Legislation proposed by Senator Simcha Felder (D- Midwood) aims to protect New York taxpayers by creating a tax credit equal to any federal tax increase caused by a Washington tax reform plan that eliminates state and local tax (SALT) deductions.
“This bill would hold harmless New York taxpayers from any possible tax increases caused by federal tax reform,” said Senator Felder. “I’m not interested in whose fault it is; let the governor and the president fight that out. But we cannot stand by and force New Yorkers to become the collateral damage of tax reform.”
With the elimination of the SALT deduction, New Yorkers would suddenly see the actual cost of state and local taxes on their federal tax bill. The sharp increase would be an expensive, eye-opening lesson to middle class taxpayers in the actual financial toll of living in a high tax state.
“As always, New York’s middle class bear the brunt of political maneuvering that isn’t their fault, but will soon be their problem,” said Senator Felder. “My legislation protects all hardworking New Yorkers from the uncertainty in Washington while saving their hard earned money and giving them peace of mind.”
Felder’s bill would have no effect where a tax bill increases due to an increase in the taxpayer’s income. Also, due to its many variables, the full cost of the bill can only be determined once a final tax reform bill leaves congress.
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One should remember that renters don’t get a deduction for mortgage interest, and if one takes the standard deduction (which occurs more often with renters, as well as anyone with a low income) the “loss” of being able to deduct state and local taxes is non-existent. For those who don’t itemize, the increase of the standard deduction, along with the increase of the child tax credit, will mean a major benefit from the Trump plan. Felder’s plan is heavily tilted towards home owners (and in New York, you need to be well off to own a home) and people in high income brackets, which are probably a group that doesn’t need financial assistance.
Simcha,
What a great idea! Kol Hakovod.
Akuperma, the issue for many New Yorkers is the elimination of the deduction of state and local income taxes. The latest I heard is that the Senate version is likely to cap but not eliminate the property tax deduction. I’d guess that more frum Jews than others in similar circumstances itemize, simply because we have large charitable contributions.
As for this proposal, who’s going to pay for it?