Socialist Mamdani’s Tax-and-Spend Machine Rolls on Despite New York City’s Windfall From Wall Street

New York City is seeing higher than expected tax revenues amid soaring profits on Wall Street. But some budget analysts doubt socialist Zohran Mamdani will use the lifeline to lift the city out of the red, and instead suggest that a flood of spending may be on the way. The New York State comptroller, Thomas DiNapoli, said in a recent report that profits on Wall Street are outpacing New York City’s expectations. He projected that “if the rate of profitability growth in the first half [of the year] continues through the rest of the year, annual profits for 2026 could exceed $90 billion, far outpacing last year’s record level.” For the first half of 2026, he said the securities industry’s profits hit $45.9 billion, up 51.3 percent year-over-year. Last year the industry generated an estimated $7.8 billion in tax revenue for the city.The president of the nonpartisan Empire Center, Zilvinas Silenas, doubts the mayor will take the opportunity to either cut taxes or create a financial cushion for future downturns, telling The New York Sun that more spending is the more likely outcome. “In terms of revenue, it will never be enough, because you can always spend more of taxpayers’ money to advance the agenda of the government [being] involved in everything,” Mr. Silenas says.“With Mamdani, more tax revenue will not lead to tax cuts. More revenue will lead to more spending intentionally creating the situations where people are getting something for free… childcare, buses,” he said. “This way you create a group of voters who have something to lose.”Mr. Silenas said, “If the tax revenue keeps increasing, great, you can finance more freebies for the population.” But if revenue decreases, he argued, “This will be the pretext to increase taxes.” He suggested that if revenues decline, the mayor would insist that to avoid a deficit crisis, the city should raise taxes on wealthy individuals rather than cut new programs and risk provoking the ire of residents enjoying their “free buses.”Mr. Mamdani campaigned on an ambitious democratic socialist agenda and has called for raising taxes on corporations and wealthy individuals to generate $9 billion in revenue to pay for his plan. Estimates of the cost of his signature campaign promises have varied. An evaluation by the New York Times pegged the cost of his marquee promises at around $7 billion annually. The Times estimated that his plan to offer universal child care would cost $6 billion a year, while offering free buses would cost $800 million, and the city-run grocery stores would cost $60 million. Several of his promises have run into the roadblock of a multi-billion deficit. Earlier this year, he sounded the alarm over the city’s roughly $12 billion deficit and sought to pressure New York Governor Kathy Hochul to increase taxes on wealthy individuals and send more money to the city. However, in May, the mayor said he had managed to close the deficit and balance the budget with the help of a pied-a-terre tax on non-primary residences valued at over $5 million — which city officials expect will generate $500 million annually — and the $4 billion in cash assistance from Albany. New York City’s comptroller, Mark Levine, reported on September 9, 2026, that the city’s central treasury balance was sitting at $13.73 billion, up from $5.31 billion at the same time in fiscal year 2026. Mr. Mamdani has enacted some of his key policies. The New York City Economic Development Corporation says the city has allocated $70 million to pay for the “construction and fit-out” of five subsidized grocery stores. The first stores are expected to open in 2027. The mayor also insists he delivered on his promise to implement universal child care. However, the City Journal notes the claim refers to a $1.2 billion pilot program — with money from Albany — to fund childcare for 2,000 children in lower-income neighborhoods.Although officials are touting what they say is a balanced budget and higher revenues, there are warning signs for the city’s finances in the near future. Mr. Levine has warned that the balanced budget may be short-lived, projecting that there could be budget gaps of more than $7 billion in the coming years. And other critics have said that Mr. Mamdani’s maneuvers merely delay the deficit problem. Reason Foundation’s managing director, Mariana Trujillo, noted in May that the mayor’s announcement he had balanced the budget was largely based on “savings” that came from reducing payments on the city’s pension debt. A fellow at the Manhattan Institute, Ken Girardin, cautioned city officials against viewing any increased tax revenue as a surplus. “The city is starting its next fiscal year almost $7 billion in the red,” Mr. Girardin said. “[In] the budget that would begin July 2027, spending outpaces revenues by well over $6 billion.”Mr. Girardin said “the first thing” Mr. Mamdani should do is “resist the temptation to spend unexpected revenue on new programs.”“The city needs to maintain its cushion for the next rainy day, because the next rainy day will come,” he said. Rather than spend money on new programs or slash taxes, he said the city should focus on large budget items such as the Department of Education to cut spending. The increased tax revenue for the city comes amid a surge in AI investments. Mr. DiNapoli said in his report that such investments “continue to drive the stock market, with AI-related venture capital reaching $407 billion” in the first half of 2026, 50 percent higher than the investments in AI for all of 2025. However, there are questions about how long the AI spending spree will last. The billionaire founder of Bridgewater Associates, Ray Dalio, said earlier this week there could be an AI bubble that pops soon.“I think we’re close to that, Mr. Dalio said while speaking at the Forbes Global CEO Conference on Wednesday. Mr. Dalio noted the hundreds of billions of dollars in AI investments are often financed with debt and said increasing bond yields and proposed wealth taxes could trigger a bubble-bursting moment. Several financial analysts have said an AI-burst could lead to a financial crisis on par with 2008.

Socialist Mamdani’s Tax-and-Spend Machine Rolls on Despite New York City’s Windfall From Wall Street

Socialist Mamdani’s Tax-and-Spend Machine Rolls on Despite New York City’s Windfall From Wall Street

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