Gov. Andrew Cuomo has been putting significant effort into countering the negative impact that the new federal tax code will have on some New Yorkers.
He’s proposing a complicated overhaul of the state’s tax law aimed at allowing residents to get around the new $10,000 federal deduction limit for state and local tax payments (often referred to as the SALT deduction). Because of this limit, some New Yorkers may see their federal tax bills go up because they cannot deduct as much from their taxable income.
In addition to looking at the state's income tax system, Cuomo announced last week that New York, New Jersey and Connecticut plan to challenge the legality of the federal tax law.
Both of these steps are worth exploring, but they also face some serious obstacles. One thing the governor and the state Legislature must avoid is creating bigger problems for most New Yorkers trying to remedy a smaller problem for some.
That said, there is at least one clear-cut measure that state leaders can — and should — take to save many New York residents some money: remove the state income tax law’s connection to the federal law.
That new deduction limit for federal taxes is essentially carried over to the state income tax system because the two have long been linked together. The Empire Center for Public Policy said the state is in line to collect an additional $1.5 billion from its taxpayers if a change is not made.
If the governor is serious about protecting New Yorkers' wallets from the negative consequences of what the U.S. Congress and President Trump did at the end of December, then Cuomo must agree to sever the state income tax law's connection.
"After weeks of attacking the cap on SALT as 'devastating' and 'an economic missile' aimed at New York, the governor’s budget aims a very similar missile at his own taxpayers," Empire Center's E.J. McMahon wrote earlier this month.
The good news is that the governor's office has indicated an openness to agreeing to this change. The state Senate has gone ahead and approved to measure to get it done, and the Assembly also appears to open to the move.
That should mean there's nothing to worry about, right? Never in Albany. The potential to allow a simple step in the right direction to get caught up in deal-making on related or unrelated issues should not be underestimated.
New Yorkers need to make it clear to their elected leaders that this relatively simple adjustment in state tax law should be agreed to by all parties in the state budget process without any other strings attached.
The Citizen Editorial Board includes publisher Rob Forcey, managing editor Mike Dowd and executive editor Jeremy Boyer.