Trump faults N.Y. on tax provision
WASHINGTON — President Donald Trump said Monday that New Yorkers could have thwarted a provision in a GOP-approved tax law that limits state and local tax deductions, one of the most contentious changes in the 2017 overhaul.
“People are fleeing New York State because of high taxes and yes, even oppression of sorts,” Trump said in a tweet Monday. “They didn’t even put up a fight against SALT — could have won.”
The $10,000 cap on the state and local tax deduction, popularly called SALT, was one of the most fought-over provisions as Congress debated the tax legislation in 2017. The change — which mostly affects residents of high-tax, Democratic-led states — led to a backlash from both Republicans and Democrats representing those states. The deduction was previously unlimited for some taxpayers.
“Is he living under a rock?!” Rep. Nita Lowey, D-N.Y., tweeted in response. “We fought tooth and nail against the Republican elimination of the SALT deduction. If he’s OK with bringing it back, he should join me in convincing members of his own party to reverse their decision to hurt working families.”
Thirteen House Republicans ended up voting against their party’s tax bill, with most citing concerns about the cap on state and local tax deductions. No Democrats voted for the bill. Trump has suggested he might be willing to reverse the provision, but he hasn’t backed any plan to do so.
Senate Republicans remain staunchly opposed to making the deduction for state and local taxes more generous.
New York Gov. Andrew Cuomo is leading a group of Democratic governors who are working to combat the limit on the tax deductions, which he calls an “economic civil war.” Democrats in the House are also working to submit a bill that would raise the cap or repeal it entirely.
New York, New Jersey, Connecticut and Maryland sued the Trump administration last year in an attempt to invalidate the $10,000 cap, saying it unfairly targets them. The lawsuit is pending.
In a court filing March 22, the states argued the Trump administration is asking the court to “turn a blind eye” to evidence that the government was trying to punish the Democratic-led states, including public remarks by former House Speaker Paul Ryan and Treasury Secretary Steve Mnuchin.
“Despite the facial neutrality of the 2017 Tax Act, Congress enacted the SALT deduction cap with an illegitimate motive — to punish states that have elected to raise revenue through relatively high taxes and to make substantial public investments,” the states said.
In three of the states most affected — California, New Jersey and New York — Republicans lost 14 U.S. House seats in the 2018 midterm elections, accounting for about a third of the party’s overall losses.
Trump made the comment Monday in a series of tweets about ongoing litigation between the National Rifle Association and the state of New York.
Migration statistics don’t show that people are leaving New York in large numbers as a result of the tax-deduction changes, according to Moody’s Investors Service. Migration rates in the five high-tax states most affected by the deduction cap — California, Connecticut, Maryland, New Jersey and New York — are generally in line with U.S. trends, according to the report the group released earlier this month.
Democrats say the cap has meant higher taxes for their constituents, but only about 25 percent of taxpayers in high-income areas are getting smaller deductions. The rest didn’t take the state and local deductions before the tax law because they paid the alternative minimum tax. Under the law, which greatly scaled back the alternative minimum tax, they can now claim as much as $10,000 of write-offs for their state and local taxes.