Steve Forbes: Don’t balance New York City’s budget at the expense of homeowners

This is a huge mistake – not only because of its economic consequences, but because of what it suggests about the philosophy of governance in the country’s largest city.

Real estate taxes It is the most regressive form of taxation in local government. Unlike a tax on income or profits, property taxes are indiscriminate: they affect longtime homeowners on fixed incomes, working-class families striving to build equity, and small business owners who form the backbone of local communities. These fees are not linked to an individual’s ability to pay, but rather to a valuation that is often separate from cash flow. For a city already reeling under pressures of affordability and rising costs of living, this is a recipe for further displacement and economic stagnation.

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Mayor Mamdani certainly sees this as a “last resort” or even a strategic way to pressure Albany to raise taxes on the wealthy and profitable corporations. But describing it as a “last resort” does not mitigate its harm. Mayors and governors negotiate hard – that’s politics. But the collateral damage from the property tax increase will be felt in neighborhoods in all five boroughs: rents have risen as landlords pass costs on to tenants, hollowing out small business margins, and forcing families to choose between property ownership and financial survival.

It is worth noting that New York City has not raised property taxes in any way since the Bloomberg era in the early 2000s, a moment of crisis that required extraordinary action. This current proposal is not a response to an unprecedented disaster, but rather a political impasse. This is precisely the kind of fiscal brinkmanship that punishes ordinary citizens because of the inability of elected officials to formulate more responsible solutions.

Proponents of such an increase will suggest that property taxes are the only means left, because the city cannot unilaterally raise income or corporate taxes without Albany’s blessing. But this is a concession to responsible budgeting, not a defense of it. A mayor who claims to inherit a “historic” budget gap that has been sharply reduced — with help and careful revenue calibration — undermines the crisis narrative. Indeed, Governor Cathy Hochul It has already allocated significant state aid to the city, narrowing the gap and undermining the argument that large citywide tax increases are inevitable.

Instead of squeezing homeowners and Main Street merchants, the City Council should check wasteful and unnecessary spending, streamline operations, and find efficiencies within the $127 billion bureaucratic giant. The budget reflects priorities – and if spending choices fail to reflect wisdom in lean times, that is a political decision, not a financial necessity.

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Another worrying dimension is the broader economic signal this tax increase will send. New York City already competes fiercely with other global cities for business investment, talent, and jobs. Other states with more competitive tax systems — including states with no income tax — have successfully lured residents and businesses away from New York for decades. The sharp new property tax increase only serves to reinforce the narrative that New York’s economic prosperity comes with a punitive price, Demographic and commercial exodus accelerates In a country that cannot afford it.

More importantly, this episode highlights a profound misunderstanding of what it is Good governance Requires: balance, creativity and justice. True leadership does not simply balance books on paper; It balances a city’s economic health, the vitality of its workforce, and the sustainability of its middle class. This means resisting the urge to raise taxes as a first line of defense, and instead engaging in real spending reform and economic growth strategies that do not crush taxpayers.

Yes, cities sometimes have to make tough choices. But pitting landlords and small businesses against the wealthy is a false dichotomy. New York is thriving – one with Create strong job opportunitiesResilient communities and inclusive opportunities – they are not built by constant tax increases. It is built by unleashing economic potential, encouraging investment, and ensuring efficient management and financial discipline.

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New Yorkers know this instinctively. They are hard-working people who have endured years of rising costs and economic pressures. They simply want the city to spend wisely, and leadership must respect that.

Mayor Mamdani must go back to the drawing board and work with the City Council, stakeholders, and the state to find pro-growth solutions. Raising property taxes – let alone wealth taxes – should not be on the table – least of all as a bargaining chip in political negotiations. Let us pursue growth, reform, and opportunity – not the tax increases that threaten to set New York back.

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