Summary
- Representative Zohran Mamdani won the New York City Democratic mayoral primary, advocating radical proposals such as rent control and increases in corporate tax rates.
- Wall Street and financial firms expressed concerns, stating that if Mamdani is elected, tax increases and policy changes may prompt them to relocate their headquarters.
- Mamdani's policies are seen as unfavorable to high-income taxpayers and employers, raising the possibility of a weaker tax base and capital flight from New York.
Rent control, corporate tax hike, and more
Mamdani puts forward radical pledges
"Financial firms considering even relocating headquarters"
Radical politician Zohran Mamdani (pictured), a New York State Assembly member, won the Democratic primary for New York City mayor, sending shockwaves through Wall Street. Concerns are mounting that his pledges for tax hikes targeting high earners and freezing rent could have a massive impact on Wall Street if elected.
On the 25th (local time), The Wall Street Journal (WSJ) reported, "After Mamdani's victory in the Democratic primary, Wall Street has been thrown into panic." Mamdani defeated former New York Governor Andrew Cuomo in the primary held across New York City the previous day. As a result, Mamdani will run as the Democratic nominee in the general election this November, facing the incumbent, Eric Adams. Given New York City's strong Democratic leanings, the party's primary carries almost as much weight as the general election.
This has led to growing concerns among Wall Street executives. WSJ reported that local business leaders even held confidential calls to discuss raising about $20 million to support outside groups opposing his candidacy. This is because Mamdani is openly pushing policies perceived as disadvantageous to high-income taxpayers and employers. He pledged to freeze rents for private rental housing and limit rent increases. He also declared he would raise New York’s corporate tax rate from the current 7.25% to 11.5% and introduce a 2% income tax surcharge for those earning more than $1 million.
Bradley Tusk, CEO of venture capital firm Tusk Ventures, warned, "If a socialist leader implements government handouts, tax hikes, and major anti-capitalist campaigns, it inevitably puts pressure on the market," adding, "Even though the likelihood isn’t high, New York could end up like once-prosperous Detroit or Baltimore."
The Financial Times (FT) reported, "Within New York's financial sector, there is concern that without a moderate mayor, the wealthy will leave, eroding the city's tax base." If Mamdani becomes mayor, there are reportedly moves among financial firms to relocate to other states such as Florida and Texas. WSJ explained, "Many financial sector leaders believe, given possible tax issues and growing fears of rising anti-Israel sentiment after Mamdani's possible victory, moving their firms might be better."
That day, U.S. President Donald Trump also posted on his social media platform Truth Social, "At last, the Democrats have gone too far—a 100% communist madman named Mamdani has won the Democratic primary," and "Even though I’ve seen plenty of radical leftists before, this is too much."
Of Indian Muslim descent, Mamdani was born in Uganda, Africa, and moved to New York at age 7 when his father became a professor at Columbia University. He has also publicly expressed his support for Palestine.
Reporter: Donghyun Kim 3code@hankyung.com
Korea Economic Daily
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