Gov. Andrew Cuomo and President Donald Trump have been in a war of words with Cuomo criticizing the 2017 tax cuts as a “direct political attack” on New York and other Democratic states and Trump saying residents should leave upstate.
Cuomo is blaming the tax reform package, which capped at $10,000 the amount of state and local taxes residents can deduct on their federal return, for causing estimated tax payments to shrink by $2.3 billion, and for people to leave New York for other states.
Cuomo said that the average New Yorker pays $22,000 in state and local taxes, which means that only $10,000 can be deducted. He said it was an “economic civil war” with different tax structures for red and blue states.
“So you pay your income tax to New York City, the federal government taxes that. You pay your property tax, the federal government taxes it. It’s a tax on tax,” he said Thursday, according to a transcript of his remarks.
Cuomo said 52 of the 62 counties have state and local deductions of above $10,000.
Tax collections are down 50 percent, according to Cuomo. Massachusetts is down about the same. Connecticut is down close to 50 percent and New Jersey has decreased 40 percent.
State officials are receiving anecdotal reports that high-income earners are moving to other states. Cuomo said that the state’s tax code is highly progressive and the top 1 percent of taxpayer accounts fund 46 percent of the income tax receipts, according to a news release.
The problem is people are moving out of New York state and Cuomo has admitted that raising taxes on the rich will not work because they will leave and revenues will shrink further.
The state also has filed a lawsuit against the federal government seeking to repeal the tax law on the grounds that it is unfair and represents double taxation.
Meanwhile, on Wednesday Trump said upstate residents should consider leaving.
“If New York isn’t gonna treat them better, I would recommend they go to another state where they can get a great job,” he said before reporters from regional news outlets, according to an account in The Buffalo News.
Trump went on to say that “states that have been really well run and don’t have debt, those states have a big advantage over states that have been poorly run, like New York and others, and have a tremendous amount of debt.”
Trump did say he was open to revisiting the issue after he was told that upstate voters were also being hurt by the SALT deduction change.
Cuomo criticized Trump for commenting about the economy in the state.
“Trump talking about upstate New York is like me talking about Antarctica, you know, I’ve never been there and I know nothing about it,” Cuomo said “Upstate New York, jobs are coming back, the unemployment rate that is now at an all-time low in the State of New York, that is all across the state. It’s not just New York City. Young people are moving back to Buffalo. Young people are moving back to Rochester. So it’s a totally different economic reality than he’s talking about.”
He also said that Trump should follow in the footsteps of President Ronald Reagan, who had considered changing the SALT deduction and did not go through with it.
I have an issue with Cuomo continuing to blame the federal government for how New York’s tax structure is set up. The makes it seem like powerful forces are conspiring against the Empire State to make it have high taxes.