Gov. Cuomo Says Capital Gains Cut Will Cost NY $500 Million
John Jordan | August 13, 2018
NEW YORK—New York Gov. Andrew Cuomo announced on Aug. 9th his intent to propose legislation to “decouple” state tax policy from the federal tax code if the Trump Administration follows through on a plan to enact a $100-billion capital gains tax cut.
Gov. Cuomo in a press conference in New York City also called on Congress to block the capital gains tax cut proposal that he said would only benefit the nation’s wealthiest 1% in violation of the US Constitution. President Trump recently asked the U.S. Department of Treasury to study unilaterally slashing capital gains taxes by adjusting the levy for inflation, which would lead to approximately $100 billion in tax cuts over the next 10 years.
The governor said the State Department of Tax and Finance estimates the capital gains tax cut, if implemented, would reduce state tax revenues by up to $500 million annually.
“After running on a scam platform of fighting for the middle-class, President Trump is again firing a missile at the heart of our working and middle-class New Yorkers,” Gov. Cuomo said. “I call on Congress to block any illegal attempt by President Trump to enrich his friends at the expense of the American people. If the President moves forward with his $100 billion tax cut for the rich, I will propose legislation to decouple our state’s tax code and ensure New York remains true to its values as a progressive beacon for the world.”
Because of the way the state tax code’s definition of capital gains is coupled with the federal tax code, New York would automatically also adjust capital gains for inflation—delivering an additional tax cut to those eligible state residents, the governor explained. Decoupling the state definition of capital gains from the federal tax code will ensure that those New York eligible taxpayers will not receive the same benefit in terms of state taxes.
Gov. Cuomo’s reaction to the Trump tax cut plan follows New York’s recent legal action against the federal tax reform law that imposes a $10,000 SALT (state and local tax) cap. In July, New York State charged in its lawsuit against the federal government that the SALT cap was enacted to target New York and similarly situated states, that it interferes with states’ rights to make their own fiscal decisions and that the cap will disproportionately harm taxpayers in these states.
The states of New Jersey, Connecticut and Maryland joined New York in the suit against the SALT cap.
The long-promised lawsuit filed by New York State Attorney General Barbara D. Underwood specifically points to the federal tax reform law capping the SALT deduction at $10,000 as damaging to state taxpayers.
An analysis by the New York State Department of Taxation and Finance shows the SALT cap will increase New Yorkers’ federal taxes by $14.3 billion in 2018 alone, and an additional $121 billion between 2019 and 2025. State officials contend “the law flies in the face of centuries of precedent, which establishes constitutional limits on the federal government’s ability to use its tax power to interfere with the sovereign authority of the states.”
In April, the governor signed legislation to provide new options for charitable contributions and create a new Employer Compensation Expense Program that allows employers to help their employees preserve deductibility of wage income.