Trump Plan to Dump Tax Deduction Would Cost NYC $7 Billion

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By John Herzfeld

A White House proposal to eliminate the federal income tax deduction for state and local tax payments would raise annual taxes for New York City residents by $7 billion, according to an analysis by city Comptroller Scott Stringer.

The plan, part of the broad outline released by President Donald Trump in late April, would produce higher tax bills for 1.3 million of the city’s residents, or one-third of its taxpayers, with 60 percent of them from households with less than $100,000 in income, Stringer said.

The June 7 analysis is the latest contribution to a chorus of protests to the Trump proposal from state and local governments. The outlook for the plan, as part of a broader tax reform package, remains unclear as congressional Republicans and the White House continue to differ over how to proceed. Proposed legislative language now isn’t expected until after Labor Day.

Stringer, in the analysis, said that almost three-quarters of city taxpayers with incomes between $75,000 and $100,000 would face higher tax bills, or one in five among city taxpayers with incomes below $50,000.

Hikes for Middle Class?

The White House plan to end the popular deduction, although billed as a move to shut down a loophole for the wealthy, would add $1,800 to the federal tax bill of a family earning $75,000 a year, Stringer said. The median federal tax increase per household would be $2,200.

In a statement, Stringer accused Trump of pursuing policies that help billionaires but hurt “everyday Americans.” He added: “We are going to continue to watch his tax plans closely and give working families the information they need to understand how White House policies affect them.”

The analysis, in a footnote, said the size of the impact would depend on the interaction of state and local tax deductibility with other tax provisions, such as the alternative minimum tax and the Pease limitation on itemized deductions. How that would work has “yet to be spelled out clearly,” it said.

To contact the reporter on this story: John Herzfeld in New York at jherzfeld@bna.com

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

For More Information

The analysis is at http://src.bna.com/pBi.

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