Since the IRS has blocked Cuomo’s workaround measures, it’s on Congress to preserve SALT deductibility.
Published on City & State New York.
For over a century, state and local tax deductions have been enshrined in the federal tax code. But due to President Donald Trump’s tax overhaul – the Tax Cuts and Jobs Act – Americans will now only be able to claim up to $10,000 in SALT deductions starting with 2018’s taxes.
About a third of tax filers in New York state itemize their deductions on their federal tax returns, and the average amount claimed is nearly $36,000 – the highest in the nation, according to data from the New York State Association of Counties. Since the IRS blocked high-tax states like New York from circumventing the federal cap on SALT deductions, the matter is now effectively up to Congress.
“After running on a scam platform of fighting for the middle-class, President Trump is again firing a missile at the heart of our working and middle-class New Yorkers,” Gov. Andrew Cuomo said in an August press release. “I call on Congress to block any illegal attempt by President Trump to enrich his friends at the expense of the American people.”
Of course, a few New York House Republicans sided with Trump and voted for the legislation, on the grounds that it would cut taxes for a majority of their constituents – even though many New York taxpayers will end up paying more.
In response to the federal law, Cuomo signed state legislation that would circumvent the new tax code by allowing residents to pay their taxes via charitable donations to state and local governments as well as providing employers the ability to opt in to paying state and local taxes instead of their employees. However, the IRS put its foot down in August on charitable SALT write-offs.
Rep. Nita Lowey, a Democrat representing New York’s 17th District, and Rep. Pete King, a Long Island Republican, proposed the SALT Deductibility Act in January. The bill would amend the Internal Revenue Code to repeal the limitation on individual deductions for certain state and local taxes. In a statement, Lowey called the act “a necessary bipartisan fix.”
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