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Editorial: Cuomo's bold end run

Gov. Andrew M. Cuomo’s roughly formulated plan to alleviate the pain of state taxpayers who might otherwise suffer under the new federal tax scheme is – so far, at least – a classic example of “it’s the thought that counts.”

The question now is whether the thought will translate into action.

The governor has been battered over his response to the new tax law, which limits the deduction for state and local taxes. His proposal, since fleshed out a little, is to reduce the state’s reliance on income taxes and instead begin a new, statewide payroll tax that employers would pay. Somehow, it would hold all parties harmless: neither employers nor employees would see their tax liabilities increase and there would be no fiscal impact on the state’s budget. It will be quite a hat trick, if the governor gets it by the goaltenders at the IRS.

If it works, Cuomo would get well-deserved applause from the gallery. The details are sketchy; stay tuned. But such revenue neutrality has to be the guiding principal of the necessary effort to counter Washington’s hastily passed, poorly vetted tax reform.

The well-meaning plan would go like this: lower salaries for workers, who would then see their income tax payments drop, leaving them with the same take-home pay. Companies would be held harmless by reducing workers’ pay. In addition the payroll tax would be deductible on their federal corporate taxes.

But this is not the only trick up Cuomo’s sleeve. The other idea involves giving companies a state credit on their state tax filings to cover the cost of the higher payroll tax. The credit idea might stand a chance if it weren’t for the fact that 18 percent of residents are employed by nonprofit entities – hospitals, colleges, social services agencies or by federal, state and local government agencies that do not pay corporate income tax to the federal government.

There are other problems with these ideas, including the state’s differing tax rates, credits and deductions. There is no obvious one-size-fits-all solution.

New York, California and other states will be pummeled by the ill-advised Republican federal tax plan, which penalizes people with higher incomes who live in areas with higher property tax levels. Cuomo has repeatedly protested that the new law will saddle the state’s taxpayers with an additional $14 billion in obligations to Washington. And that from a state which already sends more money to Washington than it ever gets back in payments or services.

The new tax plan limits to $10,000 the amount of state income taxes and local property taxes that filers can deduct on their federal forms. Soon, there will be a big whooshing sound as these people who live in high-income, high-tax states like New York decide to move to other lower taxed states.

Republicans say Democrats need to figure out how to reduce taxes. To be sure, budget fat is a chronic Albany disease. But cutting it out should be a bipartisan effort, based in Albany.
Credit Cuomo for trying something creative and add in Reps. Pete King, a Long Island Republican, and Nita Lowey, a Westchester County Democrat, who introduced a bill late Tuesday that would fully restore the SALT deduction.

Their bill puts the spotlight directly on Rep. Chris Collins, R-Clarence and Rep. Tom Reed, R-Corning. Both local congressmen have supported the GOP tax overhaul, even if it does not truly serve their constituents. Collins has been stubbornly steadfast in his support of a law that hurts his own state. Reed, at least, seemed to be swayed, saying he is supportive of restoring the deduction but questioning why New Yorkers are heavily taxed in the first place.

King and Lowey are not naïve. The bill has a near-zero shot of passing the Republican-led House. Still, it’s worth trying, as is Cuomo’s push to get around the damage Washington has done.

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