Governmental leaders from virtually all levels in New York have come out in opposition to the federal tax reform bill, and now the Port Jefferson Village board can be added to the list.
The village passed a resolution at its Nov. 20 board meeting “expressing its strong opposition to any federal tax reform legislation that would eliminate or limit access to the state and local tax deduction.” The SALT deduction, which was enacted about 100 years ago, is a provision that in the past, through federal tax returns, gave a portion of tax dollars back to individuals in higher income and property tax states like New York, New Jersey and California to avoid “double taxation.” The deduction was eliminated in the House version of the Tax Cuts and Jobs Act, which the body passed Nov. 16, for individuals’ income taxes, and limited property tax deductions to $10,000. The Senate’s version of the bill, which has not been voted on yet, completely eliminates all SALT deductions. Both the House and Senate versions double the (married filing jointly) standard deduction from $12,000 to $24,000. The bill has been touted by President Donald Trump (R) and other members of Republican leadership as a massive tax cut for middle class families.
“We’re going to get whacked,” Village Mayor Margot Garant said of the bill during the board meeting.
New York’s income tax rate is among the highest in America, with members of the top tax bracket paying 8.82 percent in 2017. On average, the state income tax deduction for New Yorkers making between $50,000 and $200,000 in annual income for the 2015 tax year was between $4,049 and $9,330. The same group of earners deducted on average between $5,869 and $8,158 over the same time period in state and local real estate taxes. The 2015 tax year is latest year with available data according to the Urban-Brookings Tax Policy Center, an organization that provides independent analysis of tax policy.
“New York residents already send $41 billion more to the federal treasury than the federal government returns to New York,” the village resolution reads. “The state and local tax deduction is a fundamental principle of federalism and without it our residents would be faced with double taxation, as they would be forced to pay federal income taxes on the taxes they must pay to state and local governments.”
Garant joined New York Gov. Andrew Cuomo (D), New York’s U.S. Sens. Chuck Schumer (D) and Kirsten Gillibrand (D), U.S. Rep. Tom Suozzi (D-Glen Cove), and U.S. Reps. Lee Zeldin (R-Shirley) and Peter King (R-Seaford) in opposing the bill. Zeldin and King were among 13 Republicans in the House to vote “no” on the bill, with 227 voting to pass it.
“I view the elimination of the SALT deduction as a geographic redistribution of wealth, picking winners and losers,” Zeldin said in a statement. “The proposal taxes additional funds from a state like New York in order to pay for deeper tax cuts elsewhere. For anyone who incorrectly argues that the rest of the country subsidizes our state, I would point out that New York is a net contributor to the federal coffers with regards to both tax policy and spending policy and that is even with the SALT deduction.”
According to www.censusreporter.org, about 62 percent of Port Jefferson Village residents earn between $50,000 and $200,000 in annual salary.
The Senate is expected to vote on the bill shortly after Thanksgiving.
This post was updated Nov. 29 to correct the income tax and mortgage tax deduction amounts under the two bills.