New York City’s fragile economic balance may be approaching a tipping point.
That’s the warning from Steve Fulop, the new CEO of the Partnership for the City of New York, who says Mayor Zohran Mamdani’s proposed corporate tax hike could trigger an exodus of companies — not to Texas or Florida, but just across the Hudson River.
“I don’t think the tax conversation is productive because we are going to be 100% higher than New Jersey if we take that proposal,” Fulop said Sunday on 77 WABC’s Cats Roundtable. “People don’t have to move to Texas or Florida. They can just move a mile away.”
At the center of the dispute is Mamdani’s plan to raise the city’s corporate tax rate from 7.25% to 11.5%, aligning it with New Jersey’s headline rate. The mayor has argued the move would restore balance after decades of tax cuts and generate an estimated $5 billion annually to help close budget shortfalls and fund new initiatives.
But critics say the comparison is incomplete.
While New Jersey’s top corporate rate stands at 11%, New York City businesses also face additional levies — including the MTA corporate surcharge. According to Fulop, the combined marginal corporate tax rate in New York City would climb from 17.44% to 22.48% if the plan is approved by Gov. Kathy Hochul and the state legislature.
That would place New York roughly 100% higher than New Jersey’s base rate — a difference Fulop says could dramatically alter corporate decision-making.
Fulop, a former mayor of Jersey City, understands the cross-Hudson dynamic firsthand. Jersey City has long attracted residents seeking lower rents while maintaining access to Manhattan jobs via the PATH train. He suggests that corporate relocation decisions could follow a similar logic.
“People want to be in New York,” he said. “But you have to have an economy that’s competitive. We’re getting close to a place that it isn’t.”
Mamdani has countered that the burden would fall primarily on the largest corporations. His campaign has stated that fewer than 1,000 highly profitable firms account for the majority of corporate tax revenue. He has also noted that New York’s corporate tax rate has declined over time — from 12% in the mid-1970s to 6.5% in 2014 following tax reforms under former Gov. Andrew Cuomo.
Still, business leaders appear uneasy.
Fulop said he recently met with 25 of the city’s top CEOs, many of whom urged a more forceful response to what they see as rising taxes and expanding government spending. Concerns extend beyond fiscal policy, he said, touching on quality-of-life issues and rising antisemitism.
Budget priorities are also under scrutiny. Fulop pointed to the Department of Education as an example of structural imbalance. Despite enrollment dropping from roughly 1.1 million students to just over 800,000 since the pandemic, the DOE budget is slated to rise to $38 billion under the mayor’s fiscal year 2027 plan. A longstanding “hold harmless” provision has prevented funding reductions at schools with shrinking enrollment.
He also cited significant spending on rental assistance programs as an area requiring review.
