President Trump’s tax plan is so far just a one page outline, but it’s already raising some red flags for New York’s political leaders.
The plan would slash corporate taxes and nearly double the standard deduction, to $24,000 for married couples.
But the proposal would also eliminate the practice of deducting state income taxes and local property taxes from federal income taxes, and that could harm taxpayers in states with high local taxes, like New York.
Governor Cuomo has been worried about the potential change for awhile.
“This would actually be a dramatic, dramatic increase,” Cuomo said on March 23rd. “And in effect, probably the largest single tax increase in the state’s history .”
Cuomo, speaking in late March, said losing the ability to deduct the state and local taxes could even “expedite” wealthier New Yorkers leaving the state.
The leader of the Majority Party State Senate Republicans, John Flanagan, said in a statement that while he supports the idea of tax cuts, he has “grave concerns” about eliminating the state and local tax deductions.
And even some Republican members of Congress from New York are having qualms. Claudia Tenney, a conservative leaning Republican who represents parts of Central New York, says until the state overhauls its own tax codes, New Yorkers “cannot afford” to lose their itemized deductions, because the benefit offers state residents one of their few forms of tax relief.
Deductions for mortgage interest and charitable donations would still be allowed, under Trump’s proposal.
Even if the Trump tax plan advances in the House, it still faces some powerful opposition in the Senate.
New York’s Senator and Democratic Minority Leader Chuck Schumer says ending the deductions could cost an average New York household $4500 a year in additional taxes.
“I have never seen tax plan that does more harm to the middle class and does more to the boost those at the top than the outline are released yesterday,” Schumer said in a news conference on April 27th.
And Schumer says he’s not going to let that happen.