Dear Mayor Mamdani, Just Wondering, Are You Planning To Pay Your Own Millionaires' Tax?

Our new socialist Mayor Zohran Mamdani has proposed many destructive initiatives. But if there is one that stands out above all the others as his signature issue, it is his plan to raise income taxes on the “ultra-wealthy,” which he has defined as those people earning $1 million of more per year. The City of New York does not have the authority on its own to raise income tax rates, either at the State or City level, so he has requested that the State Legislature enact his proposed premium taxes on “millionaires.”

Here’s what I’m wondering: If the Legislature goes along with Mayor Mamdani’s request, does he plan to pay the new taxes himself?

We know the answer to that — of course he doesn’t intend to pay the premium “millionaire” rates. But why not?

You might ask, does Mamdami have income in excess of $1 million per year? That depends on what counts as “income.” His official salary is $258,000, which would appear to leave him far below the million dollar threshold.

But how about the perks? To start with, there’s Gracie Mansion, into which he recently moved. Here is a picture:

It’s a single family, historic, free-standing mansion in beautiful neighborhood in Manhattan. I asked Google AI for an estimate of what it would rent for on the free market, and the answer was, approximately $100,000 per month, or $1.2 million per year. Add that to the official salary of $258K, and you are already north of $1.4 million. Other major perks for the Mayor, which include unlimited access to a fleet of armored SUVs, plus a round-the-clock security detail, could easily add several hundred thousand more dollars to his annual income, if these things counted as “income.”

But let’s focus just on Gracie Mansion. It’s the Mayor’s residence. How do taxes work for that? Well, first consider how the taxes work for your residence. The answer for you is, first you earn the income, then you pay the tax, and then you pay for your house or apartment with the post-tax dollars that you have left. Your housing expense comes out of your taxable income after you pay the tax. If your employer tries to short-cut that system by providing a free house for you, or by paying for a house for you, the value of that benefit will be attributed or “imputed” to you, and you will owe tax on it.

If you have any doubt about that, consider the case of Allen Weisselberg. You probably remember him. He was Chief Financial Officer at the Trump organization. Around 2020, Weisselberg got caught up in the lawfare against President Trump, and was aggressively prosecuted by the Manhattan DA’s office for a suite of crimes that prominently featured “tax evasion.” Ultimately Weisselberg pleaded guilty and was sentenced in January 2023. Here is the press release from the Manhattan DA’s office announcing the sentencing. And here’s the quote from DA Alvin Bragg describing the crime:

“In Manhattan, you have to play by the rules no matter who you are or who you work for. Trump Organization Chief Financial Officer Allen Weisselberg used his high-level position to secure lavish work perks such as a rent-free luxury Manhattan apartment, multiple Mercedes Benz automobiles and private school tuition for his grandchildren – all without paying required taxes,” said District Attorney Bragg.

So “lavish work perks,” including a “rent-free luxury Manhattan [residence]” are definitely subject to income tax, at least if you are CFO of the Trump organization. So why doesn’t this rule also apply to the Mayor?

The answer to this question turns out to be a relatively complicated issue of tax law (maybe all issues of tax law are complicated). I’m not a specialist, so definitely don’t take what I say as tax advice. But my understanding is that there is something called the “convenience of the employer” standard. If you are required to live in a particular residence as a condition of employment and must vacate it when you leave the employment, you may be able to claim that the rental value of the residence is not taxable. Many governors and some mayors around the country have official residences, and appear to qualify under this standard. Also in this category are many university presidents and headmasters of fancy prep schools. However, if you work for a for-profit business, I think the chance of the IRS (or New York State tax authorities) accepting your claim of a tax-free residence would be about zero.

And how about the Mayor of New York? It turns out that the test of “required to live there as a condition of employment” specifically does not apply. Mayor Mike Bloomberg (2002-2013) declined to live in Gracie Mansion, and continued to live at his townhouse on East 79th Street throughout his three terms. Thus, we know that there is no requirement for the Mayor of New York City to live in Gracie Mansion.

And anyway, even if there were a requirement for the Mayor to live there, or the Mayor otherwise qualified under some technical definitions for tax-free treatment of his $1.2 million annual housing perk, shouldn’t he pay the tax anyway? I mean, this is a question of fairness. People who live in great luxury have a moral duty to pay high income taxes. Or at least, that is Mamdani’s position as I understand it. Surely, it is not “fair” for the Mayor to avoid all taxes on $1.2 million of annual luxury income by using the transparent dodge that the income is provided in-kind rather than in cash. That did not work for Weisselberg, and it would not work for you. As Alvin Bragg said, “In Manhattan, you have to play by the rules no matter who you are or who [sic] you work for.”

It all goes back to the fundamental divide in the socialist’s mind between the nomenklatura and the kulaks. You and Allen Weisselberg are kulaks, with one set of rules. Zohran Mamdani and Alan Garber (President of Harvard) are members of the nomenklatura, with another set of rules.

Or maybe Mayor Mamdani will prove me wrong when his millionaires’ tax goes through. He may even start paying tax on the imputed income this year at the current rates. But I know that that is ridiculous.