The Real Deal New York

State of the State: Cuomo announces lawsuit to fight federal tax bill

State mulling restructuring tax code
By Kathryn Brenzel | January 03, 2018 05:10PM

Governor Andrew Cuomo during the State of the State address (Credit: Governor Andrew Cuomo via Flickr)

“Repeal and replace” is no longer just the siren song of Republicans. During his 2018 State of the State, Gov. Andrew Cuomo took aim at the federal tax bill, pledging to challenge the legislation in court and launch a “repeal and replace” campaign.

On Wednesday, the governor announced plans to sue the federal government, alleging that the tax law violates state rights. He said his administration is also considering restructuring the state’s tax code to make it less reliant on income taxes by establishing a statewide payroll tax system (which would be deductible).

He called the legislation an assault on New York, as it will add $14 billion to the state’s $48 billion federal tax contribution. The new bill caps the amount of state and local taxes, also known as SALT, that homeowners can deduct from their federal tax bill at $10,000 — a change the governor says will increase property taxes for some New Yorkers by 20 to 25 percent.

He said Washington’s setting the stage for “an economic civil war.”

“They made us less competitive, and they are helping other states at our expense,” he said. “They are trying to roll back New York’s role as an economic leader.”

The governor outlined what he called in his speech a “three-front war,” describing the enemies as economic threats from Washington, D.C., (compounded by the state’s estimated $4.5 billion deficit), recent terrorist attacks and allegations of rampant sexual misconduct.

In response to the third issue, Cuomo recommended requiring companies that do business with state governments to annually disclose the number of sexual harassment cases they’ve dealt with and the number of non-disclosure agreements they’ve made involving such allegations. Non-disclosure agreements in sexual misconduct cases, as The Real Deal reported in this month’s cover package, are fairly common.

He also suggested that the state only invest pension funds in companies that have significant women and minority representation. Cuomo is also seeking to ban the state from reaching non-disclosure agreements.

Cuomo mentioned that he’s called on the Port Authority and “private neighboring building owners” to hatch a redevelopment plan for Penn Station. He didn’t specify which owners were involved. (Though, Steve Roth’s Vornado Realty Trust and the owners of Madison Square Garden are safe bets.) In May, Cuomo suggested shifting control of the station from Amtrak to either the state or Port Authority. He noted on Wednesday that the state could exercise eminent domain to take control of the station.

The governor also called for a study on adding a new subway line to Red Hook through an underwater tunnel. In 2016, AECOM’s Chris Ward — former executive director of the Port Authority of New York and New Jersey — had floated the idea of extending the No. 1 train into Brooklyn, which he estimated would cost $3.5 billion. The proposal also sought to build up to 45 million square feet of residential space in Red Hook. The plan hinged on the bi-state agency allowing its 80-acre Red Hook Container Terminal to be used for the development. The governor on Wednesday called for the terminal to be relocated.

He also proposed creating a 407-acre state park on the north shore of Jamaica Bay. The governor didn’t specify the park’s location nor its cost.