State leaders continue to rail against federal tax plan

Oct 10, 2017

The tax overhaul plan proposed by President Donald Trump and now being considered in Congress would end the deduction on federal income tax forms for state and local property taxes. Gov. Andrew Cuomo said it would disproportionately harm New Yorkers, where property taxes are among the highest in the nation, and he’s taken opportunities at recent public events to make the case against the plan.

Cuomo called the plan unfair “double taxation.” If New Yorkers are not allowed to deduct their state and local taxes, they essentially would be taxed twice – once by state and local governments and again by the federal government on earnings that they already paid in the form of taxes to the state and local governments. He estimated it would cost New York $17.5 billion a year. 

“This is like upside-down world,” Cuomo said on Oct. 5 on Long Island. “It’s called a tax cut plan. It’s really a tax increase for most New Yorkers.”

Cuomo predicted that getting rid of the deduction also would ruin the state’s business climate, which is already struggling in some regions.

“It is an attempt by the federal government, purposeful or coincidental, to make New York and several states actually less competitive for businesses,” Cuomo said on Oct. 3 in New York City.

The governor is not alone in his opposition. Fellow Democrats, including State Comptroller Tom DiNapoli, also are worried. DiNapoli said recently that he’s “very concerned” about the effects of eliminating the deduction.

“For a high-tax state like New York, state and local tax deductibility has been a very important component of the federal tax code,” said DiNapoli, who added that even with a proposed higher standard deduction, it’s still not a “win” for New York taxpayers.

DiNapoli and Cuomo have conducted separate studies showing that New Yorkers give over $40 billion more in taxes to the federal government than the state gets back, an imbalance that has doubled in recent years.

U.S. Sen. Chuck Schumer, who is New York’s senior senator and the Senate minority leader, said it’s not just New Yorkers who will be adversely affected. Schumer said one-third of total taxpayers in the United States, or about 44 million, currently take the state and local tax deductions. He recently released data showing that people in states like Georgia, a Republican stronghold, and Colorado also would be affected.

“The effect of removing state and local deductibility is deep and wide,” Schumer said. “And I think it’s going to alone kill the Republican plan as it is.”

Schumer predicted that the elimination of the deduction eventually will be dropped from the plan. He said he was involved in the last successful tax overhaul in the 1980s. He said the deduction was ultimately kept in the plan because it would have adversely affected too many lawmakers’ constituents.

Several Republican congressmen and women in New York already have said they are against getting rid of the state and local property tax deductions, including John Faso of the Hudson Valley and Peter King of Staten Island. Seven GOP members, including Claudia Tenney and John Katko, both of central New York, and Elise Stefanik of the North Country, wrote a letter to Treasury Secretary Steve Mnuchin, asking him to reconsider.

Cuomo said if the final plan includes the elimination of the deduction, he’ll go to court to stop it.