The associations representing New York State’s schools, local governments, and realtors today applauded New York’s Congressional Members who voted no on the Federal Budget Resolution that narrowly passed in the House of Representatives, and renewed their request that the State’s delegation oppose cutting or weakening the State and Local Tax (SALT) deduction as congress continues to negotiate the terms of federal tax reform.
The House of Representatives voted by a 216-212 margin to adopt a budget resolution, clearing the way for action on a tax reform bill. Several Republican members of the New York delegation opposed the budget resolution to protest plan to eliminate or alter the SALT deduction. Representatives Donovan, Faso, Katko, King, Stefanik, Tenney, and Zeldin voted no on the budget resolution.
Nearly 96 percent of federal income tax itemizers utilize the state and local tax (SALT) deduction. In 2015, over 3.3 million households in New York State claimed the SALT deduction, at the highest average of any state in the nation at around $24,000. 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.
The SALT deduction 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.
In light of its anticipated impact on New York State tax filers, the respective leaders from New York State are asking the congressional delegation to continue opposing efforts to eliminate or weaken the SALT deduction as they consider the overall federal tax reform package.
The measure passed largely in part to the 'yes' votes from Tom Reed and Chris Collins. Reed issued the following statement:"This budget is a critical step towards making reforms to our broken and outdated tax code. We have a once in a generation opportunity to make positive changes that will mean more money for hardworking folks and spark our economy. The American people want and deserve a simpler, fairer tax structure. The time for tax reform is now, so let’s get to it."
