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New York City Mayor Zohran Mamdani’s latest effort to close a widening budget gap is intensifying concerns among business leaders, as his proposal to scale back a key tax credit threatens a broad range of companies that rely on it to remain competitive.
FOX Business’ Gerri Willis joined “Varney & Co.” host David Asman to report on the proposal, which would reduce the pass-through entity tax (PTET) credit, used heavily by small- and mid-sized businesses, to help generate revenue for the city.
The PTET credit was introduced as a workaround to federal limits on state and local tax deductions (SALT) and has since become a financial lifeline for many businesses structured as S corporations and LLCs. Critics argue cutting it risks undermining those firms at a time when economic conditions remain uncertain.
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“Many states implemented a pass-through entity tax because many businesses file via the S corp or LLCs. And this became a workaround to keep them competitive,” Partnership for NYC President and CEO Steven Fulop said. “In a time where the economy is fragile in New York City, we’re saying just be cautious on these sort of things.”
The proposal is part of a broader push that includes higher income, property and corporate taxes, raising concerns about long-term economic stability and business retention.
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Gristedes CEO John Catsimatidis warned that the impact could extend beyond top earners, noting middle-income professionals and small-business owners could feel the strain.
“The people that make $300, $400, $500,000 a year, they are the ones… They have an option. They get up and leave,” Catsimatidis said during an appearance on “Varney & Co.” “You can’t destroy the real estate industry… In London, it’s been destroyed… If you do the same thing in New York that is a disaster.”
As policymakers weigh competing approaches, the outcome could shape how attractive New York remains for businesses navigating rising costs and fiscal uncertainty.
