New York Republicans are making a last-minute attempt to save a tax deduction that heavily benefits homeowners, but the prospects of a compromise are looking increasingly unlikely, key lawmakers say.
As a result, a Republican-driven tax plan, backed by President Donald Trump, is on track to eliminate the deduction for state and local taxes, or significantly restrict it.
“I think that’s a fair assumption at this point,” said Rep. John Faso (R-Kinderhook), one of several Republicans who met with party leadership in the House late Monday to discuss a compromise. The House might vote on the plan as early as Thursday.
Rep. Peter King said the New Yorkers’ proposed compromise — retain the deduction for four years for everyone, keep it after that for those who earn $400,000 or less annually — didn’t fly with GOP leaders. “No, I don’t think so at all,” said King (R-Seaford). “They think they have the votes. So there was no hint of compromise.”
And if the state and local tax deduction — often referred to as SALT — is abolished or severely restricted, Northeast Republicans could suffer the “ultimate self-inflicted wound” at the ballot box next year, King said. While residents in other states could see tax cuts under the Republican/Trump plan, many New Yorkers would see a tax hike and take it out on Republicans, he said, calling the proposal “bad for Long Island.”
At issue is an element of GOP tax proposals in the House and Senate that would end or significantly alter one of the most popular deductions in New York. Under the Senate plan, taxpayers who itemize their returns would no longer get to deduct the amount paid in local and state taxes from their federal taxes, changing a tax policy that benefits high-income, high-tax states such as New York, California and New Jersey. In New York alone, some $68 billion is claimed annually.
The House plan eliminates the deduction for state income taxes paid while allowing one for property taxes up to $10,000. While many upstate homeowners would be covered by that threshold, many Long Islanders wouldn’t.
Seven of the nine Republicans in New York’s House delegation have said they oppose the tax plan because of that one proposal. Several said they have been buttonholing GOP colleagues trying to get it changed.
“I’ve been doing it every single day,” said Rep. Lee Zeldin (R-Shirley). “If I see a colleague say something that’s inaccurate, I’ll reach out directly.” Asked if the effort would escalate, he said: “It’s pretty escalated right now.”
Several Republicans met with House leaders Monday to float the compromise. “We hope there is some ability for us to retain this in a better form than what is being proposed now,” said Rep. Dan Donovan (R-Staten Island), one of those who organized the meeting.
Donovan, who called the deduction the “No. 1 concern” he hears about in his district, and Zeldin sounded more optimistic than others at the delegation’s chances to alter a plan being rapidly advanced by their own party.
“Whatever passes the House is not what is likely to go to the president’s desk. So I see multiple opportunities ahead,” Zeldin said. “I would not, at this point, predict any certain outcome.”
But King contends “the only way to do this is to block it in the House . . . We are definitely trying to . . . it’s going to be tough,” he said.
King said he is primarily hearing from “Trump voters” — his district switched from backing Barack Obama in 2012 to Trump in 2016 — worried about an increased tax bill because of the loss of the deduction.
Donovan and Zeldin said they don’t believe they would be blamed for the reduction or elimination of the tax deduction if it is enacted. “I think constituents would be proud of the members for standing up against” the proposal, Donovan said, “that we stood up and voiced their concerns.”