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Gov. Andrew M. Cuomo’s (D) plan to use charitable funds to mitigate the federal tax act’s impact on New Yorkers hit a major roadblock when the Democrat-controlled state Assembly rejected the idea.
The Assembly supports Cuomo’s proposal to allow school districts and local governments to create charitable funds, but a one-house budget resolution expected to be approved shortly rejects Cuomo’s plan to create statewide charitable funds for health care and education.
The Republican-controlled state Senate will release its one-house budget resolution March 14. A joint conference committee will then try to hammer out an agreement in time for the start of the state’s fiscal year April 1.
Cuomo proposed creating two charitable funds and a new payroll tax as workarounds to mitigate the impact of the 2017 federal tax act’s $10,000 cap on the state and local tax deduction ( Pub. L. No. 115-97). States such as California, New Jersey, Illinois, and Rhode Island have floated similar plans.
While Cuomo could still push for the statewide funds in budget negotiations with legislative leaders, rejection by lawmakers from his own political party is a major setback.
The Assembly resolution includes Cuomo’s proposal to shift tax liability for many New Yorkers from the personal income tax to a new payroll tax. It also supports the governor’s plan to close the so-called “carried interest loophole,” tax online marketplace providers, and decouple from certain personal income tax provisions in the federal tax code.
The Assembly rejected Cuomo’s plan to impose a “windfall profit fee” on health insurers to recoup a portion of their gains from the federal reduction in corporate tax rates. Instead, it would impose a 3 percent across-the-board windfall surcharge on all companies paying the corporate income tax.
The Assembly resolution would raise personal income taxes on those earning more than $5 million a year and make the state’s top rate of 8.82 percent permanent. The top rate is set to expire at the end of the 2019 tax year.
Other major tax proposals in the resolution include:
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A summary of the budget resolution is at http://src.bna.com/w2b.
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