Remember how Democrats told you the Tax Cut and Jobs Act was passed by Republicans to benefit the wealthy? Now it seems, Governor Cuomo is blaming Florida for stealing his cash cows. He believes his wealthy residents are fleeing New York for the Sunshine State. And the smart ones probably are.
Recently, Governor Cuomo announced a budget shortfall of $2.3 billion was anticipated in the state. Originally, Cuomo blamed the shortfall on the tax reform legislation. He was so concerned, he met with his archenemy President Donald Trump to ask him to reconsider the SALT deduction cap.
One of the items in the tax cut legislation was a flat cap on the SALT deduction. This means there is a consistent cap nationwide on how much taxpayers who itemize can deduct for state, local and property taxes. It was set at $10,000.
Following the meeting, Michael Zona, a spokesman for Republicans on the Senate Finance Committee said that Cuomo’s request is not likely to be taken up. He added:
It’s ironic that the same Democrats who criticized the Tax Cuts and Jobs Act for supposedly benefiting only the wealthy are now advocating for a change to the law that would primarily benefit the wealthy,”
“New York Gov. Cuomo to urge Trump to rethink tax changes”, Associated Press, February 12, 2019
According to the New York Post, New York state officials say the top one percent of the state’s income earners provide 46 percent of the state’s personal income tax revenues. Cuomo cited anecdotal evidence that wealthy residents were leaving the state for lower-tax states. Don’t tell Alexandria Ocasio-Cortez, but he also said:
“I don’t believe raising taxes on the rich. That would be the worst thing to do. You would just expand the shortfall,” he said. “God forbid if the rich leave.”
Never fear, the Governor is all about solutions. Not something silly like austerity or policy changes. Instead, he is looking to spread the pain. He is proposing that online retailers pay all state and local sales taxes. Which as we all know are passed on to consumers in the purchase price. This move is projected to cover about 10% of the projected $2.3B shortfall.
The cap on the SALT deduction was accompanied by a significant increase in the standard deduction. Prior to the changes, it was largely wealthy Americans who made up approximately 30% of taxpayers who itemized deductions. According to the Tax Policy Center:
With the changes to the standard deduction, estimates project only 6-10% of taxpayers will utilize itemize deductions for 2018. Those who do will likely remain on the higher end of the income scale. In deep blue states, the difference between the $10,000 SALT cap and the combined income and property taxes are requiring the wealthy to pay significantly more in federal tax if they itemize.
In an interview with CBS 4 Miami, CPA and estate planner Barry Horowitz said the change to long-standing deductions was resulting in significant costs. He estimated in New York a person who makes a million dollars a year, would pay $40,000 more come tax time. If they made $10 million, it could cost $400,000 a year.
Who can blame wealthy residents from New York for moving south? Especially to Florida where there is no personal income tax. The average property tax in the state is 1.1% while New York’s is 1.65%. And the average sales tax is also lower in Florida. Don’t even get me started on the weather.
Let’s just hope with this exodus, Florida’s new residents leave their politics behind. Guys, you are leaving New York for a reason! Don’t screw it up.
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