MAMDANI’S BIGGEST PROBLEM – ARRIVING WAY LATE TO THE TAX AND SPEND PARTY

In the past week, I have learned more about the tax structures of Dallas, Texas and Palm Beach, Florida than I care to know. As a Brooklyn-born native and 53-year resident of downtown Manhattan, I am not about to decamp for either location. I don’t even care to visit.

Although I’m staying in New York, I’m not happy about Zohran being the mayor of my city because I foresee major problems ahead. But first, a true story offered as a parable:

It was a hot, dusty day in Marrakech. I was 20 and it was 1971. A man led an old donkey across the large square. The animal, heavily loaded with firewood, was struggling under the burden. After a dozen yards, his legs collapsed and he fell. The man, stick in hand, beat the donkey until it righted itself. After a few more yards, it collapsed again. This time, the beating was more spirited, the blows harder and longer. The donkey finally regained its upright position and walked on. This dynamic repeated itself once more, but this time distance the donkey fell down and refused to get up. The man sat down next to him.

The city Mamdani just inherited may be like the donkey. It has been beaten down by “tax and spend” forever. Taxes are astronomical in relation to Texas and Florida, not to mention Wyoming. The city’s $119 billion budget is comparable to that of Ireland, Greece or Portugal. The top 1% of earners are responsible for 40% of the revenue.

The real problem is so much of the budget is already spoken for. Between pensions, police, debt service and education according to the NYC’s own budget office 99% of the budget is committed, for example including guaranteed health care for retirees…even if they move to Florida. Another jaw-dropper: NYC spends over half a million dollars annually to incarcerate each prisoner. The city politicians have, for at least half a century, beaten down their constituents with a club of fiscal irresponsibility.

Yet, there are not enough affordable apartments (the city owns at least 177,000 and regulates over a million-rent stabilized or controlled ones.) 50% of citizens say they have trouble paying basic bills like food, medical care, utilities and rent. The subways are shockingly decrepit compared to Mexico City or Paris. There are people in need of care who should not be exposed to the elements and an entrenched bureaucracy that could make the Cairenes blush. (A friend just had his third application for rent reduction lost by the housing authority.)

The city is losing its wealthiest as a rapid clip. The citizens budget committee reports that New Yorks share of taxpayers with more than a million in adjusted gross income shrunk by almost a third-from 12.7% to 8.7%. This is not an abstract statistic. I know at least a half dozen who have moved to Florida. This deprives the city of the revenue it so desperately needs.

On the positive side, the city is as vibrant as ever and certainly regained its footing after COVID. My bellwether is Bleeker Street, which after the pandemic was half empty. Today it’s glowing with luxury shops and unique culinary spots…not an empty space on the mile long street. Try getting into a downtown restaurant on a weeknight. OpenTable will offer you 5:30 or 9pm. Entire neighborhoods, in areas like Fort Greene that were once partial war zones, now feature multimillion dollar brownstones and luxury high-rises. Repurposed industrial buildings in Tribeca are amongst the most expensive housing in America. Grand Central Station’s new Long Island Railroad terminal demonstrates the city can do something right. Architecturally disjointed as it is, over-sized Hudson Yards is fully occupied and adding to the tax base.

As I see it, Mamdani is late to the taxing party in that most city and state residents already feel taxed to the max. If you are in the top tax bracket, own an expensive co-op with high real estate taxes and pay your 8.75% sales tax on every purchase and restaurant meal you’re in Scandinavian-level tax land. The city and state have tried to ameliorate income inequality for decades by providing housing, education, and even state-funded medical care to those less well off.

The election of Mamdani tells us that policy has failed. Our national economy is creating winners and losers in such a profound way that it is impossible for any state or city to redress that imbalance. Peter Thiel, whom I often disagree with, recently focused on the economic construct of failed capitalism as the foundational issue for the younger generation, who are chaffing in its harness. The result is Socialists for Mamdani.

What I think is needed is a broad constituent sit down. The 1 percent that pay the 40 percent of the revenue need a dialogue with the municipal unions, the developers, the healthcare providers. The goal: get the finances on a sustainable path. Make concessions that are long lasting that will not hollow out the tax base. Just tightening the absurd municipal retirement system would be a good start.

Over 53-years in Manhattan I have seen a lot: municipal bankruptcy, riots, blackouts, out of control crime, 911, Hurricane Sandy, the pandemic, and Now Zohran Mamdani and his TikTokers armed with viral pitchforks. I wish him luck but am afraid he is late to the shortsighted tax and spend party that helped create the dissatisfaction that got him elected in the first place.

I wish him well and hope he can fix the broken financial model of NYC. However just beating the taxpayer donkey some more is not going to help.