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House Ways and Means committee

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Representatives Thomas Suozzi (D-NY-3) and Peter King (R-NY-2) have introduced bipartisan legislation to reverse the impact of last year’s tax overhaul, which eliminated the deduction of state and local taxes from federal filings. If passed, people who live in high-salary, high-tax areas, such as Long Island would regain write-offs plus other benefits. 

“The SALT cap was particularly unfair to Long Islanders and New Yorkers because they already subsidize other states by paying $48 billion more into the federal government than we receive back,” Suozzi said in a statement. “It is a tax on taxes already paid, and it hits the homeowners whose local taxes fund police, firefighters and other services.” 

The legislation, called the Restoring Tax Fairness for States and Localities Act, would eliminate the marriage penalty by doubling the cap to $20,000 for joint filers for 2019 and would fully restore state and local tax (SALT) deductions for 2020 and 2021. 

The cost of the plan would be fully offset by returning the top individual tax rate from 37 percent, back to 39.6 percent, the number prior to the GOP tax bill of 2017.   

Suozzi’s district includes parts of Queens and extends into Nassau and Suffolk counties, mainly along the North Shore and includes parts of Kings Park.  In the region, more than 250,000 families reportedly have claimed the SALT deduction at an average rate of $18,300. Capping the deduction has cost Long Islanders, and all New Yorkers, billions in additional taxes, according Suozzi. In fact, Suozzi reports that the average SALT burden statewide is above the $10,000 cap in 52 of 62 counties.

“Eliminating deductions for local and state taxes will have a devastating effect on New York. We give far more to Washington than we get back. For every dollar we give, we get $0.79 back. That’s a $48 billion shortfall and hurts our middle-class Long Islanders. This legislation is critical,” Rep. King said in a statement. 

Some elected officials are skeptical of the legislation. 

Earlier this year, Rep. Lee Zeldin (R-NY-1) introduced legislation that would fully reinstate SALT reductions and also close previously unaddressed loopholes. He said he prefers that to raising the individual tax rate. 

“The issue Congressman Zeldin has with this new proposal by Representative Suozzi and others is that it permanently raises the 37 percent individual tax rate to 39.6 percent and only temporarily makes changes to the SALT deduction until 2021,” said Katie Vincentz, Zeldin’s spokesperson. 

Zeldin, Vincentz said, would be happy to work with Suozzi and King to fix the current proposal and reiterated that the legislation Zeldin introduced would permanently reinstate the deduction without raising individual income taxes.

The Restoring Tax Fairness for States and Localities Act was approved in the House Committee on Ways and Means Dec. 10. 

“In the midst of all the battles in Washington, D.C., I know that my constituents on Long Island want tax fairness. The 2017 cap on SALT broke a century-old agreement. A covenant to protect state and local government and my bill restores that protection, it restores that covenant, and it restores fairness as well,” said Suozzi. “I thank Chairman Neal and the Ways and Means Committee for passing my bipartisan legislation and I hope it will be passed by the House of Representatives in short order.”

The Tax Cuts and Jobs Act would reduce the number of income tax brackets from seven to four; eliminate deductions for state and local income taxes; and would reduce the corporate tax rate from 35 to 20 percent. Stock photo

By Alex Petroski

Last week Republicans in the House of Representatives took a major step toward fulfilling a lynchpin campaign promise that is seemingly decades old.

The House Ways and Means committee released the framework of the Tax Cuts and Jobs Act Nov. 2, a major piece of legislation touted by President Donald Trump (R) as a cut to income taxes for “hardworking, middle-income Americans,” though it would negatively affect New Yorkers if signed into law, according to lawmakers from both sides of the political aisle.

The highlights of the bill, which would require passage by the House and Senate and the president’s signature before becoming law, include a consolidation from seven individual income tax brackets down to four; the elimination of the deduction for state and local income taxes, a provision that in the past through federal tax returns gave a portion of tax dollars back to individuals in higher income tax states like New York; and a reduction of the corporate tax rate from 35 to 20 percent.

“I am a ‘No’ to this bill in its current form,” 1st Congressional District U.S. Rep. Lee Zeldin (R-Shirley) said in a statement. “We need to fix this state and local tax [SALT] deduction issue. Adding back in the property tax deduction up to $10,000 is progress, but not enough progress. If I’m not fighting for New Yorkers, I can’t expect anyone else from another state to do it for me.”

U.S. Rep. for the 2nd District, Tom Suozzi (D-Glen Cove), was even more critical of the bill than Zeldin.

“The goal of tax reform is to help hard-working Americans make more money so they can live the American Dream,” Suozzi said in a statement. “The American people expect us to find a bipartisan solution to tax reform that helps create good paying middle-class jobs. This plan doesn’t achieve that goal. I won’t support it.”

Other New York lawmakers from the Democratic Party voiced harsh opposition to the bill in its current form.

New York’s U.S. senators Kirsten Gillibrand (D-New York) and Chuck Schumer (D-New York) each said via Twitter they viewed the bill as a tax break for corporations that would have a negative impact on middle-class citizens. New York Gov. Andrew Cuomo (D) called the bill a “tax increase plan.”

“The tax reform plan, they call a tax cut plan,” Cuomo said in a statement. “It has a diabolical dimension, which is the elimination of the deductibility of state and local taxes … what makes it an even more gross injustice is, the state of New York contributes more to the federal government than any other state. New York contributes more to Washington than any other state. We’re the No. 1 donor state. We give $48 billion more than we get back. Why you would want to take more from New York is a gross, gross injustice.”

Duncan MacKenzie, chief executive officer of the New York State Association of Realtors said in a statement the bill would harm many New York homeowners.

“It will lessen the value of the property tax deduction and it cuts a host of other key housing-related tax incentives,” he said.

The Committee for a Responsible Federal Budget, a nonpartisan, nonprofit organization founded in the 1980s and dedicated to educating the public on issues with significant fiscal policy impact, estimated the bill would result in a $1.5 trillion increase to the national deficit.

Mark Snyder of Mark J. Snyder Financial Services, a Hauppauge-based personal financial planning and management firm, called the bill a “torpedo aimed at the wallets of Long Islanders” in an email. He also pointed to the elimination of the SALT deduction as clear evidence the bill would harm New Yorkers.

“As a representative from New York, I’d kick this bill to the curb,” he said when asked what he would do if he were tasked with voting on the bill.