New York closes in on workaround to Trumps new tax law

[brooklynite]

Source: Politico

ALBANY — New York is set to create an optional payroll tax and new charitable funds that will allow its residents to skirt new federal limits on the deductability of state and local taxes, officials said, becoming the first state to enact workarounds to the Trump administration’s new tax law.

It’s a win for Gov. Andrew Cuomo, a Democrat positioning himself for a possible presidential bid, who along with other blue state governors has blasted Republicans in Congress for targeting their high-tax, high-wealth precincts through certain provisions of the $1.5 trillion Tax Cuts and Jobs Act, H.R. 1 (115).

The legality of the workarounds is in question, and New York lawmakers could prompt a court challenge. New York is among a handful of states that have considered enacting ways to help residents find ways to avoid losing the tax benefits they’ve enjoyed from deducting state and local taxes on federal returns.

The new tax law caps at $10,000 the amount of state and local taxes that individual taxpayers can deduct. In New York, Cuomo’s office estimates that will cost 1.7 million taxpayers an estimated $14.3 billion. That’s just under a fifth of the state’s taxpayers, and primarily affects New York City and its tony suburbs.

Read more: https://www.politico.com/states/new-york/albany/story/2018/03/30/new-york-closes-in-on-workaround-to-trumps-new-tax-law-340295

[Lucky Luciano]

1. Great news. This tax increase for fewer services and higher deficits must not stand. nt

[MichMan]

2. Tired of the rich manipulating the tax code to avoid paying their fair share

[Amishman]

21. This, if someone is wealthy enough to take a big hit with this, they weren't paying enough before

Zero sympathy for people living in million dollar homes and making $200++k per year

Re-establish most of the old tax codes (heck, add another higher bracket while we're at it), but leave the caps in place. We're going to have to pay for UBI somehow, and this would be a start

[hughee99]

3. How much would one have to make to go over the cap of $10k on state and local taxes?

According to the story, "Republicans targeted high-tax, HIGH-WEALTH precincts" with the intention of making wealthier people pay more in taxes. Isn't that something democrats usually encourage and call "making the wealthy pay their fair share"?

Cuomo's plan seems to be designed to allow these wealthier individuals to avoid paying a lot in federal taxes.

[Jake Stern]

4. Here in Colorado one would have to make $216,000 a year to hit $10,000 in state taxes

Certainly not poverty wages

[Betty88]

8. The property tax on

my moms little house in Yonkers is almost $7000 a year, its tiny. On edit I will add that is county, and city combined.

[Clarity2]

5. Its SUPER inaccurate

that this article uses the words “tony suburbs”. Most of long island has high property taxes. Many middle class pay 8-10k just in property taxes. Local taxes=property taxes, therefore that leaves just a few thousand for state income taxes in the cap. NY state has one of the highest income taxes in the country. Upstate middle class should be fine, and I believe some NY boroughs have low taxes. Our property taxes+state income tax goes well over the cap, and we’re middle class (for NY costs). Take away work related deductions and we’ll probably be hit hard.

[FakeNoose]

6. Yes and don't forget the interest deduction - that's gone now

That's really tough on homeowners in higher-income states. We're screwed 3 different ways.

[Captain Stern]

7. Which interest deductions is gone now? nt

[winstars]

10. I am uncertain they got rid of the mortgage interest deduction???

[Clarity2]

15. No they didnt

The house version I believe removed the mtg interest deduction, but the final bill didn't. There is a little bit of change though - I think for new buyers only interest up to a 750k mtg qualifies. Formerly it was 1M.

[Ilsa]

14. Thank you. Our state plus property taxes were almost $10,000

on the nose for 2017. We are in Georgia, and it isn't as if we are raking it in, and we live in a middle class home, not a rich place. This one aspect of the tax law is awful, IMO.

[Lucky Luciano]

9. This is meant as a big tax increase for upper middle class blue state people.

We have extremely high property taxes to pay for good schools etc. and we have state AND NYC taxes if you live in NYC. The rich, of course, are getting huge tax cuts because the loss of SALT deductions is more than offset by other features.

Moreover, this tax bill makes the deficit much much worse while providing fewer government services. This is not the way to raise taxes on the more affluent (excluding the actual rich of course).

[hughee99]

11. The upper middle class? The people making roughly $150k and up?

The tax bill has many, many problems, but it looks like the one that NY is looking to get around is having wealthier people avoid paying more in federal taxes. Although they're not all "the rich", normally, these are called the "haves" and we complain that they don't pay their fair share.

People used to like paying more in federal taxes when Obama was president (or at least people here SAY that did). The money is going to the same place now as it was before, it's just that different people are in charge. Shouldn't the wealthier among us do their part to reduce the federal deficit even if we don't agree with the way it was created? Would it be better for them to just avoid those taxes and increase the deficit?

[Lucky Luciano]

12. This tax bill is a clusterfuck. Increase the deficit on the back of the 1-10%?

No.

After the middle class tax cuts expire, it will be a tax cut on the 1-100%.

...and a tax increase for fewer government services?! Fuck that. A tax increase for better healthcare? Ok. A tax increase to subsidize billionaires? No. Fuck that. I will avoid that at all costs.

I make a very good wage. About the border of the top 1% in NY State - prob top 20% in Manhattan south of 96th st...prob top 35% south of 96th st over 40 with a kid and not in public housing (I have resisted being banished to the suburbs at incredible expense).

Nevertheless, I am much closer to someone living a middle class lifestyle who has a stable job than a real swinger making 10 million a year or even 4 million a year - there are tons and tons of those people (though my job is notoriously unstable and I always have to watch my back and be interviewing for backup roles in the event of getting fired because the company does badly). In some sense my wage is below top 1% because of the constant threat of losing my job due to my fund underperforming.


We need to be going after the 100+ millionaires and billionaires. That is where the money is. They are the ones stealing from the commons. I would be happy to pay more in return for more - a first step being proper universal healthcare. Paying more for less. No way. fuck that.

[hughee99]

13. If you don't want to increase the deficit, how can you lower it without paying more taxes

for fewer services (or at least no additional services)? The increased taxes go to pay for the services you're already getting that we're borrowing money now to pay for. Under any circumstance, even with universal healthcare, if the government spends more than it takes in, the only way to reduce the deficit is to taken in more money, but not spend more money (pay more for less, or the same).

I understand where you are coming from, though. A lot of people think the wealthy should pay more, and their definition of "the wealthy" is people who make more than them. When those people say that their taxes are too high or they don't get enough "in return" it's because they are greedy, but when we do it, it's different.

[Lucky Luciano]

16. Repeal the whole monstrosity.

Then increase marginal rates at the top end - even on me. That is equitable. Then use the excess revenue to lower deficits or get closer to universal healthcare.


Oh and take $150B from the Pentagon - don’t give them an extra $100B.

[hughee99]

17. And that doesnt seem to be one of your choices.

I guess creating loopholes to allow higher income individuals to avoid paying more in taxes is okay sometimes.

[Lucky Luciano]

18. I guess so.

Let’s also not forget that this is a tax on higher income earners in BLUE states that have much MUCH higher state, local, property taxes etc than the shithole states.

If I lived in Oklahoma, this would be a non-issue and that is fuckng bullshit. So, I will go with the loophole. I refuse to have my taxes increased for the sole purpose of paying off billionaires.

[hughee99]

19. The amount of federal taxes one pays in Oklahoma is now the same

As the amount of federal taxes one pays in NY. New Yorkers pay more in state and local taxes than they do in Oklahoma. If you believe that NY spends that money wisely, then they are benefitting from those additional taxes. Oklahoma pays less in taxes and gets less benefit from state services. Why is that bullshit? You said you’d be willing to pay more in federal taxes if you got more in return (like healthcare, for example), are you not willing to pay more in state and local taxes for the additional benefit?

[Lucky Luciano]

20. I do pay more in state and local taxes!

Now it is not as deductible. It is an increase in federal taxes targeted at blue states that provides nothing good.

[hughee99]

22. Yes, you used to pay less in federal taxes than someone in Oklahoma.

Now you pay the same as someone in Oklahoma. Why shouldn't people in different states making the same income pay the same amount to the federal government? You pay more than someone in Oklahoma in state and local taxes, and get greater benefits from state and local services. You pay the same in federal taxes and theoretically get the same federal services.

The increase in federal taxes is to reduce the deficit. It's all one big pot, and there's a lot of things the government wastes money on, you've mentioned a few already, most predate this tax bill. The tax cuts are current policy, whether I like them or not (and I don't), and paying less in federal taxes increases the deficit and the debt and puts a future tax burden on everyone.

[NutmegYankee]

23. All he gets is double taxed.

2 guys make $60,000. One pays $5000 in state/local tax, the other $15000. The guy who pays $5000 will pay a higher federal tax, but he keeps about 80% of the $10,000 difference. The guy who pays $15,000 gets to pay federal tax on $5000 he paid to another level of government - he pays taxes on the same money twice.

It's just a way to fuck over higher cost of living blue states.

[hughee99]

24. It's all double taxed. The federal government gets it's due, the state and local government get

theirs. You get the same services from the federal government no matter where you live. If you make the same amount of money, why shouldn't you pay the same amount? In ADDITION to that, you get different services from your state and local government, and pay additional money for those services.

The state and federal government are different entities that do different things. If you pay someone to fix your garage and pay someone else to mow your lawn, should the carpenter end up with less money because you pay your landscaper more money?

It's interesting that the easiest fix would just be for NY to lower their tax rate, but no one seems to want to do that? Why? Because they know the extra money they spend on local taxes has value. They don't want to give up those services, they've just been happy getting a discount on their federal taxes for years and don't want that to end.

Yes, higher income people in higher tax states get screwed on this, as previously they were able to pay more for local services at the expense of not paying as much for federal services. That's coming to an end.

You can try to frame this any way you like, but in the end, federal taxes should treat people of the same income equally, regardless of the state they live in. They're starting to do that now. No, I don't like what they're doing with that money (the tax cuts), but I don't have an issue with the concept of treating people in different states equally.

[NutmegYankee]

25. We will have to agree to disagree. nt

[Clarity2]

26. Sorry but

NY gets back 79 cents on the dollar in federal funds. Where do you get that we get a discount on our fed taxes? We pay 48B more than we get back. As opposed to states like Mississippi who get $2.36 back from fed per dollar they give. So as you can see, there is a reason why NY taxes are so high, as are other states that dont get back near what they give. There is an inequity in the federal system, so to say everyone should pay the same on their income, they don't, for one thing, because of that.

And yes, its unfair double taxation. Why should anyone pay tax again on their state and property taxes that they PAID??

[hughee99]

27. You don't think double taxation is fair? The state of NY does.

Last edited Wed Apr 4, 2018, 09:43 AM - Edit history (1)

That's why you can't deduct your federal and local taxes on your STATE return (though under certain circumstances, you may be allowed to deduct property taxes but only get credit up to a small amount).

As far as what a state gets back compared to what it pays, that takes into account ALL of the money that comes from the state, not just individual income taxes, but doesn't account for all the money that comes back to a state. While I'm sure that more money comes from NY then it gets back in total, the numbers aren't as clear cut as they seem. In any case, what does that matter since money isn't apportioned to states based on how much they pay in, even though the services they provide are available to all.

My contention is that in the US, a person of the same income should pay the same in federal taxes no matter where they live... like in NY state where people pay the same in STATE taxes no matter where in the state they live. People in Manhattan, Chappaqua and Watertown, NY making the same amount of money pay the same in STATE taxes, because even though all three towns don't get the same amount back from the state that they pay in, they all receive the same state services.

[Clarity2]

28. In order for all people

of the same income to pay the same federal income tax, there would have to be no SALT CAP. So I'm not quite getting what you are saying.

People hit by the cap of the same income will be penalized, and have to pay more federal taxes.
People under the cap of the same income will get a tax cut.

To say it's a state issue and state income excess is the same bogus excuse Trump gives. This is all politically motivated and about getting back at blue states. There is nothing right about that.

[hughee99]

29. You actually have it completely backwards.

In order for all the people of the same income to pay the same amount, regardless of what state they live in, there would have to be no SALT deduction at all. When state and local taxes aren't considered at all, everyone pays the same.

When the SALT deduction is introduced, those who pay more in state and local taxes pay less in FEDERAL taxes (because they can deduct more). The SALT CAP, that is the topic of this discussion, limits how much more they can deduct from their FEDERAL taxes than those people in lower tax states.