New York City, New York — New York City lost nearly 5,000 businesses early last year as more employers shut down or relocated to lower-tax states, according to a new report released by the city’s Economic Development Corporation.
The analysis found that while roughly 3,500 new businesses opened during the second quarter of the fiscal year, about 8,400 employers exited the city during the same period. The net loss marked the weakest quarter for business formation since the height of the COVID-19 pandemic, signaling continued strain on the city’s economic base.
The report’s release comes as newly elected Mayor Zohran Mamdani advances proposals to raise business and wealth taxes to fund initiatives such as universal childcare, tuition-free college, and free bus service. Mamdani has proposed increasing New York’s top corporate tax rate to 11.5%, up from 7.25%, alongside a new wealth tax and a $30 per hour minimum wage for city workers.
Business groups warn that higher taxes could accelerate an exodus already underway. A separate survey by the Public Policy Institute of New York State found that 72% of employers view the state’s economic conditions negatively, citing high taxes and extensive regulations. The group reported that New York ranked last nationally for both outmigration and taxation from 2020 to 2022.
Supporters of Mamdani’s agenda argue new revenues are needed to address affordability, while critics counter that rising costs risk further weakening the city’s competitiveness as states like Florida and New Hampshire court departing firms.
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