Full Breakdown
NYC's PTET Tax Credit Clash: City’s Revenue Push Meets State’s Spending Call
5/1/2026, 2:54:43 PM
The Core Dispute Over PTET
Mayor Zohran Mamdani and City Council Speaker Julie Menin have asked New York State to cut the Pass-Through Equity Tax (PTET) credit, arguing that the credit lets high-income earners lower their federal tax burden and that its removal could generate about $1 billion for the city’s budget. Governor Kathy Hochul rejected the proposal, stating the state will not change the PTET and urging the city to curb its own spending.
Background and Fiscal Context
The PTET credit was created to incentivize investment in pass-through entities, but city officials view it as a loophole that reduces tax revenue. New York City faces a budget gap that could be narrowed by a new “rich-tax” stream. Governor Hochul has already secured more than $4 billion in state aid for the city, yet she points to $16 billion of spending that exceeds inflation over the past decade.
Key Players
The debate involves Mayor Zohran Mamdani, Council Speaker Julie Menin, Governor Kathy Hochul, hedge-fund billionaire Ken Griffin—whom Mamdani has cited as a model for a proposed pied-à-terre tax—and Andrew Rein, president of the Citizens Budget Commission.
Timeline of Recent Actions
- May 1, 2024 – City missed the statutory budget-proposal deadline.
- May 12, 2024 – Mayor postponed the budget unveiling pending state decisions.
- Week of May 6, 2024 – Governor agreed to meet Ken Griffin after Mamdani highlighted Griffin as a pied-à-terre-tax example.
Fiscal Numbers
Eliminating the PTET credit could add roughly $1 billion to city revenues. The state has earmarked over $4 billion in aid, while the city has spent $16 billion above inflation in ten years. A $6 billion development project could be jeopardized if Griffin’s firm withdraws.
Official Statements
Mamdani said the city cannot balance its budget without extra revenue and cost shifts from Albany. Menin supported the revenue proposal. Hochul urged the city to examine its spending and to right-size programs. The Citizens Budget Commission echoed Hochul’s call to halt spending that does not directly benefit New Yorkers.
Criticism and Conflicting Views
Budget watchdogs argue the deficit stems from spending that outpaces inflation, not from the PTET loophole. They note the absence of an independent audit of the PTET’s fiscal impact, leaving the exact revenue loss unverified.
Verbatim Quotes
- “The PTET is essentially a loophole that allows high-income earners to reduce their federal tax burden,” — Zohran Mamdani, Mayor of New York City
- “Look at your expenses” — Kathy Hochul, Governor of New York
- “Right-size spending. Stop spending on programs that don't help New Yorkers. We've increased spending $16 billion more than inflation over the last 10 years,” — Andrew Rein, President, Citizens Budget Commission
- “We cannot proceed with balancing that budget without the additional revenue and cost shifts from Albany,” — Zohran Mamdani, Mayor of New York City
What’s Next
Hochul’s upcoming meeting with Griffin will test a potential pied-à-terre tax and could affect the $6 billion development project. The city awaits the state budget agreement before finalizing its own plan by the May 12 deadline.
