County leaders in NY worry about Trump plan that would remove local tax as a deduction

Posted 12 October 2017 at 2:16 pm

Press Release, New York State Association of Counties

As New York’s congressional representatives discuss federal tax reform proposals this week with Majority Leaders of the House of Representatives, county officials are renewing their concerns that any changes to the State and Local Tax (SALT) deductions would have a direct and negative impact on New York homeowners, communities, and local governments.

“When it comes down to it, efforts to change the SALT deduction are efforts to punish New Yorkers,” said Onondaga County Executive Joannie Mahoney, the president of the NYS County Executives Association. “We pay more to the federal government than we receive in return. If we are no longer able to deduct what we pay state and local taxes, then we will be giving even more to the federal government, and we will still get far less back. It’s a double negative and our Congressional members need to stand firm and reject this outright, not negotiate a new provision of the tax code, but to simply reject it as a matter of principle.”

In 2015, over 3.3 million households in New York State claimed the SALT deduction. A recent study by PwC commissioned by the National Association of Realtors found that homeowners with an adjustable gross income of between $50,000 and $200,000 would see an average annual tax increase of $815 if the SALT deduction is eliminated, even when coupled with other federal tax reform proposals.

The deduction of state and local taxes for federal income tax purposes has been a part of the tax code since its official inception in 1913, and even earlier with the precedent set by President Lincoln and the Civil War income tax. The deduction was one of the six original federal tax deductions because it represents a core principle of federalism in that it prevents double taxation since state and local taxes are mandatory payments.

“Our elected federal representatives need to know that this proposal would hurt the hardworking homeowners of New York,” said Putnam County Executive MaryEllen Odell, president of the New York State Association of Counties. “We will all be double taxed. Taxed at the local and state levels, and then forced for the first time in the nation’s history to pay federal taxes on the state and local taxes we already paid. It’s not fair to New Yorkers and it’s not fair to New York.”

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