The New York State County Executives Association, comprised of the state's 18 county executives and the Mayor of New York City, is asking the State's congressional delegation to reject federal tax reform proposals that would unfairly punish the taxpayers of New York State. (View the Fact Sheet on how eliminating SALT would impact NYS.)
As Congress works on an overhaul of the federal tax code, the county leaders are highlighting two pending reforms that will hurt New York residents and local governments: 1) eliminating state and local tax deductions, and 2) eliminating the federal tax exemption for municipal bonds.
(To view your county's SALT profile, click here.)
"Our congressional members must understand that these two actions would have a direct and negative impact on our homeowners and local governments," said Onondaga County Executive Joannie Mahoney, president of the New York State County Executives Association.
Nearly 96 percent of federal income tax itemizers utilize the state and local tax deduction. Over 3.3 million households in New York State claimed the state and local tax (SALT) deduction in 2015. New Yorkers claim the highest average federal deductions of any state in the nation at $36,000, with more than two-thirds of this attributable to state and local taxes. In addition, a recent study by PwC, commissioned by the National Association of Realtors, found that homeowners with AGI between $50,000 and $200,000 would see an average annual tax increase of $815 if the deduction for state and local taxes is eliminated, even when paired with a doubling of the standard deduction.
"We already pay more in federal taxes than the state gets back in funding and grants. This action would dramatically tilt that imbalance against us," said Mahoney.
The county leaders letters to all of the members of the congressional delegation, including Senators Charles Schumer and Kirsten Gillibrand, asking them to oppose these two reform proposals as they consider the overall federal tax reform package.
"Our elected federal representatives need to know that this proposal would hurt the hardworking homeowners of New York. They will all be double taxed: Taxed at the local and state levels, and then forced for the first time in the nation's history to pay federal taxes on the state and local taxes they already paid," said Putnam County Executive MaryEllen Odell, president of the New York State Association of Counties.
The deduction of state and local taxes for federal income tax purposes has been a part of the tax code since its official inception in 1913, and even earlier with the precedent set by President Lincoln and the Civil War income tax. The deduction was one of the six original federal tax deductions because it represents a core principle of federalism in that it prevents double taxation since state and local taxes are mandatory payments.
The county leaders are also asking Congress to oppose eliminating or limiting the federal tax exemption for municipal bonds that lower the borrowing costs for critical infrastructure capital projects in local governments across the state. Over the last decade, more than 3,500 projects have been financed using tax exempt bonds in New York, accounting for nearly $150 billion in investments in our future. If the exemption had not been in place, local governments would have spent $45 billion in higher interest costs. This reform would drastically reduce future investments in public safety, transportation, other critical infrastructure projects.
"With this letter, we are asking our congressional members to put their constituents first. It's time to fight for working New Yorkers and reject the current plan for tax reform," said NYC Mayor Bill de Blasio, who joined his county executive colleagues in opposition to these proposals.
The New York State Association of Counties is a bipartisan municipal association serving all 62 counties of New York State including the City of New York. Organized in 1925, NYSAC's mission is to represent, educate and advocate for member counties and the thousands of elected and appointed county officials who serve the public. For more information, visit www.nysac.org