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NY, other states to appeal ruling on Trump's SALT reform

Gov. Andrew Cuomo speaks about National Grid on

Gov. Andrew Cuomo speaks about National Grid on Nov. 26, 2018 in Westbury. Credit: Howard Schnapp

Gov. Andrew M. Cuomo and Attorney General Letitia James announced Tuesday that New York is leading the appeal in a multistate lawsuit against the Trump administration's SALT reform, a cap on the deduction for state and local taxes as a result of the 2017 Tax Act.

With the filing of the notice of appeal to the U.S. Court of Appeals for the Second Circuit, New York is joined by Connecticut, Maryland and New Jersey in challenging the Sept. 30 ruling by the U.S. District Court for the Southern District of New York. That ruling rejected the original suit, which argued that the SALT cap "is a politically motivated bid to effectively raise property taxes in predominantly Democratic states," a news release from the governor's office said.

"The Trump administration's SALT policy is retribution politics — plain and simple," Cuomo said in his statement, adding: "New York is already the nation's leader in sending more tax dollars to Washington than we get back every year, and we will not allow this administration to pick the pockets of hardworking New Yorkers to fund tax cuts for corporations and send even more money to red states. We will continue to fight this unconstitutional assault until it is repealed once and for all."

A statement issued by James said the cap "has already put a heavy burden on the hardworking, middle-class families of New York," and said estimates are it will cost state taxpayers more than $100 billion in coming years.

The lawsuit was originally filed in the Southern District in July 2018, arguing the new SALT cap was enacted "to target New York and similarly situated states, that it interferes with states' rights to make their own fiscal decisions, and that it will disproportionately harm taxpayers in these states," the statement read.

The 2017 Tax Act reversed more than a century of precedent in the federal tax code, the statement said, as it "drastically curtailed the state and local tax deduction by capping it at $10,000." According to Cuomo and James, an analysis by the New York State Department of Taxation and Finance "projected that the cap would increase New Yorkers' federal taxes by up to $15 billion annually."

Before enactment of the 2017 law, Cuomo and James said New York "already had the widest disparity among all states when factoring how much money New York sent to Washington and the funding it received in return."

The governor said unspecified media reports show "anecdotal evidence" that New Yorkers, "particularly the state's highest earners," are already moving residences and businesses to states like Florida because of the new caps on SALT deductions and that the top 1% of taxpayers in New York account for 46% of state income tax collections. Losing that taxpayer base, Cuomo and James said in the news release, threatens opportunities for state residents.

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