Digging Deeper Into New York SALT
Published: December 13th, 2017

Digging deeper into New York SALT

By Joe Angelino

Sun Columnist

Last week I wrote about the recent peculiar split in the Congressional GOP votes on the proposed overhaul of the federal tax code. I mentioned the split in the Republican voting was along the Affluence Line, or the upstate – downstate divide. There was more to this topic I wanted to mention, so today’s column is Part 2 of Too Much SALT in New York.

The overhaul of the federal tax laws has highlighted just how much New Yorkers pay in taxes. With the looming tax revamp limiting tax deductions, even some New Yorkers are getting sticker shock over just how much they actually pay into SALT. (State and Local Taxes) According to the webpage WalletHub, New Yorkers pay the highest personal taxes in the country, particularly those making over $150K per year. Those earners shoulder a tax burden of 12.4 percent followed by Connecticut at 11.2 percent, Maryland at 10.4 percent, and New Jersey at 10.3 percent. At least when you pay into local taxes you see what your dollars are doing and can readily comment to elected officials. At the state level, it is often a mystery what happens to our money in Albany.

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For as long as there have been taxes, there has been the mantra of ‘tax the rich’. When New York City’s Mayor DeBlasio was running for his first term in office, his campaign constantly made the promise of universal pre-kindergarten. He said this would be funded by ‘taxing the rich’. For his re-election campaign this past year, he promised transportation and infrastructure improvements funded by the wealthier New Yorkers because, he said, “they can afford it”.

In the New York legislature, particularly the Democrat lead Assembly, there is always a plan to squeeze additional tax revenue from the more well-to-do residents. Currently there is a proposed across the board tax hike on residents earning over a million dollars annually. The Assembly Speaker feels that some New Yorkers should pay ‘more than their fair share’. Recently his attitude has changed and he feels any tax increases should be put on hold. There’s even rumors the Assembly may have to cut back on some spending (gasp!).

With the loss of SALT deductions from federal taxes, there are some wealthy in New York considering a move to more tax-friendly state. They might as well; they can afford to make a move. Sadly, when they leave the state their income tax dollars go with them. Some people call this the “183 Club”; live outside New York State for 183 days or more and you aren’t considered a resident for tax purposes.

Governor Cuomo calls the federal tax revisions “the ultimate fraud that will deal a death-blow to the New York economy”. His statement completely ignores the proposed tax code section that nearly cuts in half the corporate tax load. Our Governor reminds us the new tax code takes money from hard working New Yorkers to subsidize other states finances. That argument doesn’t hold up, because the money the federal taxes are taking is from the deduction we get because of the already too high state and local taxes. In the Governor’s mind, those tax dollars are supposed to be his for the taking.

With tax reality setting in, the Governor, the NYC Mayor and other political leaders are now defending the rich, in hopes they don’t move away. Or worse yet, they no longer contribute to their re-election campaigns. Mayor DeBlasio was recently heard to moan about the ‘human impact’ the federal tax revision will have on the wealthy in his city. Now the Mayor is the champion for people earning more $500,000 annually; a position that doesn’t sit well with his political base.

This hypocrisy is caused by fear. The fear that common people, both liberal and conservative, will realize just how much money is taken from them. Politicians fear they are getting backed into a corner where the only recourse is to cut into government programs and spending, because they certainly can’t raise our taxes any higher to support these programs if they plan to get re-elected.

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The hypocrisy is also caused by greed. If the wealthiest residents move from the Empire State, their income tax dollars will no longer feed into state government. There is already some creative thinking happening with regards to saving pet programs by devising new ways to obtain revenue. With all the attention on taxes, no politician is going to vote for a tax increase. My concern will be an upsurge in state and local fees to pay for government services. Fees are imposed by agency heads without a politician’s name associated with a legislative vote.

Another concern if the wealthiest of our state’s residents move away is the vacuum that will occur. That vacuum whooshing noise will suck all earners and taxpayers up a notch and the cycle will repeat itself until there is no one left in the state that works, or pays taxes.



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