January 3, 2018. Gov. Andrew Cuomo delivers his State of the State address on Wednesday, kicking off a challenging year of budget deficits and re-election races. This article states that the governor fought unsuccessfully to reverse the elimination of the deduction for state and local taxes, which harms some middle-class and wealthy taxpayers in the state. Cuomo, speaking on CNN over the holidays, said he’ll announce in his State of the State a plan to re-engineer the state’s tax code to try to mitigate the effects.
The article goes on to explain that New York, New Jersey and California are among states considering back-door ways to restore the deductions. One proposal would convert state income taxes to a payroll tax on employers, which is still deductible. Another would reclassify state income taxes as charitable contributions to state government, allowing taxpayers to then claim the payments as deductions on their federal income taxes.
“Ron Deutsch with Fiscal Policy Institute, a union-affiliated economic think tank, said the ideas do seem a bit far-fetched, but he said states with higher local taxes may have to get creative to prevent being harmed by the new tax changes.” “I don’t think there are any crazy ideas at this point,” Deutsch said. “There are just ideas that need to be trotted out and tested.” Deutsch said New York already pays $48 billion more to the federal government each year than it gets back.”
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