Trump tax plan screws N.Y.
‘Reform’ would actually soak N.Y.ers Deductions for middle class gone
NEWS SAYS: A THEFT OF HISTORIC PROPORTIONS FROM MIDDLE CLASS, AND A GIFT TO THE RICH
PRESIDENT TRUMP’S tax reform policy would cost average New York taxpayers a pretty penny.
The President’s plan to simplify the tax code, unveiled on Wednesday, includes the elimination of state and local tax deductions on federal returns — a writeoff used by more than 3 million residents in New York, already one of the top-taxed states in the nation.
Thanks to Trump, a family living in the five boroughs making $75,000 a year would pay $1,800 more in taxes, according to a study conducted by city Controller Scott Stringer’s office.
Currently, taxpayers who itemize their returns can deduct the amount they pay in city and state taxes from their income before paying federal taxes.
A whopping 3.2 million people claim the deduction statewide, with 85% of those residents making less than $200,000 a year, according to state lawmakers.
Roughly 1.3 million taxpayers in the city would face higher tax bills — 60% of them low- and middle-income households, Stringer’s report notes.
Gov. Cuomo said losing the deduction would cost New Yorkers more than $17 billion — and he vowed to fight it. “It would penalize this state,” he said. Cuomo also questioned the constitutionality of the move, calling it double taxation.
“It is the height of hypocrisy,” he said. “You have an administration saying I want to cut taxes and now literally they want to tax you on the taxes that you pay.”
The elimination is part of a vague wish list Trump offered as means of fulfilling his promise to simplify the tax code.
Also in the plan is a reduction of the number of tax brackets from seven to three, lowering corporate and small-business taxes, and eliminating the estate tax paid by the wealthy.
It also offers incentives for companies doing business overseas to bring their profits back to America.
“We’re going to cut taxes for the middle class, make the tax code simpler and more fair for everyday Americans, and we are going to bring back the jobs and wealth that have left our country and most people thought left our country for good,” he said at an event in Indiana.
But his plan, deemed a framework by the President and congressional Nearly 30% of all U.S. taxpayer’s leaders, left out many details, including use the deductions. where the next tax brackets Even the Empire State’s congressional start and end. Republicans are concerned
The plan was ripped as prowealthy about the plan to eliminate and anti-middle class by the deductibility of state and local congressional Democratic leaders taxes. and anti-New York by state officials. A group of seven GOP members of the New York congressional
Senate Minority Leader Chuck delegation sent a letter to Treasury Schumer (D-N.Y.) called the overall Secretary Steven Mnuchin to GOP tax plan “perverse in helping reconsider the proposed elimination. the wealthy and hurting the middle class.” National Republicans say a proposal
The nonpartisan Urban-Brookings in the tax plan to nearly double Tax Policy Center estimates the standard deduction to that New Yorkers claim an average $12,000 for individuals and of $21,038 in state and local $24,000 for families would help offset taxes on their federal returns. the losses.
Other reports show that the loss But others say the benefit would of the deduction would cost New be negated by a proposal to do Yorkers an average of $4,500 more away with personal exemptions. a year, for a total federal tax increase E.J. McMahon of the conservative of $14.8 billion. Empire Center said for a homeowner on Eastern Long Island making $100,000 to $200,000, the deductibility of state and local taxes amounts to a $15,000 federal tax credit — one they would lose under the President’s plan.
Just what that would mean in terms of the size of the tax cut they would receive is not possible to calculate with all the unanswered questions in the overall plan, McMahon said.
New York’s congressional Republicans agreed.
“Until New York completely overhauls its tax code, removing this provision will strip primarily middle- and low-income New Yorkers of their only real tax relief,” said Rep. Claudia Tenney (ROneida County). “Throughout the negotiations on tax reform, I will continue to fight alongside my colleagues in New York to ensure this vitally important relief mechanism is in the final bill.”
The potential change also has business leaders concerned.
“We applaud Washington’s focus on reducing business and personal income tax burdens, but cannot support a proposal that unfairly burdens New Yorkers,” said Heather Briccetti, president and CEO of the Business Council of New York State.
For Trump, tax reform becomes even more important after another priority, the repeal and replacement of Obamacare, collapsed Tuesday.
Even as Democrats like Schumer accused Trump of breaking his promise to help the middle class, the President said he believes ultimately those on the other side of the aisle will be supportive.
“Tax reform that truly truly truly will make America great again,” Trump said, invoking his campaign slogan and urging voters to pressure their representatives to support it. “If you demand it, the politicians will listen.”
In addition to eliminating the deductibility of state and local
taxes, the Trump and GOP plan will lower taxes on corporations and do away with the estate tax for the wealthy.
It also seeks to simplify the tax system, with the rates being 12%, 25% and 35%. It does not set the income levels at which the new brackets kick in.
Schumer complained the plan drops the top personal income tax rate on the rich to 35%, from 39.6%, but increases the lowest rate for the working class to 12%, up from 10%.
For a family of two with an average income of $45,000, the plan to hike the lowest rate would increase their tax bill by $1,000, he said.
“The top rate comes down and the bottom rate on working-class families goes up. What kind of plan is this?” Schumer asked.
The corporate rate, as expected, would dip to 20%, down from 35%, and limit to 25% the maximum tax rate for small and family-owned businesses.
Republicans argue reducing the business rates will help stimulate the economy by creating jobs.
But Schumer said there is no plan to help offset the corporate tax cuts by closing various corporate loopholes. And he countered there’s no proof large corporations will reinvest the money into job creation.
“Corporation profits right now are way up, but wages are not,” he said. “Corporations have plowed all that money into CEO bonuses, stock buybacks, dividends for their shareholders.
“They’re (flush) with money already,” he said. “There’s no proof, no real belief, no real argument, that they’re going to take this new money and put it into creating new jobs.”
He said the Dems are open to discussing small-business tax relief.
But he ripped the overall tax plan as being “part of the hard-right agenda” to cut taxes, blow up the deficit” and ultimately cut Medicare. He said if enacted, the federal deficit will grow between $5 trillion and $7 trillion.
The plan would also increase a $1,000-per-child tax credit and make it available to families with higher incomes, limit the “marriage penalty” on couples that both work and file jointly, and create a new $500 elder and sick care tax credit.
Mortgage interest and charitable giving deductions, as well as tax benefits for college and retirement savings, would remain in place, while most itemized deductions would be eliminated.
The plan now goes to Congress. “This is vital for America’s future and it is urgent,” said House Speaker Paul Ryan (R-Wis.).