We find it odd that Gov. Andrew Cuomo now believes that New York’s property tax system is a “cancer” on the state.
It’s even more unusual for him to single out local governments to reduce costs because property taxes are such a burden on local residents, especially since it has been our observation that the 2 percent tax cap has kept local taxes under control and forced schools and municipalities to be more frugal than at any point in recent memory.
Gov. Cuomo obviously does not have his finger on the pulse of our small communities.
What we heard last week in the governor’s annual State of the State address was partly a declaration of war against Donald Trump and the Republicans’ new tax plan, and partly a declaration of his intention to be the next president of the United States.
We’re concerned the latter will come at the expense of New Yorkers, who would be better served if Gov. Cuomo first tried to be a better governor.
While most of us don’t have to worry about losing any significant portion of the property tax deduction (to be capped at $10,000 in the future), we were surprised to learn that a full third of taxpayers in California, New York and New Jersey deduct at least $17,000 a year.
That’s why Gov. Cuomo sees the new tax plan as not only a crisis for taxpayers, but an attack on a significant segment of New Yorkers. He promised in his State of the State to restructure our state tax system to combat the losses many will see at the federal level.
The governor wants to enact a massive restructuring of the state tax code from an income tax system to a payroll tax system. We expect to hear more details when he announces his budget plan in a couple weeks.
Apparently, the new federal tax plan was done so quickly that there are a multitude of loopholes that allow taxpayers to get around the essentials of the plan. In this case, employers would pay more under payroll taxes — they are deductible under the new plan — while individuals would not have to pay any state income tax. That would make it a win-win for the employer and employee.
The plan calls for individuals to take a cut in pay, but since there would be no state income tax, their take-home pay would remain the same.
Anyone else worried?
We can’t think of anyone who is going to be dancing a jig over taking a pay cut, no matter how much their taxes are reduced, especially when there are exceptions so some workers will not have to take a pay cut, such as union workers or those already earning minimum wage.
And those are just the complications we understand. Some believe the new plan could be a lot of extra work for businesses, and perhaps the final straw to send a company out of state.
Especially when you consider some of the other challenges the state is facing, such as a $4 billion budget shortfall and another $2 billion in federal funding cuts to its health care programs.
We share this reaction from the nonprofit and fiscally conservative Empire Center:
“The idea of replacing all or part of the state peronsal income tax (PIT) with a payroll tax, partially subsidized by the federal government via business tax deductions, might sound plausible or even appealing on the surface to politicians worried about the impact on their revenue cash cows.
“But on closer inspection, even taken on its own terms, the payroll tax idea is not nearly as simple as it sounds. In fact, any attempt to broadly displace the PIT with a payroll tax would be fraught with mind-bending complications and virtually impossible to implement.”
Do any of us want to hear terms like “mind-bending complications” and “impossible to implement” when it comes to our taxes?
We wondered if Gov. Cuomo might be better served taking a hard look at state government spending and mandates before reading the riot act to smaller communities that are already struggling to stay under a tax cap.
Just recently, we called the governor out about his bloated staff and how he hides the payroll by paying them through various agencies outside the executive branch.
We’re pretty sure Gov. Cuomo could enact a 10 percent across-the-board cut in state personnel and few of us would notice the difference. He could start with well-paid spokespeople who serve absolutely no purpose.
We perused the governor’s 22 proposals for the coming year and there are many worthwhile ideas that should be explored, including a new look at the tax code.
But New York should not make the same mistake the federal government did. It should take its time and work through its options carefully.
That is not what the governor is doing here.