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The competition to determine the next Democratic mayoral candidate for New York is reaching its final stages, and several Wall Street leaders are anxiously watching the results.
Recent polls indicate a tight race between two front-runners: former mayor Andrew Cuomo and 33-year-old assembly member Zohran Mamdani. For many in the financial sector, the thought of socialist Mamdani potentially leading the world’s largest financial hub is alarming.
Mamdani’s campaign is centered on raising taxes for the city’s wealthiest individuals and major banks and corporations.
High-profile financial figures like Bill Ackman of Pershing Square, Dan Loeb of Third Point, Steven Roth of Vornado, and Anthony Scaramucci’s SkyBridge, alongside former mayor Michael Bloomberg, are all investing millions to prevent Mamdani’s victory.
Cuomo, who resigned in 2021 amid unproven harassment claims, has resurfaced as the candidate that Wall Street is rallying behind. His supporting political action committee, “Fix the City,” has already amassed $24 million, making it the most well-funded external group in New York’s municipal history. Notably, Bloomberg contributed $8.3 million, while Ackman and Loeb donated $500,000 and $350,000, respectively.
Ackman, once a significant Democratic donor and now a strong supporter of President Trump, remarked that if Mamdani were to win, businesses would likely “flee” New York. “Most financial firms in the city could easily move elsewhere,” Ackman stated during a conversation with the Free Press.
A prominent private equity professional expressed concern: “Socialist policies have failed across the globe. Why would we consider them in the capital of capitalism? It doesn’t make sense.”
Mamdani proposes a 2% income tax on New Yorkers earning over $1 million, stricter rent regulations, higher minimum wages, increasing the supply of affordable housing, and raising the city’s top corporate tax rate from 7.25% to 11.5%—similar to New Jersey’s rates—which he anticipates will yield an additional $9 billion in revenue. Supported by US representative Alexandria Ocasio-Cortez and senator Bernie Sanders, he also advocates for government-operated grocery stores, free childcare, and transportation services.
While his ambitious plan covers various areas, the main concern among Wall Street executives seems to hinge on the proposed tax hikes. This reflects a wider national debate regarding how to manage escalating federal deficits amid New York’s current surplus. Finance leaders are increasingly warning about the spiraling nature of federal debt.
Jamie Dimon from JPMorgan has cautioned that the US’s borrowing habits might result in a “crack” in the bond market. His sentiments are echoed by Jim Esposito, president of Citadel Securities, who termed the burgeoning US deficit a “ticking time bomb” threatening fiscal stability, while John Waldron, president of Goldman Sachs, noted that bond traders perceive the rise in US debt as a greater risk than tariffs.
However, most financial leaders oppose tax increases or the elimination of loopholes like carried interest, which allows private equity investors to pay much lower taxes than those on regular income.
“High taxes won’t resolve the excessive deficits. If taxes rise, people will seek ways to protect their income—that’s just human nature,” a hedge fund investor remarked. “The real issue is waste. We must cut government spending and allow businesses to focus on innovation and growth.”
Nevertheless, implementing cuts without significantly impacting beloved programs is a challenging task. Even initiatives from the so-called Department of Government Efficiency, founded by Elon Musk, have only realized a small portion of the expected savings.
Next year will mark a decade and a half since the Occupy Wall Street protests emerged post-financial crisis. The concerns about inequality raised during that time are still relevant, especially given the asset price inflation driven by a long period of low interest rates following the crisis. If tax hikes are not the answer to the deficits, those on Wall Street must clarify their alternative suggestions. Otherwise, support for candidates like Mamdani could continue to rise.
jfk@ft.com
