New York Democratic Gov. Andrew Cuomo believes the new tax law is a declaration of “economic civil war” on high-tax liberal states because it limits the deductibility of state and local taxes to $10,000 per year.
“One of the really devilish things in the bill, is they then eliminate the deductibility of state and local taxes, which sounds like a mouthful, but what it says is up until now, for over 100 years, you paid a state tax, you paid a local tax, you deducted that from your federal tax. They’re eliminating that. So you’re now paying two taxes, you pay a tax to the state, or a tax to the local government. And then the federal government taxes that tax,” the governor told CNN, “It happens to occur coincidentally on only blue states.”
The vast majority of Americans do not itemize their deductions on their tax returns, and instead take the standard deduction. The new law doubles that standard deduction. With rare exception, only the wealthiest Americans will face an issue with the new $10,000 deduction cap.
Cuomo is encouraging New Yorkers to pay their 2018 taxes by the end of 2017 in the hope of allowing them to deduct the full amount of their 2018 taxes this year, thereby avoiding the new law’s limit for one year.
He announced Democrats are “going to propose a restructuring of our tax code” in an attempt to avoid higher taxes on the wealthiest New Yorkers. “I’m not ever sure what they did is legal and constitutional,” Cuomo added.
When asked how changing the tax code could be illegal, Cuomo said, “There’s never been a double taxation before in the history of the nation.”
The estate tax, commonly called the “death tax,” is double taxation — with the money earned by someone being taxed when they earn it, then it being taxed again when that person dies.