County Leaders To Congress: Oppose Eliminating SALT Deduction; Follow Guiding Principles for Tax Reform
As New York State becomes a focus of federal tax reform proposals, county officials continue to raise concerns that any changes to the State and Local Tax (SALT) deductions would have a direct and negative impact on New York homeowners, communities, and local governments. Today the Association of Counties released a set of simple guiding principles for tax reform, in light of a visit by Vice President Mike Pence to Western New York.
“Elimination of the SALT deduction would be a devastating blow to individual households countywide and to the county overall, and would strike at the American tradition of federalism. This is a horrible and unconscionable idea that steals from the many to give to the few and we are urging the public to contact their congressional representative to stop this in its tracks,” said Mark Poloncarz, the County Executive for Erie County, where Vice President Pence is visiting to promote federal tax reform proposals that include eliminating the SALT deduction.
“This is not tax reform, it is a theft from every hard-working household in WNY, one that reaches directly into their pockets to double-tax them and then redistributes that money to the very wealthy and corporations. It’s a brazen and unethical federal overreach, without logic or reason, and it clearly and demonstrably hurts working families and individuals,” said Poloncarz.
"When it comes down to it, efforts to change the SALT deduction are efforts to punish New Yorkers. We pay more to the federal government than we receive in return. If we are no longer able to deduct what we pay in state and local taxes, then we will be giving even more to the federal government, and we will still get far less back. It's a double negative and our Congressional members need to stand firm and reject this outright, not negotiate a new provision of the tax code, but to simply reject it as a matter of principle," said Onondaga County Executive Joannie Mahoney, the president of the NYS County Executives Association.
In 2015, over 3.3 million households in New York State claimed the SALT deduction. A recent study by PwC commissioned by the National Association of Realtors found that homeowners with an adjustable gross income of between $50,000 and $200,000 would see an average annual tax increase of $815 if the SALT deduction is eliminated, even when coupled with other federal tax reform proposals.
"Our elected federal representatives need to know that this proposal would hurt the hardworking homeowners of New York. We 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 we already paid. It's not far to New Yorkers and it's not fair to New York," 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.
Guiding Principles for Federal Tax Reform
In advance of the Vice President of the United States meeting in Western, New York, the NYS Association of Counties released the following guiding principles as negotiations continue to reform the Federal Tax Code:
- Federal tax reform is necessary, but it must not undermine federalism in the process. The deduction for state and local taxes has been in the federal tax code since the beginning and it protects taxpayers from double taxation. Making individuals and families pay federal taxes on taxes they already pay is something that should never be compromised.
- Tax reform must be fair to New Yorkers, especially middle class families that are homeowners. These individuals are particularly vulnerable to paying higher federal taxes than they already do under the outlined proposals because of the elimination of the State and Local Tax (SALT) deduction, even if there is a doubling of the standard deduction.
- New York taxpayers already pay more in federal taxes than any other state, compared to what we get back in in federal outlays. The proposals on the table would make that imbalance worse. Federal tax reform must be fair and should not be financed on the backs of a handful of states.
For more on NYSAC’s opposition to eliminating the SALT deduction, visit http://www.nysac.org/taxation.
