By midnight Monday, more than 9 million New Yorkers will have filed their income tax returns for 2018. And most will then have cause to wonder what the Great New York SALT Panic of 2018 was all about.
Governor Cuomo is now backing away from Medicaid spending cuts he pushed less than four weeks ago, his second about-face on health-care funding so far this year. Even more head-spinning is his stated rationale: the supposed threat to federal aid outlined in President Trump's budget proposal this week.
Federal officials have reportedly confirmed that they are cutting off a major portion of funding for New York’s Essential Plan, opening a roughly $1 billion hole in the state budget and raising new doubts about the future of a rapidly growing health insurance option for the working poor.
Hypocrisy aside, Cuomo’s strident opposition to repeal of the SALT deduction is understandable. Even with a larger standard deduction, the outlined plan might not deliver a big tax cut for middle-class New Yorkers.
As the Empire Center’s E.J. McMahon notes, every one of the state’s 12 “metropolitan statistical areas” saw growth below the national average in 2016.
If New York doesn’t change its ways and get serious about lowering taxes and cutting back regulation, it will keep on losing ground.
Any savings in New York, particularly in the New York City suburbs with high taxes, would be negligible compared with what other states may see, said E.J. McMahon, president of the Empire Center, a fiscally conservative group in Albany.
"This much is clear: A couple falling well within the middle class by downstate standards — people, in most cases, living paycheck-to-paycheck in modest suburban homes — will realize much smaller savings than their counterparts in lower-cost, lower-taxed states across the country," he wrote.
Seemingly stalled on health care and Medicaid, congressional Republicans and the Trump administration will soon turn their attention to taxes—another area in which federal reform offers mixed prospects for New York State.
President Donald Trump unveiled a tax plan Wednesday that would eliminate a deduction that heavily benefits New Yorkers — especially on Long Island — and “undermine the state’s tax base,” officials and analysts said.