(Jewish Voice News) New York City quietly hemorrhaged nearly 5,000 businesses early last year, a troubling milestone that underscores growing anxiety among employers as City Hall debates even higher taxes, as Center Square reported.

A newly released analysis paints a stark picture of an economy losing its footing just as newly elected Mayor Zohran Mamdani presses ahead with an ambitious — and costly — progressive agenda. According to the report from the city’s Economic Development Corporation, business closures and relocations dramatically outpaced new openings, marking one of the weakest periods for entrepreneurship since the darkest days of the COVID-19 pandemic, Center Square reported.

During the second quarter of the fiscal year, more than 3,500 new businesses opened across the five boroughs. But that modest growth was overwhelmed by the loss of roughly 8,400 employers, leaving the city with a net decline of nearly 5,000 businesses. The authors of the report described the quarter as the worst for business formation since pandemic-era shutdowns, as Center Square reported.

The findings arrive at a politically sensitive moment. Mamdani is seeking support for sweeping tax increases aimed at funding universal childcare, tuition-free college, and free bus service throughout the city. Critics argue the timing could not be worse, with businesses already signaling that New York is becoming too expensive — and too risky — to stay.

The Economic Development Corporation’s report adds to a growing stack of warnings that New York City’s business climate is deteriorating, with employers increasingly eyeing lower-tax, lower-regulation states, Center Square reported. As Albany continues to layer on mandates and costs, nearby and Southern states are rolling out the welcome mat.

Under Mamdani’s proposal, the state’s top corporate tax rate would jump to 11.5%, up from the current 7.25% — a roughly 50% increase. If enacted, New York would match the highest corporate tax rate in the nation, currently held by neighboring New Jersey. The mayor has also endorsed a so-called wealth tax and a $30-per-hour minimum wage for city workers, moves that have sent shudders through the business community, as Center Square reported.

Those concerns are not theoretical. Low-tax states such as Florida and New Hampshire have actively courted New York City companies, promoting friendlier regulatory environments and dramatically lower tax burdens.

A separate September report from the Public Policy Institute of New York State underscores the depth of employer frustration. Surveying 500 businesses, the institute found that 72% believe New York’s economic conditions are poor, while just 21% think the state is headed in the right direction, Center Square reported. The report concluded that New York has lost its competitive edge, ranking dead last — 50th in the nation — for both outmigration and taxation during the 2020–2022 period.

Business leaders surveyed cited crushing taxes and an overwhelming regulatory environment as key reasons for leaving or scaling back operations. New York has more than 300,000 regulations on the books, and employers said they want fewer rules and lower taxes at both the state and local level, as Center Square reported.

Even before Mamdani’s proposed increases, New York was already near the top nationally for business taxes. In 2023, the state’s effective business tax rate stood at 5.9%, the ninth-highest in the country. The state also ranks poorly for individual income taxes, sales taxes, property taxes, and unemployment insurance costs. Compounding the problem, nearly 39% of households are considered housing-burdened, spending more than 30% of their income just to keep a roof over their heads, Center Square reported.

Those pressures have fueled a steady exodus. From 2020 to 2022, New York lost more domestic taxpayers than any other state, with many relocating to New Jersey, Florida, and other lower-tax destinations, according to the report.

As City Hall debates higher taxes to fund expansive new programs, the latest numbers suggest New York City may already be paying a steep price — one closed storefront at a time.