“The federal administration’s SALT policy is an economic civil war.”
New York Gov. Andrew Cuomo on Thursday blamed President Donald Trump’s tax overhaul for an exodus of wealthy New Yorkers.
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The Democrat said at a press conference that changes to the federal tax law cost his state $2.3 billion in tax revenue. He singled out last year’s so-called SALT cap on deductions for state and local taxes at $10,000 as the reason for the shortfall and immigration out of the state.
“It is devastating. And the state’s with the higher state and local taxes, obviously it’s more devastating,” Cuomo said. “The blue states actually got a tax increase. It was an economic civil war done suddenly, done with nuance, but we now have one tax structure and the red states have a different tax structure.”
However, a day earlier Trump said it New York was responsible for its own problems, suggesting state taxes were too high for business owners and affluent residents. He urged those affected to leave if necessary.
“I love those people,” the president, who said he’s “open to” revising the SALT cap, told the Regional Reporters Association. “Those people are my voters. They’ve been treated very badly. If New York isn’t gonna treat them better, I would recommend they go to another state where they can get a great job.”
Cuomo didn’t like that.
“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,” he said. “I’m disappointed that President Trump, being a New Yorker, would say anything disparaging about New York. We want all New Yorkers to stay and prosper and do well.”
The governor insisted that in all other measurable metrics, his state is doing well.
“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. So it’s a totally different economic reality than [Trump] is talking about,” he said.
The Tax Cuts and Jobs Act of 2017 set the cap for SALT deductions at $10,000 as a way of offsetting the lower rates on individual and business tax rates the bill passed.
Many affluent New Yorkers have been fleeing to other states, such as Florida, which has no state income tax.
“Our tax base is getting more diversified, however SALT impacts progressive tax policies disproportionately,” Cuomo said. “SALT encourages high-income New Yorkers to move to other states and if even a small number of high-income taxpayers leave the state, it would harm state revenues and impact critical funding for education, health care, infrastructure and the middle-class tax cuts.”
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