Government officials and community organizations alike are concerned with possible tax reforms they say could cost Long Island residents millions.
While President Donald Trump (R) has not released any formal proposal yet for tax reform, organizations like the Long Island Association, a nonprofit group focused on business and civic affairs, are reacting to both Trump’s and his administration’s rhetoric during and since the 2016 election.
The LIA sent Trump a letter in December outlining some of their fears with possible tax reform in the coming year, specifically the possibility of eliminating deductions for real property taxes, mortgage interest, state income tax and reducing charitable donation deductions.
“We are concerned about some of the comments your Secretary of Treasury nominee Steven Mnuchin made about limiting the ability to deduct mortgage interest and property taxes on federal tax returns,” the letter from the organization said. “Speaker Paul Ryan has also expressed support for scaling back or eliminating the deduction for state and local income and property taxes.”
Matt Cohen, vice president of government affairs and communications for the LIA, said eliminating deductions could be a “disaster,” for Long Island. He referenced various news articles including one in The Hill, which reported the administration is taking a “serious look,” at capping deductions including ones for charitable donations.
“If these proposals are given more structure and momentum it would be devastating for Long Island.”
“If these proposals are given more structure and momentum it would be devastating for Long Island,” he said in a phone interview.
The LIA Research Institute did a study on the effects eliminating the deductions might have and said it could cost Long Islander’s $4.4 billion. In a 2013 report, they found Long Island sends the federal government $23.1 billion more than it receives back in programs and services from the government, so taxpayers in all brackets would be impacted by these cuts to deductions. The study said the middle class would be hit especially hard with tax increases, anywhere from $1,000 to $4,000 annually, and $3 billion would be taken away from the regional economy.
“No matter who you are, if you’re deducting mortgage interest on your returns you’re going to get hurt by this,” Cohen said. “In an area with high costs and high taxes, this could even drag down the real estate market.”
Cohen is not the only one who is concerned.
Suffolk County legislators and Executive Steve Bellone (D) echoed the sentiments.
“For Suffolk County residents, who already pay a steep price in property taxes, this type of tax reform will be a blow to homeowners and will have a negative ripple effect on our economy as a whole,” Legislator William “Doc” Spencer (D-Centerport) said at an event earlier this month. “With potential increases as high as $4,000, this reform will cut off many Suffolk County residents from the American dream by discouraging home ownership, and will cripple current homeowners’ ability to make ends meet.”
Legislator Steve Stern (D-Dix Hills) stressed the importance of residents understanding this debate as it reaches the national stage.
“Whether you are a local business owner or a middle class Suffolk County resident looking forward to a reduction in your taxes as it was promised along the campaign trail, it’s important for all of us to understand what the impact to each of us will actually be if you have a proposal such as this one that would be implemented,” he said.
Bellone said the elimination of these deductions is not welcome to Suffolk County.
“Any attempt by Washington to eviscerate these critical financial incentives under the guise of tax reform is a nonstarter and should be dead on arrival,” he said. “Instead of making it more costly to own a home on Long Island, the federal government should do more to lower taxes for hardworking homeowners and not the other way around.”
Elected officials were not the only voices speaking up.
Robert J. Ansell, board member of the Huntington Township Chamber of Commerce also spoke at the April 5 press event.
“Two-thirds of the country’s gross domestic product is consumer spending,” Ansell said. “The elimination of the mortgage interest, state income tax, and real property tax deductions not only puts a significant damper on incentivizing home ownership, but will also mean that families will have less disposable income to spend in their communities on local businesses.”
Cohen said it’s important to get out early with this issue, even though no formal or concrete decisions have been made yet.
“It’s a new administration, a new theme with new policies — we just want to get out ahead of this and show where we stand,” he said