The slogan “I Love New York” will be turned on its head if Gov. Andrew M. Cuomo increases payroll taxes and cuts income taxes to get around the federal Tax Cuts and Jobs Act.
The governor claims this shell game won’t hurt businesses because their federal tax deductions have no cap and they can write off the increases. He says it won’t impact employees because their gross salaries may drop, but they would get the same take-home pay. It’s a way to circumvent the new $10,000 IRS limit on state and local taxes. But, if unincorporated businesses are included in this plan, few will opt in.
The scheme will create confusion and complexity, require hours of additional administrative work and leave business owners in limbo if the IRS challenges its legality. Employees won’t opt in because a lower gross salary is linked to lower employee retirement benefits.
Cuomo’s attack on the federal tax law comes as small-business owners across the nation are ecstatic about it. They are making plans to expand, create new jobs and increase worker pay. Now, Cuomo is quashing a potential for growth and job creation in New York with a counterproductive idea. Uncertainty about state’s finances and a foreboding of higher taxes will dash plans for growth and put our state at a disadvantage.
Another concern is IRS data in 2017 showing the number of New Yorkers departing the state since 2010 has topped one million. Cuomo’s sleight of hand tax plan will send more companies and taxpaying workers to lower-tax states. When they leave so does their consumer spending, and the state economy will plummet.
The governor’s claims that under federal tax reform in New York, “everybody’s taxes go up 25 percent.” That’s patently false.
The vast majority of New Yorkers benefit under the new law. Workers already see higher paychecks due to less withholding. Cuomo’s misleading statement that tax reform will be a $14.3 billion tax hit on New York doesn’t even factor in lower tax rates or a larger child care credit. You must wonder if dramatic soundbites help raise Cuomo’s political profile at a time he is considered a contender in the next presidential race.
The situation the governor finds himself in is due to years of failed fiscal policies that continue to make New York a high-tax state. This year, his budget proposes increasing taxes and fees by $1 billion, despite a $4.4 billion state deficit.
The only lasting way to reverse New York’s dire economic picture is to cut spending, rein in costs and encourage business owners to “Love New York.” Our governor should learn from members of Congress who courageously voted for tax reform. As a result of that law, we now see business growth, employees getting bonuses or a raise and a healthier national economy.
As published in the Buffalo News on February 19, 2018: http://buffalonews.com/2018/02/19/another-voice-cuomo-tax-scheme-unlikely-to-do-the-job/