Gov. Andrew Cuomo (D-N.Y.) blamed the Trump administration for New York's declining tax revenue, saying a 2017 law signed by the president that caps state and local tax (SALT) deductions has pushed some of the state’s highest earners to move elsewhere.
“The federal administration’s SALT policy is an economic civil war that helps red states at the expense of blue states, and we are now seeing the potentially devastating effect of it in the form of significantly lower tax receipts,” Cuomo said Monday during a televised presentation.
“These changes hurt our economy and make New York less competitive, and we will not stop ringing the alarm bell about this punitive policy until Congress reverses it,” he added.
The GOP tax law that Trump signed in December 2017 caps the SALT deduction at $10,000. The deduction was limited in order to help raise revenue to partially offset lower tax rates for business and individuals. Some of the bill's proponents also viewed the previous SALT deductions as unfair subsidies to high-tax states.
Politicians from high-tax states have long opposed the SALT cap, with Reps. Nita LoweyNita Sue LoweyLobbying world Progressives fight for leverage amid ever-slimming majority Biden needs to tear down bureaucratic walls and refocus Middle East programs MORE (D-N.Y.) and Pete KingPeter (Pete) KingBiden pays homage to Obama by rocking tan suit during birthday week Newsmax anchor Greg Kelly to host New York radio show Top GOP lawmakers call for Swalwell to be removed from Intelligence Committee MORE (R-N.Y.) reintroducing bipartisan legislation earlier this month to restore the full SALT deduction.
Cuomo said the 2017 law is to blame for a decline in personal income tax receipts in December and January that is projected to plunge $2.3 billion below previous estimates. The governor cited Florida as an attractive option for New York residents who are seeking to pay less in taxes.
“Our tax base is getting more diversified, however SALT impacts progressive tax policies disproportionately," Cuomo said. "SALT encourages high-income New Yorkers to move to other states and if even a small number of high-income taxpayers leave the state, it would harm state revenues and impact critical funding for education, health care, infrastructure and the middle-class tax cuts."
Florida has seen an increase in home purchases by residents from high-tax states. Home values in low-tax areas have also spiked in comparison to places where the ability to deduct state and local taxes has been limited, according to a Wall Street Journal review of analysis by real estate and data firm Zillow.
“I’ve been starting to see New Yorkers as Florida’s new foreign buyer,” real estate appraiser Jonathan Miller told the Journal. “If they were already on the fence, I think the tax law has changed the calculus for some.”
New Jersey reported a 35 percent drop in tax revenue for December, compared to the previous year, and Connecticut Comptroller Kevin Lembo (D) warned last week that tax law changes and a sluggish stock market could bring down state revenue there as well.