It works really well in quite a few other cities, actually.

Car infrastructure takes up a huge amount of space and is incredibly hostile to any kind of mixed use. Having near-zero cars means there is suddenly space available for an order of magnitude more pedestrians. It's why reducing car traffic almost always results in a significant increase in revenue for local shops and restaurants - which means more taxes are being paid.

Converting all of NYC into a huge pedestrian-only zone obviously isn't going to work, but having a few pedestrianized superblocks could greatly improve the quality-of-life.

this is worth thinking about. The idea that the small toll charge actually pays for the streets it covers is flat out untrue. The citizens of the US vastly subsidize the streets and roads of the country. Just purchasing the land used for roads in Manhattan would cost a massive fortune and the people paying taxes in the US have and are paying for it. Not to mention the cost of maintaining the roads (physical infra) and policing the roads. So if NY put the land to more productive use and didn't have to maintain the roads I think they could save a lot of money.