fiscal Policy Institute analysis cited by the mayor found the wealthiest New Yorkers leave the state at roughly one-quarter the rate of other residents. Critics of taxing top earners have long argued doing so would trigger a millionaire exodus, but the data hasn’t borne that out. When Massachusetts introduced a 4 percent surtax on million-dollar earners in 2024, the state collected $3 billion more in revenue than budgeted. The exodus already underway, Mamdani has argued, is a working-class one driven by the affordability crisis.
Hochul has previously stated that she’s “done raising taxes” this session. The unions, both legislative chambers and now both Mamdani and Menin disagree. The advocacy coalition DREAM, which has been organizing around the budget fight, is circulating a petition-style letter to the governor’s office; Mamdani pointed New Yorkers to it during Tuesday’s press conference. The state budget was due April 1. Nearly a month later, the next several days in Albany will decide whether the PTET reduction lands in the final deal.
