Legislation introduced by State Senator Simcha Felder (D-Brooklyn) aimed at protecting New Yorkers from tax increases resulting from the recent federal overhaul was passed unanimously by the upper chamber and is presently working its way towards becoming law.
New York, like many states, bases a resident’s taxable income on the way it is reported to the federal government.
In an effort to simplify the tax code and offset slashed rates, Congress did away with many commonly used deductions. One that has hit high-tax states like New York the hardest is the elimination of the ability to deduct state and local taxes (SALT). The result is that many in the state will have a significantly higher “income” than in previous years, for their state taxes as well. The difference would fill New York’s coffers with an estimated $1.5 billion in revenue for the coming year.
The present legislation, however, allows New Yorkers to continue calculating their income for state taxes as they did before the sweeping federal tax law was enacted.
Sen. Felder told Hamodia that while many in the state have focused mainly on decrying the Republican-led tax reform, the present bill actually addresses an issue that could help those who stand to lose from it.
“This bill is very simple, but very critical,” he said. “Some people will benefit from Washington’s tax bill and others will not, but instead of complaining, which a lot of people in politics want to do, this will prevent the state from taking an additional $1.5 billion from you and me.”
The bill was co-sponsored by Senators Patrick Gallivan, Martin Golden, Chris Jacobs and Patty Ritchie, all Republicans, and gained unanimous approval in the Senate. It has now been introduced in the Assembly, but has yet to be voted on.
Senator Catharine Young (R-Olean), who chairs the Senate’s Finance Committee, was influential in bringing the bill to a vote.
“This bill is about protecting every taxpayer in New York and making sure everyone can reap the benefits of tax relief. We are working hard every single day to make sure New York is a more affordable place to live,” she said.
One potential complication is that Governor Andrew Cuomo’s recent budget proposal bases its numbers on the extra $1.5 billion that the state stands to gain from the federal changes, money that would not be there should this bill become law.
Yet, Sen. Felder expressed confidence that the governor would adjust for the bill’s impact in the amended version of the budget set to be released in the coming weeks.
Governor Cuomo’s office did not respond to an inquiry from Hamodia as to whether he would support the present legislation or make adjustments to the budget proposal.
This is not the first action Sen. Felder has taken to offset potential losses for New Yorkers from the federal tax reform. In November, as the legislation was still making its way through Congress, he introduced an ambitious plan that would create a state tax credit for each New Yorker equal to the amount of their federal tax increase resulting from the elimination of the SALT deduction.
The senator admitted that due to the huge losses of tax revenue for the state and the spending cuts that would be necessary, the bill was unlikely to come up for a vote. He remains optimistic that it could be used as a bargaining chip to reign in government waste and ultimately lower state taxes.
“I was shooting for the sky,” he said. “The fact is that according to most computations, 85 percent of New Yorkers will benefit from the federal plan, but we still have a responsibility to do what we can to help the 15 percent who won’t. This bill that passed now was a no-brainer, but hopefully it’s only one piece of the puzzle of what we can do to help overtaxed New Yorkers.”