Wall Street Braces for Impact as NYC’s Next Mayor Proposes Tax Hikes on High Earners and Financial Transactions

New York's financial elite are sounding the alarm as democratic socialist Zohran Mamdani, the 33-year-old three-term Assemblymember poised to become the next mayor, prepares to implement a series of progressive tax policies. The proposed measures include increased levies on high earners, financial transactions, and dividends, alongside tighter regulations that could slow dealmaking.

Veteran hedge fund manager Philippe Laffont warned of potential capital flight during a CNBC Squawk Box appearance, noting many wealthy residents and firms have already relocated to low-tax states like Florida and Texas during the pandemic. The trend may accelerate if these policies take effect, particularly with former President Trump's potential return to office.

The proposals have drawn sharp criticism from Wall Street luminaries. Pershing Square's Bill Ackman expressed dismay while searching for alternative political candidates, while former Treasury Secretary Lawrence Summers called the nomination 'profoundly alarming,' comparing Mamdani's economic policies to Trotskyite ideology.

Market reaction was immediate. New York-centric financial stocks took a beating, with Flagstar Bank down 4%, SL Green Realty sliding 6%, and Vornado Realty Trust plunging nearly 7% on the day of Mamdani's victory celebration.