As the exodus of New York’s wealthiest homeowners reportedly continues, Gov. Andrew Cuomo is pointing his finger at the federal tax code for the cause of high-income earners fleeing the state.
Cuomo met with President Donald Trump last week in an effort to discuss - among other things - the federal tax code, which he has also attributed to the state’s $2.3 billion reported revenue drop . The governor has said the $10,000 cap on the federal deduction for state and local taxes ( SALT ) is the biggest cause of the wealthy, often elderly leaving New York.
"The federal administration's SALT policy is an economic civil war that helps red states at the expense of blue states, and we are now seeing the potentially devastating effect of it in the form of significantly lower tax receipts," Cuomo previously said. "These changes hurt our economy and make New York less competitive, and we will not stop ringing the alarm bell about this punitive policy until Congress reverses it.”
In 2017, Trump made remarks that elderly residents should consider moving out of upstate New York if they don’t like paying the state’s high taxes.
"If New York isn’t gonna treat them better, I would recommend they go to another state where they can get a great job,” Trump said last week. “I love those people. Those people are my voters. They’ve been treated very badly.”
Cuomo previously stated that New York has a “very fragile economy” which is reliant on some of the state’s wealthiest to pay a large portion of their tax dollars. He has not offered any numbers regarding the rich elderly leaving New York, but stated that his office “has information on who is paying what and who might be moving.”
According to Cuomo’s Office, the combined state/local tax rate for high-income New Yorkers is the second highest in the country. The top one percent of taxpayer accounts for nearly half (46 percent) of State Income Tax liability. More than 95 percent of the tax increase from SALT falls on the top 20 percent of taxpayers - these taxpayers pay 87 percent of New York income taxes.
Cuomo said that the tax reforms encourage New York’s wealthiest to move to other states, “and even if a small number of high-income taxpayers leave the state, it would harm state revenues” and impact funding for education, healthcare, infrastructure and a planned middle-class tax cut.
"The federal tax law has led to a decrease in revenues and has increased taxes for middle-class New Yorkers," Lt. Gov. Kathy Hochul added. "We will continue to fight these attacks from Washington and reject the elimination of the full SALT deduction to ease the tax burden on New Yorkers and ensure fiscal stability."
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