Trump budget director: It's New York's fault taxes are so high there

Lester Mason
November 15, 2017

On "America's Newsroom" today, Rep. Peter King (R-NY) said he plans to vote "No" on the House tax plan, and he had some strong words for Director of the Office of Management and Budget Mick Mulvaney.

Gov. Andrew Cuomo continues to assail Republican tax-reform plans - in particular, a House proposal to cap deductions for local property taxes and scrap state income tax deductions.

Gov. Cuomo, state Democrats and even some Republicans have said high-tax states like NY would be severely hurt if Congress eliminates or changes the federal deductibility of state and local taxes.

The budget director also cast doubt on another argument that Cuomo and other advocates of the current system make: that by withdrawing the deduction, the federal government would, in essence, be taxing state and local tax benefits, which would do far more damage in a high-tax state such as NY.

Cuomo said the House bill, with the loss of the deduction for state income taxes and a cap on the deduction for property taxes, "disproportionately targets states like NY, which already sends $48 billion more to Washington than it gets back in funding - the highest of any state in the nation".

Asked about that disparity, Mulvaney said: "The system is not set up so that states get back the same amount of money they put in".

"If our lives are entirely, exactly the same, we make the same amount of money, we have the same auto, our kids go to the same schools - but you live in New York City, and I live in SC, why should I pay more federal taxes than you do?", he said.

He pointed out that NY sent an estimated $48 billion more in tax payments to Washington in 2016 than it received back in federal spending, which amounts to approximately 79 cents on the dollar.

"I'll make is simple: Just give NY the $48 billion we send to Washington that makes us the number 1 donor state in the nation and he and the president can do whatever they want with state and local tax deductibility", Cuomo said in a statement.

Cuomo's theory is that wealthier New Yorkers, those who file for greater deductions, are the most mobile and would be able to pick up and leave if they are subjected to "double taxation". Eliminating this provision would cause taxes to go up faster in states such as NY where the income tax is higher. The House bill would cap property tax deductions at $10,000, while killing state income and sales tax deductions.

"All thing being equal, if I am paying more federal tax than you are, I am subsidizing your high-tax existence", Mulvaney said.

In conference call to reporters last Thursday, Reed said that in both the House and Senate versions the standard deduction increases from $12,000 to $24,000, meaning a larger number of people won't be itemizing because the standard deduction will surpass any package of deductions filers are now using.

In addition, Mulvaney accused Cuomo of exaggerating the impact of the proposed changes to the SALT deduction. "And now he seems to use every opportunity to take shots at NY".

Other reports by Iphone Fresh

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