Congress budget jeopardizes $72B NY tax break

ALBANY -- A budget plan approved Thursday by the U.S. House opens the door for a sweeping tax overhaul that could cut a $72 billion tax savings for New Yorkers.

The narrowly approved budget clears the way for Congress to move ahead with tax reforms that may include ending taxpayer deductions for state and local taxes -- which would be a major hit to high property taxes states like New York, New Jersey and Connecticut.

The concerns over the loss of the tax deduction led seven of New York's nine GOP House members to vote against the budget. Only western New York Rep. Chris Collins and Southern Tier Rep. Tom Reed voted for it.

Rep. John Faso, a Republican who represents the mid-Hudson Valley, said he could not vote "in support of a budget resolution that singled out for elimination the ability of New York families to deduct state and local taxes."

But Reed said the vote was important to overhauling our "broken and outdated tax code."

He added, "We have a once in a generation opportunity to make positive changes that will mean more money for hardworking folks and spark our economy. The American people want and deserve a simpler, fairer tax structure.

The time for tax reform is now, so let’s get to it.”

Democrats in New York have railed for months about Republicans' plan to do away with the state and local tax deductions, saying it unfairly targets New York and other high-tax states that send more money to Washington than they get back.

New Yorkers could lose $72 billion in deductions under the proposals in Washington, Comptroller Thomas DiNapoli said in a report Thursday.

The hit would include an average $34,345 in Westchester County and $20,045 in Rockland County, DiNapoli said.

“Changes to the standard deduction and personal exemptions could result in higher tax bills for some New Yorkers and only modest savings for others,” DiNapoli said in a statement.

Gov. Andrew Cuomo and Sen. Charles Schumer have argued the plan would essentially be double taxation in New York.

"In the weeks ahead, Democrats will do everything we can to preserve it and work to defeat any tax proposal that favors the wealthy few over the middle class many," Schumer said in a statement.

The budget resolution can now be used as a framework to negotiate a final tax deal by the end of the year.

Republicans have outlined plans they say will help families across the country, and they have rejected claims that it mainly benefits the rich.

The plan includes lowering income tax brackets, nearly doubling the standard deduction, increasing the child tax credit and eliminating the estate tax, which mainly affects the wealthy.

So now New York leaders will make a final fight to preserve the state and local tax deductions, even as Republicans view it as an important piece to their plan, estimating it would provide $1.3 trillion over 10 years to fund lower tax rates.

Cuomo has vowed to sue the federal government if the measure becomes law.

On Thursday, Cuomo praised the GOP members of Congress from New York who joined with their Democratic colleagues to vote against the plan, but knocked Reed and Collins for voting for it.

"While there is no transparency and the details remain unclear, what is clear is that New York will be destroyed if the elimination of state and local tax deductibility is included in any plan," Cuomo said in a statement.

 

© Gannett Co., Inc. 2017. All Rights Reserved


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