In an early routine, comedian George Carlin’s Hippy Dippy Weatherman would report that radar was picking up the approach of showers.
And then add that radar was also picking up the approach of incoming Russian missiles. “So don’t sweat the showers,” Carlin’s weatherman would advise.
We cannot fairly equate the recent town and county elections to the approach of Carlin’s showers. The issues of county corruption, a grossly dysfunctional assessment system and county finances are too important to dismiss.
But we can safely say that the tax plan presented by Republicans in the House and Senate – with President Trump’s support – is the economic equivalent of the Russian missiles headed toward Long Island.
The different plans presented by the House and Senate would be bad for the country, requiring the poor and the middle class to pay for tax cuts to corporations and the very rich and in the Senate’s case making changes that would result in 13 million people losing their health insurance. It would also raise the deficit by $1.5 trillion.
But a key part of each bill – the elimination of state and local tax deductions – would fall heaviest on states such as California and New York, blue states with higher taxes, with Long Island serving as the poster boy for bad impacts.
The House version is very bad, eliminating deductions for state and local taxes on federal returns, except for property taxes up to $10,000. The Senate version is worse, eliminating the state and local tax deductions entirely.
This is not an argument being made by representatives on one side of the aisle – at least on Long Island.
Reps. Thomas Suozzi, a Democrat, and Peter King, a Republican, said the Senate’s version will cost Long Islanders $2.5 billion annually.
That is $2.5 billion less for Long Islanders to spend on homes, cars, dinners or any other purchases that drive Long Island’s economy.
King, a former Nassau County comptroller, put it more bluntly. He said the proposal would “screw” New York.
Suozzi called the bill “devastating” for Long Island. Suozzi’s district has more than 250,000 families that use the state and local tax deduction, the most in the nation.
Gov. Andrew Cuomo said the end of the state and local tax deduction would ratchet up federal taxes and drive away wealthy New Yorkers, forcing the state to make up lost revenue by raising taxes on less wealthy taxpayers.
Mick Mulvaney, a former South Carolina congressman and Trump’s budget director, put the blame squarely on New York for the economic damage it expects for having high taxes.
Cuomo responded by noting that New York sends $48 billion to Washington, making it the No. 1 donor state in the nation, while King cited a Tax Foundation report that said South Carolina gets back $1.35 for every federal tax dollar it sends to Washington, but New York gets a return of 79 cents on each dollar.
“The fact is that states like South Carolina are living off New York,” King said. “Is that fair?”
Fair or not, Long Islanders need to consider what life here will be like if a tax plan along the lines being considered by either the House or Senate is approved and the deduction for state and local taxes is reduced or eliminated – a possibility called likely by Suozzi and King.
The first impact faced by Long island is the loss of spending power. The state Department of Taxation and Finance found that nearly 950,000 Long Islanders would be hurt financially by the change.
That impact could be expected to be seen in sales tax revenues and fees for things like real estate sales.
A second impact could be expected in government spending, both state and local, beginning with schools.
School spending represents about two-thirds of the property tax paid by Nassau residents and budgets must be approved by voters each year.
What happens to voters when they can no longer deduct their school taxes from their federal returns? We can expect at least some of them to vote no on school budgets.
School districts could pare back their budgets, possibly sacrificing some of the quality that has drawn so any residents to their homes. Or school districts could take their chances at the polls.
One would expect that there will additional pressure to take a look at reducing the cost of government on Long Island in general with consolidation of governments getting a closer look.
Having government close to voters is nice, but the tax changes may make this an unaffordable luxury.
Much of this is hard to predict.
But one thing seems certain: if a tax plan along the lines now proposed is approved Long Island will never be the same.