Following the House's passage of a budget resolution that will allow tax reform negotiations to advance, U.S. Rep. John Katko and other members of New York's Republican delegation met with GOP leaders to discuss a key provision.
Katko, R-Camillus, and six other New York Republicans opposed the budget resolution Thursday. Their reason: The existing tax reform plan would eliminate the state and local tax deduction.
Gov. Andrew Cuomo, a Democrat, has criticized the GOP tax plan and the provision that would eliminate the deduction. He said it would amount to a double tax on New York residents and hurt the state's economy.
New York Republicans in Congress have shared their concerns about the fate of state and local tax deductibility. U.S. Rep. Dan Donovan, a Staten Island Republican, led a letter signed by most of his New York colleagues, including Katko, urging Treasury Secretary Steven Mnuchin not to advance a plan that would eliminate the state and local tax deduction.
"We are making our case to leadership and if the tax plan was passed a few weeks ago as planned, there would be no more (state and local tax) deduction and middle class people would be hurt," Katko said Friday during his visit to North Area Meals on Wheels in North Syracuse.
What's happened in the last few weeks, Katko believes, is that they have been able to "turn the ship around." The group of New York GOP members have met with House leadership to discuss the fate of the deduction. Katko said there have been at least five or six meetings about state and local tax deductibility.
The product of those meetings is a plan that hasn't been released. Katko didn't provide any details about the compromise, but is encouraged by the development.
"Based on what they told us (Thursday), I think we're going to be OK," he said. "But I want to make sure before I say publicly."
While Katko opposes the elimination of the state and local tax deduction, there are portions of the tax reform plan he supports. The proposal would lower the corporate tax rate from 35 to 25 percent and cut taxes for small businesses.
He believes lowering business taxes could help revitalize upstate New York's manufacturing sector and spur economic growth.
"I'm absolutely positive that if this tax reform goes in it's going to be a pop to the job market here and it's going to be a pop to the economy nationwide because they're going to lower the tax rates for corporations and a lot of them are going to come back home," he said.
Katko recalled a conversation he had with a central New York business owner who said he will hire more people, raise employee salaries and invest more in his plant if the tax reform plan is adopted.
House and Senate Republicans are expected to introduce the tax reform legislation next week. The goal is to finalize the measure by the end of the year.
As the bill works its way through the legislative process, Katko said his main concern will how it will impact middle class residents in his district.
"On the business side, the corporate side, it's great," he said. "On the personal side, we gotta make sure the middle class doesn't get screwed."