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Mamdani and Menin pressure Hochul for another tax on the rich
By
Elizabeth Kim
and
Jon Campbell
Published Apr 28, 2026
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Jason Alpert-Wisnia / Hans Lucas / AFP via Getty Images
By
Elizabeth Kim
and
Jon Campbell
Published Apr 28, 2026
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Mayor Zohran Mamdani and City Council Speaker Julie Menin came together on Tuesday in a rare moment of unity to pressure Albany lawmakers to reform a tax credit that primarily benefits the wealthy.
Mamdani said rolling back the tax credit popular among hedge funds and law firms would help plug the city’s $5.4 billion budget deficit. Gov. Kathy Hochul swiftly rejected the proposal, saying the state had already done enough to address the city’s fiscal problems. The back-and-forth signaled that the mayor is not letting up on his push to raise taxes on the wealthy, even as some business titans criticize his rhetoric.
“We cannot close this deficit with savings alone,” Mamdani said in what has become a mantra for him. “We need new revenue.”
Mamdani and Menin proposed lowering an optional tax credit under the state’s pass-through entity tax, or PTET, program from 100% to 75%. They estimated the change could raise roughly $1 billion in revenue for the city.
City officials said the tax benefit is used almost entirely by people earning more than $1 million a year.
Hochul shot down the idea.
“We've encouraged the speaker and the mayor to do what every other city has had to do: Look at your expenses,’” she told reporters in Albany.
“It's not happening. We’re not changing PTET,” she added.
The governor’s response is a blow to Mamdani, who has been trying to find ways to close the budget gap without cutting funding to city services.
Only a few weeks ago, Mamdani released a video criticizing Menin’s refusal to support the mayor’s call to raise income taxes. Their tax credit plan marks the second proposed tax increase targeting the city’s rich. Mamdani and Menin are both in favor of Gov. Kathy Hochul’s plan to raise taxes on homeowners with second homes worth over $5 million.
Menin said reducing the pass-through entity tax credit would “create a more sustainable and equitable ecosystem” and be a “temporary reduction over a few years.” She said the move was in line with what other states like Connecticut and Massachusetts had done.
The pass-through entity tax program was created to serve as a loophole for a cap on SALT deductions – the amount of state and local taxes that can be written off on federal tax filings — included in President Donald Trump’s 2017 tax reforms. Owners and partners in businesses that register and pay state and local taxes as pass-throughs can fully deduct the payments on their federal tax returns and bypass the SALT limit.
Mamdani and Menin also announced that the mayor’s executive budget would be delayed until May 12 because the state budget is still in limbo. The deadline for Mamdani’s revised spending proposal had been this Friday.
Gov. Hochul and Mayor Mamdani both support a pied-a-terre tax. They are at odds on Mamdani's latest tax proposal, however.
Susan Watts/Office of Governor Kathy Hochul
By law, the mayor and Council must reach a deal to pass a budget by June 30. In February, Mamdani released a $127 billion preliminary budget proposal that included property tax hikes to close the deficit. He has since backed away from property tax increases.
The governor said she considers the mayor and speaker’s proposed tax credit change to be an income-tax increase, which she’s opposed since coming into office in 2021. She said it’s time for Mamdani and Menin to find savings in the city’s budget.
“They have programs that are growing not 4% a year, but 4% a month,” she said.
She ticked off a list of state aid coming New York City’s way in the roughly $260 billion state budget, which is now four weeks late.
That includes $1.5 billion to help close the city’s budget gap, $1.2 billion over two years to help cover the cost of a child care expansion and an estimated $500 million from the planned tax on second homes in New York City. Hochul said she’s also open to changing state law to allow the city to delay its pension fund payments.
The Citizens Budget Commission, a fiscally conservative budget watchdog, urged the mayor and Council to look for more savings.
“We continue to believe the focus should be on improving the quality and efficiency of services and using the savings to close the budget gap,” said Andrew Rein, the group’s president. “Raising our already nation-leading taxes risks making the city less competitive, when we want to keep and attract people and businesses to support our services and create jobs.”
Heather Mulligan, president and CEO of the state Business Council, said the passthrough entity tax credit has worked as intended. Her organization, the biggest business group in the state, opposes lowering the credit.
“We are never going to support increasing taxes on people who already pay taxes,” Mulligan said.
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Elizabeth Kim
Elizabeth Kim is a reporter on the People and Power desk who covers mayoral power. She previously covered the pandemic, housing, redevelopment and public spaces. A native of Queens, she speaks fluent Mandarin. Got a tip? Email [email protected]
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Jon Campbell
Jon Campbell covers the New York State Capitol for WNYC and Gothamist. Prior to that, he covered the Capitol for more than a decade for the USA TODAY Network. He has twice earned the Walter T. Brown Memorial Award, an honor given annually by the Legislative Correspondents Association alumni for outstanding state government coverage. Jon grew up in the Buffalo area and graduated from the University at Albany. Got a tip? Email Jon at [email protected] or Signal at JonCampbellNY.90.
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Gothamist is funded by sponsors and member donations
Gothamist is funded by sponsors and member donations
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