Schumer, Cuomo Urge NY Delegation to Oppose State, Local Tax Deduction Repeal
John Jordan | October 24, 2017
BETHLEHEM, NY—U.S. Senator Charles Schumer and New York Gov. Andrew Cuomo were joined by New York Realtors in urging the state Congressional delegation to oppose the elimination of state and local property tax deductions as part of the Republican-led tax reform campaign in Washington, D.C.
At a press conference held on Oct. 23 at a residence in the Albany suburb of Bethlehem, Gov. Cuomo and U.S. Senate Minority Leader Schumer announced the launch of a statewide push across Congressional districts to urge New York’s delegation to stand up for this state’s middle class and oppose the repeal or reduction of state and local tax deductions. If the Republican tax plan were to pass, many New Yorkers could be saddled with a tax increase of thousands of dollars. In Albany County, where average state and local taxes amount to $7,250, this proposal would raise taxes on one in three taxpayers by an average of $3,438. Eliminating or reducing the state and local tax deduction would have ripple effects of decreasing home values in the region and placing pressure on state and local governments to reduce their taxes and cut spending on education and their local fire and police departments.
“While Washington is considering a ‘tax cut’ plan, what it really amounts to is a ‘tax increase’ plan for New York,” Gov. Cuomo said. “The elimination of state and local tax deductibility is a death blow to New Yorkers and our economy. The current plan only makes it possible to cut taxes for other states by using New York and California as the piggybank. Every member of our Congressional delegation must do everything they can to stop this devastating proposal.”
“Whether the savings from these deductions becomes money for home repairs, groceries, school supplies or even the yearly vacation, it belongs in the pockets of New Yorkers, period,” said U.S. Senator Charles Schumer. “These deductions should not be eliminated so people making millions of dollars a year can catch a tax break of their own. It simply makes no sense for Congress to eliminate the SALT deduction, which has helped steady the cost of many middle-class families including those living in the Capital Region-it would be double taxation on the middle class. Without state and local deductions potential homeowners may look elsewhere which could devastate the New York State including the Capital and North Country economy.”
The sentiments of U.S. Sen. Schumer and Gov. Cuomo were shared by executives with the New York State Association of Realtors and the Hudson Gateway Association of Realtors.
NYSAR CEO Duncan MacKenzie said, “Home ownership is a keystone to strong societies, a keystone to building personal wealth. Anything to take away from that, that’s irrational, which this really seems to be, doesn’t make any sense. We support efforts to reform the federal tax code to create a more simplified and fair system, but eliminating the deduction of state and local taxes, including property taxes, will only serve to hurt New Yorkers disproportionately compared to other states.”
“Any proposal that would either eliminate the deductibility of state and local income taxes, including property taxes, or gut the mortgage interest deduction, would have an immediate and potentially devastating effect on property values in New York State,” said HGAR CEO Richard Haggerty. “As Realtors we must collectively convey to our legislators the negative impact such a proposal would have on property owners.”
In September, Gov. Cuomo released an analysis of the impact of the proposed elimination of state and local tax deductibility, warning that the Washington tax plan imposes a double-tax on New Yorkers. Nationwide, approximately 44 million Americans take advantage of this deduction and a repeal could result in more than $1 trillion in losses for taxpayers and their local communities. Reductions to or the removal of these sorts of tax deductions would hit the Capital Region particularly hard. Gov. Cuomo and Senator Schumer have pledged to fight any efforts that would rollback critical savings deductions used by New York’s homeowners and taxpayers.
New York is the highest donor state in the country, sending $48 billion more in tax dollars to the federal government than it receives back in federal spending. Under the Republican tax plan, the federal government would take even more revenue from the number one giving state, subsidizing every other state in the nation as a result.
Under the current federal tax system, taxpayers who itemize deductions on their federal income tax returns can deduct state and local real estate and personal property taxes as well as either income taxes or general sales taxes. The Republican Tax Reform Framework would eliminate SALT deduction entirely. Currently, 44 million taxpayers, or one third of all taxpayers, across the country take the state and local tax deduction.
Under the Republican plan, the loss of the state and local deduction would decrease the value of the average itemized deductions by more than half, far below the doubled standard deduction. Families would be left with choosing between a decreased itemized deduction or the doubled standard deduction and no personal exemptions. For many, especially in high SALT states like New York, this would mean a large tax increase. This tax increase would effectively be used to pay for tax breaks for the wealthy, Gov. Cuomo and Sen. Schumer charged.
Across New York State, the deduction loss would total approximately $68 billion per year that state residents would no longer be allowed to deduct from their federal tax returns.
According to figures prepared by the Government Finance Officers Association using 2015 IRS data, a significant amount of individuals in the New York City/Hudson Valley regional market area of HGAR take advantage of state and local tax deductions.
% of Individuals
Using SALT Deduction
Source: Government Finance Officers Association