N.Y., California Governors Fault GOP Congress Tax Plan

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

By Laura Mahoney

Congressional Republicans are poised to ram through a flawed tax overhaul before most Americans have time to understand how harmful it is, New York Gov. Andrew Cuomo (D) and California Gov. Jerry Brown (D) said.

In a joint phone call with reporters Oct. 27, the governors said the Republican proposal to eliminate the federal deduction for state and local tax taxes (SALT) violates conservative tax principles in the name of harming blue states like New York and California. Cuomo said it would create an unprecedented redistribution of wealth between states.

“This is the most cynical version of their politics, which is the politics of division,” Cuomo said. “They’re trying to rush the vote in Congress before people understand what it would do.”

House and Senate leaders have set a Thanksgiving deadline to introduce and enact a tax overhaul, and continue to discuss dropping the SALT deduction, which would generate an estimated $1.3 trillion over 10 years.

‘Hail Mary Pass’

Cuomo has said elimination of the SALT deduction would cost New York taxpayers $17.5 billion. Brown’s office estimates a $25 billion loss for Californians. Brown faulted the plan to take the deduction from individuals while allowing corporations to continue deducting state and local taxes.

The governors said Republicans are quickly forcing the tax plan to recover from their failure to enact other key items on their agenda, especially repeal of the Affordable Care Act.

“It’s a Hail Mary pass,” Brown said. “It’s unbecoming a democracy.”

California Republicans in the House are likely to support the tax proposal, but some Republican members from New York are waffling.

All 14 California House members voted in favor of a budget bill Oct. 26 that is a prelude to the tax debate. Seven of nine Republicans from New York voted against it, largely because of concerns about elimination of the SALT deduction in the forthcoming tax bills. A total of 20 House Republicans voted against the bill.

To contact the reporter on this story: Laura Mahoney in Sacramento, Calif., at LMahoney@bna.com

To contact the editor responsible for this story: Jennifer McLoughlin at jmcloughlin@bna.com

Copyright © 2017 Tax Management Inc. All Rights Reserved.

Request Daily Tax Report: State