Tuesday, April 17, 2018

NY Gov. Signs Tax Bill to Blunt SALT Impact

New York Gov. Andrew Cuomo came on Federal Tax Day to Sign Legislation he said was intended to Circumvent the New Federal Tax Law. "We are getting attacked and I'm not going to stand for it," Cuomo said.

Cuomo, a potential Presidential Candidate in 2020, has made the State's Opposition to Federal Tax Reform, which Caps Income Tax Deductions for State and Local Taxes, a Centerpiece of his Attack on the Administration of President Trump.

While several States have explored ways to Circumvent Federal Tax Reform, New York is the first to Pass Legislation to do so. The Governor said the Federal Reform would End Up Costing the Average New York Taxpayer $6,400 a year.

Cuomo said New York would Sue the Federal Government, saying that the New Law amounted to Double Taxation because New Yorkers were Paying Federal Income Tax on the property and Income Taxes New Yorkers were paying in the State. "This is repugnant," he said.

Dutchess County Executive Marc Molinaro, who is seeking the Republican Nomination for Governor, questioned whether the Cuomo Plan would work. "Typical Governor Cuomo — instead of lowering taxes himself, he's created a mess with no guaranteed outcome," Molinaro said. "New bureaucracy, new layers of government, a new tax on hard working New Yorkers and no relief."

Critics have complained that Cuomo has Overblown the impact of Federal Tax Reform by not taking into Consideration the Reduction in Tax Rates for Individuals. "The provision says you can no longer deduct your state and local taxes from your federal taxes," Cuomo said. But the Federal Tax Bill, however, does not Eliminate Deductions for State and Local Taxes. It Caps those Deductions to $10,000 a year.

Morris Peters, Press Spokesman for Cuomo's Budget Division, said Cuomo in the past has said that the Law Eliminates the Full Deductibility of State and Local Taxes. And Press Releases have mentioned the Cap on Deductions. "I think if you went through all the many press releases on the federal tax changes, the administration has been pretty clear," he said.

The Bill provides Two Ways to get around the Federal Law:

- It would allow Employers to Opt into a Payroll Tax System that could Cut Tax liability on Wages in Excess of $40,000 through Tax Credits.

- It would also Empower New York Governments to set up Charitable Funds to which Taxpayers would make Tax-Deductible Contributions, and receive a Property Tax-Credit equal to 95% of the Donation in the following year.

Municipal Leaders are wary of the Charitable Fund Provision, uncertain whether the Internal Revenue Service (IRS) would Allow the Deduction of Charitable Contributions that were made for Property-Tax purposes. New York, however, will not Seek an IRS Ruling on New York's Plan, Cuomo told Tax Watch on Tuesday. "We had it gone through by 57 tax accountants and lawyers, et cetera," Cuomo said. "It’s legal and if politically they try to use the IRS as a political tool, in the way they accused Obama of using it as a political tool, that would be unethical, if not illegal."

Latimer said he Plans to convene a Meeting of State and Municipal Officials in coming weeks to provide Guidance on how to Set Up the Charitable Funds. Mamaroneck Supervisor Nancy Seligson said the Town is open to setting One Up but feared its Complexity.

Westchester Cities and Towns collect Taxes for their Own Municipalities as well as the County, School Districts, as well as Fire and Water Districts. "I'm worried that it's going to be difficult to do with our software programs," she said. "We're open to it. It's going to be quite a change."

NYC Wins When Everyone Can Vote! Michael H. Drucker
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