High-tax states forming coalition to sue government over tax bill, SALT changes

By Government SpendingFOXBusiness

New York Gov. Cuomo suing to stop GOP tax reform bill

Former. Lt. Gov. of New York Betsy McCaughey discusses New York Gov. Andrew Cuomo’s lawsuit to stop the tax reform law from going into effect, calling his argument that the bill is “unconstitutional” is “laughable.”

While U.S. corporations are cheering the new tax law, a handful of high-tax states are forming a coalition to sue the federal government over how their constituents are being affected, Gov. Andrew Cuomo (D-N.Y.) said on Friday.

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Cuomo added that the Tax Cuts and Jobs Act “destroyed a century-old tax structure between the federal government and the states.”

Cuomo and leaders of other high-tax states like New Jersey, Connecticut and California have been railing against the new law because of its treatment of the popular state and local tax (SALT) deductions, which have allowed residents to save billions on their tax bills.

The newly-implemented tax legislation caps SALT deductions at $10,000, which is well below the average amounts claimed by individuals residing in states like New York, California and New Jersey. The average deduction claimed in California, for example, is $22,000, according to Kevin de Leon, a member of the California state senate.

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Gov. Dannel Malloy (D-Conn.) said on Friday that Connecticut taxpayers stand to lose $10 billion as a result of changes to the SALT deduction.

As previously reported by FOX Business, these states were exploring creative ways to circumvent the new SALT cap, including allowing taxpayers to make charitable contributions to an established state fund in order to earn a credit, or implementing an employer-side payroll tax. Through the latter, employers would essentially pay income taxes to the state, which are deductible, on taxpayers’ behalf. Workers would receive a taxable income that would be the same as if they could claim the SALT deduction.

Cuomo has made no secret about his plans to sue the government on behalf of New York State. During his State of the State address earlier this month, he called the SALT changes an “assault” on the state, which would raise middle class families’ property and state income taxes by 20% to 25%. He pledged to challenge the law as unconstitutional, start and repeal and replace effort and explore a major shift in tax policy within the state.

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