New Yorkers would lose some state and local tax deductions under the latest Republican tax plan.
House Republican lawmakers on Thursday released their tax plan, which keeps the property tax deduction up to $10,000. The proposal would get rid of the deduction for state and local income taxes. Rolling back or eliminating such deductions would issue a “death blow” to New York, Gov. Andrew Cuomo wrote to President Donald Trump earlier this week.
“It’s clear this is a hostile political act aimed at the economic heart of New York with no basis on the merits,” Cuomo wrote. “First, it is an illegal and unconstitutional double taxation that forces our middle class families to subsidize a tax cut for the rest of the nation, and it is contrary to every principle the Republican Party has always espoused. Second, it reverses all the bipartisan progress New York state has made in lowering taxes over these past few years.”
E.J. McMahon, research director of the Empire Center for Public Policy, a fiscally conservative research group in Albany, said earlier this week eliminating the state and local income tax deduction would hurt New York.
“From the state budget standpoint, still, if they repeal the income tax deduction, that is a huge threat to New York more than any other state to our tax base, and that’s because the state has become dangerously over-reliant on taxes paid by the highest-earning 1 percent,” McMahon said.
“That will not immediately clobber the state’s financial plan but it could accelerate the erosion of the top-end of the state’s tax base, and it will force the state to reassess its revenue structure and its funding levels.”
That could have “ripple effects right down to the local level,” he said.
A report by state Comptroller Thomas DiNapoli found New Yorkers could lose more than $72 billion in tax deductions if all state and local tax deductions were eliminated.
New Yorkers received 84 cents back for every dollar they sent to the federal government last year, DiNapoli’s office found. That was down from 91 cents for every dollar sent in 2013.
“This funding disparity will only be exacerbated by the proposed changes to SALT,” Heather Briccetti, president and CEO of The Business Council of New York State Inc., said in a statement.
Briccetti said while the House plan is an “important first step” toward reform, the deductions should not be eliminated.
“While we appreciate that the current bill recognizes the importance of retaining the federal deduction for real property taxes, we urge our House and Senate members to continue to push for retention of the full state and local tax deduction,” Briccetti said.