ALBANY - Not so fast.
That was the message Tuesday from Senate Republicans on Gov. Andrew Cuomo's proposal Monday to shift New York's income-tax system to a payroll tax to usurp a federal cap on state and local tax deductions.
"My visceral reaction is: I think all of our colleagues are opposed that," Senate Republican Leader John Flanagan, R-Suffolk County, said during a news conference at the Capitol on the GOP's own tax-cutting plan.
He cast doubt on an agreement with Cuomo on an overhaul of the state's already complex tax code in time for the start of the new fiscal year April 1.
"Do I think it could get done by the end of March? No," Flanagan said.
The criticism from Republicans who control the closely divided Senate could spell trouble for Cuomo's hope to create a new payroll tax system that would shield New Yorkers' income from the $10,000 federal cap on state and local deductions.
Cuomo has railed against the cap since it was adopted by the Republican-led Congress and President Donald Trump in December.
The Democratic governor said it would equate to a $14 billion tax increase because the average so-called SALT deduction in New York — which includes property taxes — is about $22,000.
"SALT encourages the loss of state and local deductibility and encourages high income New Yorkers to move to other states," Cuomo's budget director Robert Mujica said Monday when he introduced the plan.
"Even if you only lose a small number of high income taxpayers, that would cripple the state's revenues."
Cuomo proposed a new payroll tax that would be offset by tax credits for employees and employers, making it revenue neutral for them and the state, but allowing businesses to claim the taxes on their own income taxes. It would also be a voluntary program.
Another step would be to create two charitable contribution programs so New Yorkers could donate to fund eduction and health care, then be able to deduct the contributions on their taxes.
Flanagan said the whole idea might be too much for businesses and employees to understand and embrace.
Senate Republicans on Tuesday proposed a tax-cutting plan for small businesses and manufacturers.
"I don’t know how you go out and say we are going to do this thing: An employee who is making $100,000. Now we’re going to shift it over to the employer, and you’re going to tell the employee, ‘You’re fine. But now you’re making $94,000. You’re still getting your same net pay,'" Flanagan said.
"The mentality of human nature is will be, ‘I just cut my pay cut $6,000.’”
Flanagan also questioned whether the program would actually be voluntary.
"We need to see the details. Because sometimes voluntary is not voluntary," he said. "I’ve seen a lot of things written, ‘No, no. It’s OK. It’s at the employer’s option,’ and then it turns out there is no option at all."
Cuomo plans to include the measure in his 2018-19 budget, but details will not be released until Thursday.
"I can’t comment on something I haven’t seen," Flanagan said. "I will say this: Payroll tax? That makes my head spin."
Business groups were also either opposed or concerned about the implications of the income-tax switch, saying companies are likely to get a tax cut from the federal tax plan.
Cuomo is a potential presidential candidate in 2020 and is seeking a third term in the fall.
"While the vast majority of small businesses and taxpayers are getting a boost from the recently enacted federal tax reform, New York remains uncompetitive for small employers," said Mike Durant, state director of the National Federation of Small Business.
