New York Tax Workarounds Suffer Another Loss in Legislature

From Daily Tax Report: State

March 14, 2018

By Gerald B. Silverman

Gov. Andrew M. Cuomo’s (D) plan to overhaul the state tax code in response to the federal cap on the deduction for state and local taxes has suffered its second blow in two days.

The Republican-controlled state Senate approved a one-house budget resolution ( R. 4168) March 14 that rejects Cuomo’s plan for a new payroll tax and creation of charitable funds to mitigate the impact of the $10,000 cap on the state and local tax deduction. The resolution was approved 32-29.

The Democratic-controlled state Assembly approved its own one-house resolution ( E. 912) minutes earlier by a 99-35 vote. The resolution, which was released March 13, would impose the new payroll tax, but rejects the creation of two statewide charitable funds.

A joint conference committee will now try to negotiate an agreement on the budget in time for the April 1 start of the state’s fiscal year. At the same time, Cuomo will be negotiating with top legislative leaders to reach an agreement.

The two proposed workarounds have become some of Cuomo’s signature issues since President Donald Trump signed the 2017 tax act ( Pub. L. No. 115-97). States such as California, New Jersey, Illinois, and Rhode Island have floated similar plans.

Morris Peters, a spokesman for the state Division of the Budget, told Bloomberg Tax that the governor would work with the Legislature “to protect New Yorkers against this federal assault.”

Cuomo was successful in getting both houses to accept his plan to decouple the state personal income tax code from the federal code to address a number of tax conformity issues that would cause the state to reap a $1.5 billion windfall.

The Senate resolution, however, rejects many of Cuomo’s other tax proposals, including measures to tax online marketplaces, close the “carried interest loophole,” tax opioid manufacturers, and impose a windfall profit fee on health insurance companies.

“We are looking to cut taxes, not increase them,” Sen. Catharine M. Young (R), chairwoman of the Senate Finance Committee, said in debate on the Senate floor.

To contact the reporter on this story: Gerald B. Silverman in Albany, N.Y. at gsilverman@bloomberglaw.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bloombergtax.com

For More Information

Text of the Senate's resolution is at http://src.bna.com/w4H.

Copyright © 2018 Tax Management Inc. All Rights Reserved.


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