He wants Donald Trump to repeal one of tax reform’s best features.
Spare a thought this week for the beleaguered underclass known as Albany politicians. New York Gov. Andrew Cuomo is heading to Washington to beseech President Trump to re-store the tax deduction that has propped up the Empire State’s profligate spending for decades. Let’s hope the President doesn’t fall for it.
Mr. Cuomo is blaming the state’s $2.3 billion budget shortfall on a political party that doesn’t run the place. He says the state is suffering from declining tax receipts because the GOP Congress as part of tax reform in 2017 limited the state-and-local tax deduction to $10,000.
“What it does is it has created two different tax structures in this country,” Mr. Cuomo said Monday. “And it has created a preferential tax structure in Republican states. It has redistributed wealth in this nation from Democratic states” to “red states.” In reality, the once unlimited deduction allowed those in high tax climes to mitigate the pain of state taxes. It amounted to a subsidy for progressive policies.
President Trump has said he might be open to revisiting the cap, and as with much else, who knows how serious he is? But that would be an enormous political and economic mistake.
Mr. Trump succeeded where President Ronald Reagan couldn’t in broadening the tax base.
Taxpayers can still write off $10,000, which means those with modest means are spared a tax increase. The Tax Foundation re-ported last month that repealing the cap would “almost exclusively provide tax relief to the top 20 percent of income earners, the largest tax cut going to the top 1 percent of earners.” The government would lose $600 billion over 10 years. This must be the first time in years that a Democrat has said the government needs less money, or that the rich need a tax cut.
The real problem is New York’s punitive tax rates, which Mr. Cuomo and his party could fix. ”People are mobile,” Mr. Cuomo said this week. “And they will go to a better tax environment. That is not a hypothesis. That is a fact.” Maybe Mr. Cuomo should stay in Albany and do some-thing about that reality.
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Appeared in the February 11, 2019, print edition.
…Credits: Wall Street Journal