High-Tax States Balk at Republican Deduction Proposal
October 23 2017 - 7:38PM
Dow Jones News
By Mike Vilensky
Lawmakers from New York and other high-tax states are resisting
efforts to roll back a policy that helps residents save on their
federal taxes.
Republicans have proposed eliminating or limiting the
deductibility of state and local taxes as part of a new tax
legislation. New York Gov. Andrew Cuomo, a Democrat, has seized on
the issue, touring the state and joining with local and federal
lawmakers who want to preserve the lucrative tax break.
The deduction allows individuals to subtract their home-state
levies from their federal taxable income. In high-tax states such
as New York, that can allow taxpayers to save big.
"This is probably one of the most destructive policies to the
state of New York I've heard proposed in 30 years," Mr. Cuomo said
Monday at a news conference with U.S. Sen. Chuck Schumer, a fellow
New York Democrat.
The status of White House and congressional efforts to eliminate
the deduction for some or all taxpayers isn't clear. A tax policy
the White House outlined earlier this year proposed repealing the
deduction.
House Republicans from New York, New Jersey and other high-tax
states have been resisting GOP leaders' proposals to repeal the
deduction and use the money to lower tax rates.
House leaders need at least some of those members' votes to get
the bill through and they have been negotiating with New York and
New Jersey lawmakers. So far, they haven't announced a deal, though
they have been considering proposals to allow property tax
deductions or to set an income limit for the tax break.
On Monday, a White House spokesperson said: "The President has
made it clear that his two non-negotiables are a middle-class tax
cut and getting the corporate rate down to 20% or lower."
The spokesperson also said that only about 30% of U.S. taxpayers
claim deductions, and pointed to a report from the Congressional
Budget Office that said the state and local tax deduction "provides
a much larger benefit relative to income for higher-income
households than for lower-income households."
The issue has put some New York Republicans in a difficult
position, torn between a policy their party generally supports and
concerns about how it could impact them in their districts.
Rep. Peter King, a Republican representing Long Island, has been
at the fore for pushing back on the policy within his party. In an
interview, Mr. King described a recent meeting of House Republicans
where he and other high-tax state representatives expressed
concerns about repealing the deduction.
"Politically and economically, it would be devastating," Mr.
King said, describing his suburban district as a swing region where
voters backed Mr. Trump last year after previously voting for
President Barack Obama, a Democrat. "The deduction is essential for
these people to get by."
For Mr. Cuomo, the issue is familiar. In the 1980s, Republican
President Ronald Reagan sought to eliminate the deduction, and New
York Gov. Mario Cuomo, Mr. Cuomo's late father, led a successful
effort against the repeal.
"The deductibility fight gave Cuomo a clean issue to champion to
counter his weakness with Reagan Democrats," said Howard Glaser, an
aide to the late Mr. Cuomo at the time. "It is rare to find one
issue that does so much political work with relatively little
controversy. He rode it to great effect."
--Richard Rubin contributed to this article.
(END) Dow Jones Newswires
October 23, 2017 19:23 ET (23:23 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.