A bill to ease an added federal income tax burden on many Long Islanders that is expected to get a final vote in the House of Representatives as early as this week is drawing support from business groups, but opposition from some Republicans who have their own proposal.
The bipartisan bill sponsored by Rep. Tom Suozzi (D-Glen Cove) is aimed at the federal tax bill adopted by Republican President Donald Trump and the GOP-controlled House and Senate in 2017.
The law gave tax cuts to corporations and most middle-class families in moderate-cost areas, including the South and Midwest.
But to cover the cuts, the legislation placed a $10,000 cap on how much taxpayers could deduct on their federal income tax returns for state and local taxes — often referred to as SALT.
That resulted in many residents in areas including Long Island, in Westchester and Manhattan paying more in federal taxes because their state and local property taxes exceeded the cap.
Suozzi’s bill would be phased in and increase the cap to $20,000 for couples filing jointly for the 2019 tax year. Full deductibility for state and local taxes would be restored in the 2020 tax year.
To replace the lost revenue, the bill would return the top individual income tax rate to 39.6%, which was cut to 37% under Trump's tax law, Suozzi said.
Supporters of the bill include Rep. Peter King (R-Seaford) and Rep. Kathleen Rice (D-Garden City) and other members on both sides of the aisle.
But Rep. Lee Zeldin (R-Shirley) has another proposal.
Zeldin would fully and permanently reinstate the SALT deduction by closing what he called loopholes in the federal tax law.
Zeldin criticized Suozzi’s bill for reinstating the SALT deduction only until 2021 and for raising the tax rate on top earners. Zeldin’s bill, however, has failed to advance in the Democratic-led House.
Suozzi’s bill, which he said also has the support of groups representing mayors, firefighters and cities, faces an uphill battle in the Republican-led Senate, which passed the 2017 tax law.
“While there is still a long road ahead before this bill becomes reality, this is the first glimmer of hope that middle class Long Islanders have that this crucial exemption may be restored,” said Kyle Strober of the Association for a Better Long Island.