Kathy Hochul weighs massive corporate tax hike amid pressure to bend knee to Mamdani

New York Governor Kathy Hochul is reportedly considering an increase in the corporate tax rate of New York in order to cover a budget shortfall. This also comes after Hochul endorsed socialist NYC Mayor-elect Zohran Mamdani leading up to his victory. He has also made the pitch that higher taxes are needed in the Empire State.

"The state is on strong financial footing today but much of the budget outcome at the start of next year is going to be largely dependent on what the federal government does and we're watching that closely and trying to plan accordingly," a source familiar with the matter told Reuters. However, the source said a decision has not been made on the policy. In New York, the corporate tax rate ranges from 6.5 to 7.25 percent, and ranks as having the 17th highest corporate tax rate in the nation.

The shift from Hochul is notable, as the incumbent New York governor has repeatedly said she does not want to raise taxes. Earlier this year, when she was asked about the prospect of raising taxes, she replied, “I’m not raising taxes at a time where affordability is the big issue."

Mamdani has pushed for an increase in the corporate tax rate from 7.25 to 11.5 percent, which would bring the state to having the highest corporate tax rate in the nation, alongside New Jersey. The upcoming socialist mayor has also advocated for a rent freeze as well as a $30 an hour minimum wage in the Big Apple.

New York is facing a budget shortfall of $34.3 billion up through the 2029 fiscal year, beginning on April 1 and ending on March 1. The budget shortfall was one of the issues addressed by Hochul in her meeting with Mamdani that took place on Thursday, according to a read-out statement on the meeting.

The two politicians also "discussed the possibility that the federal government would surge ICE and/or National Guard to New York City," the statement added. The deficit in New York, with the shortfall, will reach levels not seen since the financial crisis of 2009.