Democrats in New York and California are fighting the tax overhaul. Here’s how

Lawmakers face an uphill battle

New York /
Jan.January 02, 2018 10:45 AM

Gov. Andrew Cuomo and Phil Murphy (Credit: Getty Images and Murphy4NJ.com)

States hit hardest by the Republican tax overhaul are contemplating ways to remedy some of the legislation’s most costly provisions.

In New York, Gov. Andrew Cuomo signed an executive order allowing residents to prepay their 2018 property taxes as a way to avoid the new $10,000 cap on state and local deductions. He’s also indicated that more changes will be revealed when he presents the state’s budget in mid-January.

“They want to target us for certain provisions?” Cuomo said in a recent press conference, according to the New York Times. “Well, let’s see if we can redesign our tax code to get out of the federal trap that they set.”

One idea being floated is for states to partly or completely replace their income taxes with payroll taxes paid by employers, similar to taxes on Social Security and unemployment insurance. Companies would reduce workers’ pay by the amount of the payroll tax and be able to deduct it; because workers never receive the money, they wouldn’t be taxed on it.

In California, lawmakers are mulling a proposal to allow residents to replace their state income tax payments with tax-deductible charitable contributions to their state governments. Kevin de León, a Democrat who is temporary president of the California Senate, is consulting with Kirk Stark, a law professor at UCLA, and others to craft legislation aimed at reducing the impacts of the tax law, which he admitted was “gaming” the system.

“This is highly unusual tax policymaking,” de León told the Times. “However, this is a highly unusual time in the history of this country.”

Meanwhile, New Jersey’s soon-to-be sworn in governor, Phil Murphy, has indicated that he may challenge the tax law on constitutional grounds.

Daniel Hemel, a law professor at the University of Chicago, said Democrats should reconsider gaming the tax system to insulate high-tax states. “The Democratic Party’s long-term agenda requires the federal government being able to raise revenue,” Hemel said. “This would be short-termism at its worst, potentially setting back the progressive agenda for decades to come in response to a bad tax bill.” [NYT] — Kathryn Brenzel 


Related Articles

arrow_forward_ios
Suburbanites with pitchforks as two hands ripping building plans
Suburban Nimbys oppose more housing. Do they have a point?
Suburban Nimbys oppose more housing. Do they have a point?
Gale Brewer (Getty, Gale Brewer)
City takes aim at landlords’ empty retail space
City takes aim at landlords’ empty retail space
From left: Silverstein Properties' Larry Silverstein and New York City Councilmember Julie Won along with a rendering of Innovation QNS (Getty Images, Julie Won for City Council, Innovation QNS Official Site)
Silverstein’s Astoria megaproject ups affordable housing commitment
Silverstein’s Astoria megaproject ups affordable housing commitment
MR Property Builders' Rich Rauff and 45th Street between Pacific and Prospect Streets in Copiague (Getty Images, Google Maps, MR Property Builders)
Honey, they shrunk the housing: Long Island project withers
Honey, they shrunk the housing: Long Island project withers
Village of Lawrence mayor Alex Edelman (Facebook, Getty)
Shovels down! Hempstead Town halts development in two villages
Shovels down! Hempstead Town halts development in two villages
A photo illustration of Daniel Brodsky and 75 West End Avenue (Getty Images, Google Maps)
Brodsky brings challenge to NYC Airbnb law
Brodsky brings challenge to NYC Airbnb law
(Illustration by The Real Deal with Getty)
How illegal Airbnbs slip through the cracks
How illegal Airbnbs slip through the cracks
From left: Boston Mayor Michelle Wu and South Boston Senator Nick Collins with Boston City Hall
Controversial transfer tax bill advances in Boston
Controversial transfer tax bill advances in Boston
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...