ARA Issues

November 20, 2017

NYS Congress members Collins, Reed, Tenney and Katko abandon their constituents with their vote on tax “Reform”: Representatives Donovan, King, Zeldin, Stefanik and Faso vote NO.


The stakes are very high. The house has begun the process of tax reform by passing a tax reform bill that hurts New Yorker’s more than most states. Yet 4 of our elected representatives voted for this bill. Congressional Representatives Collins and Reed have admitted that they are voting for this bill simply to pacify their donors who will be in revolt if congress doesn’t get a “win”. Congresswoman Tenney voted for the bill because Vice President Mike Pence asked her to vote yes and Congressman Katko, who voted against the budget blue print, voted for the bill for reasons yet to be defined. Hardly the “representative” government that New Yorkers deserve. The proposed Senate bill also repeals the individual mandate of the Affordable Care Act which, according to the CBO would make about 13 million more people uninsured and increase premiums by 10+%.

State and local income taxes

Called SALT, the reduction or elimination of state and local deductions would hurt New York as hard as any state in the nation. New Yorkers had $73 billion in such income-tax deductions in 2015, including $52 billion for income taxes and $21 billion for property taxes, a report last month from Comptroller Thomas DiNapoli found. That’s 14 percent of all the deductions in the nation.

The repeal of SALT would help Congress generate $1.3 trillion to offset other income tax cuts. Schools, realtors and business groups in New York all opposed he change, saying it would cripple the economy and funding for local services.

“The personal income tax is the state’s largest revenue source, and school aid is its largest general fund expenditure,” Mary Beth Fiore, superintendent of the Elmira Heights school system, said in a statement. “Ending deductibility of state income taxes could drive upper income taxpayers to leave our state.” Many elected representatives across the country have dismissed the deduction for state and local taxes as a reward for states that have high tax rates and that they are unfair to other states. The fact is the state Business Council said New York already gives nearly $50 billion more in taxes than the state receives from the federal government.

Property taxes

The House bill would still allow a deduction for up to $10,000 in property taxes, but the Senate would eliminate it entirely. The $10,000 cap on property-tax deductions would save most homeowners upstate from losing the deduction, but that wouldn’t be the case in the New York City suburbs.

In Westchester County for example, the average property-tax bill is $15,000. Statewide, the average property-tax bill is $8,700, DiNapoli said.

The disparity across the state was among the reasons Rep. John Faso, R-Columbia County, voted against the bill. Faso and other opponents in New York were looking for at least a few years to have the bill phased in, but were unsuccessful in the House version.

“However, the statewide impact of the proposal will dramatically and negatively impact state revenues as wealthier taxpayers and their businesses flee New York state to lower-taxed jurisdictions.”
Mortgage interest deduction

In the House bill, new mortgages would be able to deduct interest on the first $500,000, down from $1 million, borrowed for a primary home. But interest on mortgages for second homes and home equity loans would no longer be deductible.

The Senate would keep the same limit, which is currently $1 million, but it would end the deduction for home equity loans. New Yorkers paid an average of $8,727 in mortgage interest in 2015, DiNapoli said. “The House bill would only increase that disparity,” the group said.

Standard deduction

Those who take the standard deduction would see a drop, too, DiNapoli said.

The current law allows for a standard deduction of $28,900 for a married couple with two children. The House bill provides a larger deduction, but New Yorkers still wouldn’t come out ahead.

Because the plan would also eliminate the personal exemption for dependents, their deduction would decrease by $4,900, or by 17 percent, DiNapoli said.

Still, a child-tax credit would increase from $1,000 to $1,600 in House bill, while the Senate bill increases it to $1,650

There would also be an expansion of the estate tax, which is when assets above $5.5 million are passed on to someone’s heirs. It would grow to $11 million next year, which would be a benefit to wealthier New Yorkers only.

Upstate vs. downstate

Depending on where you live in New York will have a lot to do with how you would be impacted by all of this.

Taxpayers in downstate counties have the largest deductions: $60,384 in Manhattan, $34,345 in Westchester and $15,146 in Dutchess, for example. The deductions are much lower upstate: $13,740 in Monroe County and $11,986 in Broome County, DiNapoli said.

By repealing most or all of the SALT deduction, “that will be historic in a negative sense for New York, more than any state,” said E.J. McMahon, who heads the Empire Center, a fiscally conservative think tank in Albany.

“Yes, most New York households will see some tax cut in the first year but since the individual deductions sunset while the corporate tax cuts are permanent the number of middle class taxpayers seeing an increase will grow. But the impact will be very uneven, with upstaters far more likely to see a significant tax cut than downstaters.”

Unions in New York also ripped the plan, saying it would hurt the middle class.

“To add insult to injury, the plan would be paid for, in part, by drastically cutting Medicaid, Medicare and education. Their betrayal will not be forgotten,” said Mario Cilento, president of the New York AFL-CIO, the umbrella group for 3,000 unions.

“The amended tax bill that Senate Finance Committee Chairman Hatch released on November 14 is even more skewed to the wealthy than the bill he released on November 9, estimates from the Joint Committee on Taxation (JCT) show, and its tilt would worsen over time. The original bill provided by far the largest benefits to high-income people, and many middle- and lower-income households would end up worse off. Under the amended bill, in 2025 (when most of its provisions would be in place), high-income households would get the largest tax cuts as a share of after-tax income, on average, while households with incomes below $30,000 would on average face a tax increase. By 2027, when many of its provisions would have expired, those at the top would still get large tax cuts, but every income group below $75,000 would face tax increases, on average. Yet despite raising taxes on millions of middle- and lower-income households, the bill would add $1.5 trillion to deficits over the decade due to its large tax cuts for high-income households and corporations.”

NYSARA activists must CONTINUE to hold their Senator’s and Congressional representatives feet to the fire. To demand that the GOP tax plan goes no further, call your Representative and Senators at 866-828-4162 and tell them to reject the outrageous tax bill.

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