Gov. Cuomo Promises to Sue Feds Over Tax Reform; Restructure State Tax System

John Jordan | January 4, 2018

New York Governor Andrew Cuomo at State of the State Address

ALBANY—Gov. Andrew Cuomo in his “State of the State” address on Wednesday here vowed that the state will file suit against the recently enacted federal tax reform law and will also study restructuring the state’s income tax revenue system.

Calling the federal tax reform law an “arrow aimed at New York’s economic heart,” Gov. Andrew Cuomo acknowledged that in this legislative session the state faces a $4-billion budget deficit and a projected $2-billion cut in federal government assistance.

Gov. Cuomo said, “The budgetary and economic challenges we face short-term and long-term are compounded by the federal assault on New York. This is literally going to define the future of this state. President Ford may have metaphorically told New York to drop dead in 1975—but this federal government is the most hostile and aggressive toward New York in history.”

Cuomo promised to challenge the federal tax reform law as unconstitutional that violates the principle of state’s rights and the principle of equal protection. He added that the onerous impacts of federal tax reform on New York State constitute “the first federal double taxation in history.”

“We will lead the resistance to this injustice and start our own repeal and replace effort,” Gov. Cuomo said. “Launching a tax fairness for all campaign. We begin today and we will not stop until economic justice is restored for every state and every taxpayer in the state of New York. In the immortal words of John Paul Jones, ‘We have not yet begun to fight,” my friends. “

In terms of the restructuring in how the state secures revenues, the governor explained that his administration is developing a plan to restructure the state tax code to reduce its reliance on its current income tax system and perhaps adopt a statewide payroll tax system as well as reform the carried interest loophole that he characterized as a “Wall Street giveaway.”

He cautioned that the state tax revenue restructuring would be complicated and difficult. “If we do not fix this problem, it is a question of the state of New York’s economic viability in the long term. It’s a question of our competitiveness, long term,” the governor said. “And preserving the strength of New York State and New York State’s economy at a time when we have a federal government that is giving other states a structural competitive advantage against us.”

The governor in his State of the State address focused on some key initiatives in the Hudson Valley, including pressing the Port Authority to approve $34 million for the expansion of Stewart International Airport, which would be renamed New York International Airport at Stewart Field and build a new Metro North train station at Woodbury Common Premium Outlets. The state is about to launch a nearly $150-million project to improve access to the shopping center and Route 17.

He also plans to continue to press forward with the possible construction of tunnel connecting Long Island to either Westchester County or Connecticut to help alleviate traffic congestion on the Long Island Expressway.

Among some of the key takeaways from the State of the State address include continuation of middle-income tax cuts; a pledge to file suit if the U.S. Environmental Protection Agency deems General Electric’s cleanup of the Hudson River of PCBs as complete; expanding cashless tolling throughout the New York State Thruway system by 2020; continuing his $100-billion infrastructure program by investing $11.7 billion in the state’s transportation infrastructure. The funding will allow the State Department of Transportation to pave 2,000 miles of road and repair or rehabilitate 500 bridges, and the New York State Thruway Authority renewal of an additional 170 lane miles, repair or rehabilitation of 25 bridges and the completion of the new $3.9-billion Governor Mario M. Cuomo Bridge in 2018.

The governor during his State of the State referenced major capital projects underway at LaGuardia and Kennedy Airports, Penn Station and the Javits Center. He urged the Port Authority to expedite the approval of the development of an AirTrain connection between LaGuardia and Willets Point in Queens that would create access to the number 7 subway line and the Long Island Rail Road, which both offer service to Grand Central, Penn Station and all of Long Island. The project is expected to be developed through a public-private partnership. The Port Authority will begin the environmental review process as soon as possible, with the goal of starting construction in 2019, the governor stated.


John Jordan
Editor, Real Estate In-Depth