Don aide: We will listen to deduct-ive reasoning

ALBANY — A top White House adviser Friday gave some hope to New Yorkers concerned that a GOP tax reform plan will eliminate their ability to deduct their state and local taxes.

White House economic adviser Gary Cohn told Bloomberg TV that the issue “is not a red line” in the upcoming talks with Congress on tax reform.

Cohen defended the idea of eliminating the deductibility of state and local taxes, but said there are only a few non-negotiable items in the tax reform framework unveiled by President Trump and congressional Republican leaders this week.

The first, he said, is that business tax rates cannot go higher than that proposed. The second is that the middle class see a tax cut.

“We are willing to work with the tax writers on the other dials that we have in the system,” Cohn said.

Rep. Peter Roskam (R-Ill.), a senior member of the House Ways and Means Committee, told the Wall Street Journal that “members with concerns from hightax states have to be accommodated.”

“This has to be dealt with,” said Roskam, whose district the Journal reported ranks 37th out of 435 in use of the deduction.

Many Republican congressional members from New York, New Jersey and other states that will be most impacted have come out for tax reform but against eliminating the deductions to help pay for it. The plan if unchanged would raise $1 trillion over 10 years to help cover the tax cuts.

Several New York Republicans said killing the deductions will not only hurt many of their constituents, but could threaten GOP control of the House in 2018.

“It’s certainly a concern that has been expressed to the leadership by members from New York and other states,” said one congressional source.

According to the Government Finance Officers Association, 35% of New York filers deduct their state and local taxes, with the average deduction totaling $22,169.

Cohn and other supporters of the plan to eliminate the credit say the loss from doing away with the deduction would be offset by a near doubling of standard deductions and other benefits in the tax reform bill. Critics argue that’s not the case. All nine Republican members of the New York congressional delegation have a high percentage of constituents in their districts who claim the state and local tax deduction, including 48% in Long Island Rep. Peter King’s district, 46% in Suffolk County Rep. Lee Zeldin’s, and 36% in Staten Island Rep. Daniel Donovan’s, according to the finance officers association. “If this tax plan goes as is it will hit the very people who are the core of (their) voting base,” said one Democratic insider. “Not the smartest midterm campaign, if you ask me.”

Donovan and six other members of the New York GOP delegation sent a letter in June to Trump Treasury Secretary Steven Mnuchin expressing “deep concerns” about talk of eliminating state and local tax deductibility.

Acknowledging the hit such a plan would have on his Staten Island constituents, Donovan said Friday he’s encouraged by Cohn’s comments that the issue is not being viewed as a line in the sand by the White House.

He said already he’s heard one proposal in Washington that would only eliminate the deduction for high earners, though he cautioned what’s considered a higherearner in Iowa is different than in New York City.

“Gary Cohn’s statement today is an example how debate and communication can result in something,” Donovan said. “Nothing is set in stone here.”

Congress hopes to turn the tax reform framework announced this week into a full plan by the end of the year.