New York Mayor Zohran Mamdani added a wealth tax proposal this week to accompany his recently announced pied-à-terre tax, continuing what Christopher Whalen, chairman of Whalen Global Advisors and editor of the Institutional Risk Analyst, told Dan Proft on Chicago’s Morning Answer represents a trajectory toward fiscal collapse that will become undeniable as the business tax base that funds roughly a third to a half of New York City’s operations continues to erode.
Proft opened by noting the reaction of Seattle Mayor Katie Wilson when asked whether she was concerned about wealthy residents and businesses leaving Washington State in response to its new millionaire income tax, in which she said the claims that millionaires would leave were overblown and added that those who do leave can simply go. Whalen said that attitude is precisely what is accelerating the deterioration of the blue state fiscal model, and that city governments operating on the assumption that they can replace departing business tax revenue with individual taxes are making a mathematical error that will eventually force significant service cuts regardless of how long they can pretend otherwise.
The latest Mamdani initiative that drew Whalen’s sharpest reaction is a plan to confiscate renovated rental buildings. He said developers bought older buildings, many over a century old, gutted and renovated them at significant capital expense, and brought them back to market as market-rate rental apartments. Mamdani and Governor Kathy Hochul are now moving to seize those buildings and convert them back to rent-stabilized properties, effectively stealing the invested capital that made the renovations possible. Whalen said the consequences will be severe because the economics of tearing down and rebuilding at current construction costs are prohibitive, meaning the practical result of the policy is that aging building stock goes unimproved, deteriorates, and eventually becomes unusable without the private capital investment that the policy has just made irrational to provide.
On commercial real estate, Whalen described the situation at a 6th Avenue property owned by Mike Nierenberg’s Rithm Capital, which acquired Paramount Group’s portfolio of premier commercial properties across New York, San Francisco, and other major markets. The building is offering such substantial rent concessions to attract tenants that the company is actually borrowing money to pay for those concessions, a situation Whalen called a clear sign that the asset is not generating the returns needed to support the tax base New York depends on. When commercial buildings lose value and their owners go to the city for tax abatement, as they increasingly will, the burden gets redistributed to residential property owners, which is exactly what Chicago experienced at the end of last year when homeowners in lower and middle-income neighborhoods received triennial property tax assessments showing one hundred percent increases because commercial reassessments had shifted the load onto them.
He said blue states compound the problem by structurally discouraging new construction, which means existing assets keep appreciating while governments raise taxes to capture that appreciation, but when values eventually decline, the same governments have no mechanism and no intention of lowering property taxes commensurately. He said he lived this pattern in Westchester County, where annual property tax increases were routine during his time there.
On Spirit Airlines, Whalen offered a somewhat contrarian take, saying he thought the Biden administration may have inadvertently done JetBlue a favor by blocking the merger, since JetBlue is a better-managed company and absorbing Spirit’s operations and culture might have created more problems than it solved. He said there is always a certain percentage of airlines at the bottom of the market that need to be wound up and liquidated periodically as part of normal creative destruction, and that the broader airline industry is actually healthier than it has been historically because the elimination of poorly managed carriers and the consolidation that has followed has forced remaining airlines to run disciplined operations. He said personnel and fuel costs are essentially uncontrollable for any airline, which means operational efficiency is the only real lever available, and the industry has gotten much better at it.
On the generational wealth question raised by George Mason economist Tyler Cowen’s recent writing, which argued that younger generations are accumulating wealth at roughly the same pace as older ones and that real inflation-adjusted wages are at historic highs, Whalen said the picture is highly individual. Some young people are killing it. Others are not. He said the left’s insistence that everyone should have the same outcome is the source of much of the narrative distortion around generational wealth comparisons. His practical advice for long-term financial health centered on maintaining what he called a barbell: one side holding real assets that preserve value including real estate, gold, silver, and tangible commodities, and the other holding the fiat assets like bonds and stocks that currently produce returns in the existing market structure but will not always do so. He said the dollar is not going to collapse because it remains the world’s indispensable financing currency, not just its reserve currency, but that Congress will continue to fund everything through inflation rather than raising taxes or cutting spending, and that personal financial resilience requires being positioned for that reality.
He said precious metals look particularly attractive over the next few years, driven partly by the Gulf conflict’s disruption of commodity supply chains and partly by a shortage of sulfuric acid, a critical industrial input that is a byproduct of copper and other metal mining and therefore linked to gold and silver production cycles. On cryptocurrency, he was brief and blunt, calling it essentially finished as a serious investment category and noting that the Trump family’s continued enthusiasm for it is itself a reliable indicator that the smart money has already moved on.