Even before Donald Trump became President, congressional Republican tax reformers had been aiming to get rid of or at least tightly curtail the state and local tax deduction, known as SALT, that mainly benefits residents of New York and other high-tax blue states.

Gov. Cuomo had been loudly complaining about the assault on SALT months before the federal tax reform bill finally passed in December. After it passed, he effectively declared an emergency closeout sale, urging homeowners to pre-pay property taxes before the end of the year in order to qualify for one last full federal deduction.

And yet in the budget he introduced Jan. 16, Cuomo proposed nothing to prevent the very same federal changes from automatically eliminating or capping itemized deductions on New York’s state income tax. Leaving the law unchanged would automatically increase taxes by more than $700 million on well over a million New Yorkers who itemize on their state returns.

Cuomo’s Executive Budget plan actually baked a $700 million tax hike into projected state personal income receipts starting the fiscal year after next. Yet this non-trivial factor was not even mentioned in the voluminous budget narrative.

Pressed to explain the oversight, a Cuomo administration spokesman cited the need to “analyze the bill thoroughly and solicit feedback from outside experts.”

But it didn’t take an expert to see this coming. Any New Yorker who’s ever completed the state’s IT-201 resident tax form could tell you that state itemized deductions are based directly on federal itemized deductions. Indeed, within days of the federal bill’s passage in December, Sen. Simcha Felder, D-Brooklyn, had introduced a bill to decouple key provisions of state personal income tax from federal law.

Yet another potential tax hike came to light a few days after the governor’s budget rollout, when a tax department report estimated that the federal changes could cause state income taxes to rise by $841 million for 5.2 million single filers claiming New York’s standard deduction.

Last week, the Senate passed Felder’s bill tweaking current state law to head off both changes, with no net cost to the state. Not to be outdone, Cuomo issued a statement promising to “propose legislation to address the impacts arising from our coupled (to federal law) tax system.”

Amid all this posturing, few seem to have noticed that Cuomo already has proposed legislation to address at least one impact of the federal tax bill.

Under current law, New York’s Empire State Child Credit — an added break for families with kids — is pegged at a maximum of 33% of the federal child credit, which Congress just doubled from $1,000 to $2,000. With no further change in the state tax code, the federal reform would boost the New York’s credit to $666 and make it available to additional thousands of families higher up the income scale, generating a tax cut estimated at $500 million.

To prevent that big tax cut from happening, Cuomo’s budget includes language decoupling the Empire State Child Credit from the federal credit, ensuring the break on New York income taxes stays at its current level rather than doubling and becoming available to more families.

It’s no surprise that the governor would want to prevent a $500 million revenue loss at a time when he was facing a $4.4 billion budget gap. But he has yet to explain why he chose to act quickly (if not “haphazardly”) to stop New Yorkers from getting a tax cut, even while dawdling over a simple tax code tweak needed to prevent a tax increase.

Meanwhile, Cuomo is exploring the notion of replacing at least some of the state’s personal income tax, which is no longer fully deductible on individual federal taxes, into a payroll tax, which employers could deduct from federal business taxes. Although the idea would be incredibly complicated and difficult to implement, the governor is promising to have fleshed-out legislation in his 30-day amendments, due in mid-February.

Cuomo has compared the federal tax bill and its SALT cap to a “missile” aimed at New York. But the best missile defense would be a strategy aimed at actually reducing New York taxes — not creating new ones.

McMahon is research director of the Empire Center for Public Policy and an adjunct fellow at the Manhattan Institute.

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