search

The Real Deal Logo

Trending

Swig finds new bottom with DTLA office sale at $94 a sfSwig finds new bottom with DTLA office sale at $94 a sfBillionaire hedge funder Larry Robbins makes South Florida moveBillionaire hedge funder Larry Robbins makes South Florida moveGlossier founder is buyer of $22M Brooklyn townhouseGlossier founder is buyer of $22M Brooklyn townhouseBrookfield’s deal to sell 777 Tower in Downtown LA collapsesBrookfield’s deal to sell 777 Tower in Downtown LA collapses
Politics
New York

Andrew Cuomo is waging an all-out assault on the GOP tax law

Governor Andrew Cuomo (Credit: Getty Images)
Governor Andrew Cuomo (Credit: Getty Images)
  • New York Gov. Andrew Cuomo said on Thursday that he is considering challenging the constitutionality of the GOP tax law in court. 
  • He’s also taking action to help New Yorkers circumvent a new cap on state and local tax deductions. 
  • But time is running out. The tax law will take effect on Monday. 

New York Gov. Andrew Cuomo is fighting back against the GOP tax law signed by President Donald Trump last week after months of legislative wrangling on Capitol Hill.

Cuomo is specifically targeting a change to the so-called SALT deduction, which currently allows high-income taxpayers in states like New York and California who itemize their deductions to benefit from an unlimited deduction on state and local taxes. Under the new Republican law, that SALT deduction is now capped at $10,000.

“We’re going to propose a restructuring of our tax code,” Cuomo said in an interview with CNN on Thursday. “I‘m not even sure what [Republicans] did is legally constitutional and that’s something we’re looking at now.”

In a subsequent tweet, Cuomo called the tax law “partisan” and said he believes that the cap on SALT is punishment for tax payers in overwhelmingly Democratic states.

Circumventing the president’s changes

Sign Up for the undefined Newsletter

Even though Cuomo is considering a potential legal challenge against Trump’s tax law, he has already taken action.

On Friday, he issued an executive order allowing local governments in New York to issue tax warrants for 2018 property tax payments, thereby giving property owners the chance to pay at least a portion of their overall bill before Monday, when the law takes effect.

“We’re doing this to circumvent the bill the president just signed?” Cuomo said at a press conference on Friday. “You’re damn right I am.”

Anticipating significant financial losses, homeowners across the country have been rushing to prepay their property taxes in recent days before the tax law goes live on Monday.

From Virginia to Massachusetts, and New York to California, municipalities — mostly in areas with higher levels of state and local income taxes — have seen a stunning increase in property-tax receipts.

“It’s been insane here,” James McAuliffe, the town treasurer in Milton, Massachusetts, told The Wall Street Journal.

McAuliffe estimated that roughly half of Milton’s residents would be affected by the new $10,000 cap. The limit also covers state and local income and sales taxes, but the law prohibits people from prepaying those taxes. Lawmakers left the prepayment of property taxes up to local municipalities.

In response to the surge in prepayments, the Internal Revenue Service (IRS) issued an advisory notice to taxpayers on Wednesday, warning them that gaming the system by prepaying their property taxes will only work if those taxes are paid and assessed in 2017. This means that some people who rushed to prepay property taxes that have not yet been assessed actually won’t end up avoiding the new SALT deduction cap after all.

“Those individuals now are not getting the benefits of those prepayments,” Nicole Kaeding, a tax expert, told The New York Times. “All that you’ve done is provided an interest-free loan to your municipal government.”

Tags
Andrew CuomoDonald TrumpPoliticsTaxes