Mamdani beware — Cleveland’s forgotten folly holds a warning for NYC

Mayor Zohran Mamdani is just the latest in a long line of tax-the-rich politicians eager to go after America’s business elite — but he should consider how one such war on wealth enriched and empowered the city over which he now presides.

If not for Cleveland, Ohio, New York’s rise as the nation’s undisputed center of capital, commerce and culture may never have happened.

By 1914, John D. Rockefeller was already the richest man in America.

Standard Oil, the behemoth he originally incorporated in Cleveland, had moved its headquarters to 26 Broadway in New York in 1885 — a strategic decision driven by access to global capital markets, not any hostility toward his home state.

In 1899, though, responding to New Jersey’s deliberate decision to actively compete for the business by liberalizing its corporate laws, he reincorporated Standard Oil as a Jersey holding company while retaining his New York City home base.

Two states vied for Rockefeller’s enterprise — and both won something.

But Rockefeller’s heart remained in Ohio: His wife Cettie loved Forest Hill, their estate in East Cleveland, and he returned to her there each summer.

When Cettie became ill in 1913, Rockefeller stayed through the winter — past Feb. 8, the date that established legal residency for tax purposes in Cleveland’s Cuyahoga County. He had already paid his personal taxes in New York.

Enter John Flackner and William Agnew, Cuyahoga County’s tax commissioners.

They sent Rockefeller a staggering $1.5 million tax bill, $200 million today — and threatened a 50% penalty for non-payment.

Then they gleefully publicized it, bragging that when Rockefeller paid up, ordinary residents would enjoy a 20% cut in their own tax burden.

A vivid populist moment, a visible villain, a promised dividend to voters — and no thought for what Rockefeller, with his enormous wealth, could have built in Cleveland had he stayed there part-time.

Rockefeller paid nothing.

He left Forest Hill and never came back.

History may vaguely remember the politically expedient yet never-paid tax bill, but it fails to recognize the long-term consequences: a century of compounding losses to the people of Cleveland.

Flackner and Agnew are not remembered at all.

No monuments, no named institutions, no political careers of consequence.

Their 20% tax cut never materialized.

Cleveland became the loser — just not on their watch.

What followed was one of the greatest concentrations of private philanthropy, scientific investment, cultural construction and urban development ever associated with a single family and its adopted home city: New York.

Rockefeller University, the Rockefeller Foundation, Rockefeller Center, the spine of Midtown Manhattan.

The United Nations headquarters, the Museum of Modern Art, the Cloisters.

Memorial Sloan Kettering, Lincoln Center, the Metropolitan Opera, Chase Manhattan Bank.

All of it built in the city of New York, which treated Rockefeller more fairly.

Cleveland got nothing. New York received the next century.

Today, New York City is itself engaged in a debate about taxation, regulation and housing — one that sounds remarkably familiar.

Once again, identifying visible targets brings political rewards.

Once again, specific promises of relief to ordinary citizens are attached to extracting more from a small, wealthy, highly mobile group of individuals.

And once again, the politicians aren’t pricing in the cost of departure.

The modern Flackner tax is rarely a single itemized bill.

It’s a cumulative signal: a mansion tax, a pied-à-terre surcharge, a rent freeze.

It communicates a change in the city’s relationship with the people who fund its institutions and build the future.

Investors don’t react to one data point; they react to a trend.

Austin, Nashville and Miami are competing for talent with the deliberate ferocity of New Jersey in 1899 — changing their terms, lowering friction, offering welcome as a structural policy rather than an afterthought.

The parallel to Standard Oil’s 1899 reincorporation is striking.

New Jersey didn’t simply receive a company that was leaving Ohio for unrelated reasons; it actively competed for the business, changed its laws, and won.

States that feel like destinations attract destinies.

But New York’s next century is still being decided.

That’s the thing about the mismatch of the short-term trade involved in attracting attention for votes versus the long-term asset of economic consequences.

Unlike in markets, no margin call arrives before an election.

The future looks stable right up until the asset has moved — and the underlying funding has disappeared along with it.

The positioning data always tells the story before the narrative catches up.

Capital is repositioning.

The only question is whether New York notices before it becomes the new, and very expensive, Cleveland.

Bob Sloan is the author of “Don’t Blame the Shorts” and co-host of the “Risk and Return” podcast.