Gov. Andrew Cuomo's spin on the tax hikes in the state budget approved this month is this: they won't really count when the $10,000 cap on state and local tax deductions is repealed by Congress.
But it's not entirely clear when, or if, that cap put in place as part of the 2017 federal tax law will actually be thrown in the wastebin by the narrow Democratic majorities in Congress.
New York's own Democratic House delegation on Tuesday nevertheless kept up the cause. A letter released by Reps. Tom Suozzi and Jerry Nadler, signed by 15 Democrats from New York, sent a warning to their leadership: they could wind up opposing future tax bills if the cap is not repealed.
The provision was not taken up in the most recent stimulus measure approved last month. Now Congress is considering a massive infrastructure bill that would be partially paid for with tax increases on corporations.
"Repealing the SALT limitation is a question of fundamental fairness. With the SALT limitation in place, New Yorkers — who already send $40 billion more in taxes to federal coffers than the state receives in return — face the manifestly unfair risk of being taxed twice on the same income," Nadler said. "Now, as New York State reckons with the vast economic impact of COVID-19, including a workforce depletion of more than one million jobs, eliminating the SALT limitation is imperative. I and many of my colleagues from New York stand prepared to work with House Leadership to restore the SALT deduction. We are equally prepared to oppose any legislation that fails to do so."
The cap affects high tax states like New York, Illinois and California. In the past, Cuomo has railed against the provision for also affecting heavily Democratic states when it was put in placed under Republican control.
“Our effort to restore the SALT deduction is gaining momentum. My thanks to Chairman Nadler, the Dean of the NY delegation, for his leadership and all of my NY colleagues that are fighting for New Yorkers,” Suozzi said. “The cap on the SALT deduction has been a body blow to New York and middle-class families throughout the country. Over the coming months we will work with House Leadership and the White House to highlight the middle-class families unfairly hurt by the SALT cap. At the end of the day, we must fix this injustice. No SALT, no deal.”