If the G.O.P. Tax Plan Hurts You, Congressmen Say It’s Your State’s Fault
The tax plan does harm high-tax states like New York, New Jersey, Connecticut and California, primarily by eliminating the deduction for state and local income taxes, or SALT, and capping the deduction for property taxes at $10,000.
In New York, some 725,000 New York households would be subject to higher taxes under the proposed property tax cap, with 2.4 million also hit by increased income tax bills resulting from the SALT elimination, according to Mr. Cuomo’s office.
But even in New York, the effects of the tax plan would not be felt evenly. The four Republican Congress members who voted for the plan — Chis Collins, John Katko, Claudia Tenney and Mr. Reed — represent districts in Central and Western New York with more low-income areas than their Republican colleagues closer to New York City. In the upstate districts, the tax plan would benefit those whose incomes are more moderate, they argue, and who take the standardized deduction, which would be nearly doubled under the plan.
As such, the tax plan has also provided some upstate Republicans with a pure populist message: The tax bill helps as many working-class families as it hurts the upper stratus. Mr. Collins, a constant critic of Mr. Cuomo, said the notion that many well-to-do downstaters would have to “suck it up” and pay more taxes was fine by him.
“We never said we were going to protect the top one or 2 percent,” Mr. Collins said in an interview on Thursday. “The juxtaposition is the governor is fighting for the millionaires and billionaires.”
On Thursday, the governor once again tried to call attention to what he called the evils of the tax plan, suggesting that Mr. Collins and his fellow Republicans were being shortsighted and insincere, noting that high earners in Republican districts provided an outsize amount of state revenue via taxes. Mr. Cuomo warned against tax migration out of the state if high earners find their taxes increased, saying such a development would cause either future tax increases for the middle class or a gutting of social services which help the poor.
“If you lose those taxpayers, you lose their revenue,” the governor said, adding that the tax plan was geared to pay for corporate tax reductions and pay for tax relief in more conservative parts of the country. “They need the money to cut taxes in other states.”
The tax bill has already surfaced in some of the more competitive races around the state, including in Utica, where Assemblyman Anthony Brindisi, a Democrat, is the leading contender to take on Ms. Tenney, a Republican. Tim Edson, a spokesman for Ms. Tenney’s campaign, said, “When Anthony Brindisi complains about the Republican tax plan he is admitting guilt — that the high-tax policies he has rubber-stamped for Governor Cuomo are killing New York.”
But Mr. Brindisi clearly sees political opportunity as well. “The more sunlight this tax plan gets, the more people hate it,” he said, noting that a Quinnipiac poll shows that more than half of Americans disapprove of the plan while only 29 percent approve. In Albany, Mr. Brindisi is also considering state legislation to address a specific area of concern: the tax plan’s elimination of a deduction for teachers who spend their own money on school supplies.
Indeed, Mr. Brindisi says that beyond the property tax cap and the SALT elimination, a number of less-publicized cuts — including deductions for medical expenses and student debt — will also end up hurting the middle class.
“Those are deductions that people use,” he said.
In New Jersey, the political dynamics are less divided: Four of the five New Jersey Republican congress members voted against the initial House bill, and have signaled that, absent any major changes, they would remain against the bill.
The sole Republican to vote for the bill, Representative Tom MacArthur, represents a Central New Jersey district where fewer than half of the households itemize state and local tax deductions, according to his office. And like his colleagues in New York, he argues that the tax bill will be a necessary challenge to a high-tax state like New Jersey to reform its policies that he says causes the high cost of living.
“If cutting taxes at the federal level forces Democrats in Trenton to do the same, then this would be a welcome new direction for the state and an even bigger win for New Jersey taxpayers,” Mr. MacArthur said. “I’ll be glad to see them change the tax-and-spend policies that have made us the most overtaxed state in the nation, and I’m sure New Jersey taxpayers would agree.”
Even those Republicans who rejected the bills have been taking the debate as a ripe moment to attack their state’s taxes.
“Our state and local tax deduction is as high as it is because our state and local taxes are as high as they are,” said Representative Lee Zeldin of Long Island, who has been punished by Republican leadership for voting no on the House bill. “All levels of government should be focused on tax relief.”
Mr. Cuomo and his surrogates scoff at the suggestion that the governor is pro-tax, noting several state tax cuts during his nearly seven years in office as well as a cap on local property taxes. Nor do they concede any ground on spending — noting a spending cap during Mr. Cuomo’s time in office — as well as New York’s well-documented status as a “donor state,” sending billions more to Washington than it receives.
Moreover, the governor seems proud to tout progressive policies paid for by the state’s $160 billion budget, larger than any state other than California.
“Yes, California, New York are high-tax states,” Mr. Cuomo said on National Public Radio on Wednesday. “We have governments. We believe in providing social services and free college tuition, etc. And that’s a decision our states have made.”
The governor’s allies were also railing against the plan, including the New York State AFL-CIO, which wrote a letter to the state’s congressional delegation denouncing it as “job-killing,” and arguing it “cuts taxes for the wealthy on the backs of hardworking New Yorkers.”
Whether it costs Republicans at the ballot box is an open question. William F.B. O’Reilly, a Republican consultant in New York, called the tax bill “a calculated bet that the cuts, particularly the corporate tax cuts, will kick-start the manufacturing sector enough for working-class Americans to begin feeling optimistic again.”
“The problem is that 2019 is too late for electoral considerations,” he said. “Republican members of Congress will be running in ’18 on a promise that may or may not come true.”
Such prognostications are probably unsettling for Congress members like John Faso, who is facing a tough re-election fight in his Hudson Valley district. Mr. Faso said he voted no on the tax bill primarily because of worries about the impact of the SALT elimination, which he said he feared “will accelerate the exodus” of residents out of the state. As of now, Mr. Faso said he still would vote no, though he still hoped for changes in the final bill.
But he said he wasn’t worried about Mr. Cuomo’s threats, political or otherwise. “There’s a lot of time between now and next November,” he said. “I’ll worry about the politics next year.”
via NYT http://nyti.ms/2gVZ2VB
December 7, 2017 at 06:12PM