U.S. Sen. Chuck Schumer (D-NY) and U.S. Rep. Tom Suozzi (D-Glen Cove) introduced new legislation to permanently restore New York’s deduction on state and local taxes on Friday.
The two Democratic officials have joined forces to eliminate the $10,000 cap on the state and local taxes deduction for more than a year. Their new proposal would permit taxpayers throughout the state to fully deduct state and local taxes on their federal income returns this year.
Both officials underscored the need to restore the deduction so Long Islanders do not flee the state due to the hardships caused by the coronavirus pandemic.
“The cap on SALT deductions has been a body blow to New York families,” Suozzi said. “Without the full SALT deduction, families will leave New York and the last thing we need in the midst of the health and economic devastation of COVID-19 is to lose our residents and taxpayers.
“When it comes to SALT, if you think Long Islanders needed and deserved this money before the coronavirus took hold, the stakes are even higher now because the cap is costing our community tens-of-thousands of dollars they could be using amid the crisis,” Schumer said.
The cap, signed into law by President Donald Trump as part of the 2017 tax legislation, limits the deduction for state and local taxes on federal tax returns to $10,000. It has led to increased federal taxes in areas with high property taxes like Long Island.
Repealing the cap, Suozzi said, would put money back into the hands of middle-class taxpayers despite claims from some it would benefit only the wealthy.
Repealing the tax cap, Suozzi said, will provide local governments and residents in states such as New York, which have been affected the most by the coronavirus, necessary resources in the ongoing battle against the virus.
“Some New Yorkers are complicit in funding our own demise by supporting elected officials who not only redirect billions of New York state’s federal tax dollars to their own states but also capped the SALT deduction. This is literally chasing people out of New York,” Suozzi said. “New Yorkers are left holding the bag in the form of higher taxes and our largest companies are being lured to other lower-cost states.”
Suozzi also said that New York has recently been one of the states that have paid more money to the federal government than they received. From 2015 to 2019, Suozzi said, New York, sent $116 billion more to the federal government than it got back. Over the same period, Kentucky received $148 billion and South Carolina received $87 billion more than they contributed to Washington.
According to 2017 data from the IRS, the average state and local taxes deduction for Nassau County homeowners prior to Trump signing the cap into effect, was $26,259.
From the same year, 53 percent of individuals who lived in the 3rd Congressional District, which includes Manhasset, Roslyn, Port Washington, Great Neck and Floral Park, among other areas, and stretches from Whitestone, Queens, to Kings Park in Suffolk County, took advantage of the deduction. The average deduction for those who filed in the district was $33,317, according to the data.
Nearly 50 percent of people who lived in the 4th Congressional District, which incorporates central and southern Nassau County, including Floral Park, Garden City, Hempstead, Mineola, Carle Place, New Hyde Park and Westbury, in 2017 used the deduction, receiving an average of $21,127, according to the data.
Kyle Strober, executive director for the Association for a Better Long Island said the loss of the full deduction for state and local taxes is “destructive” to the state’s economic state.
“Long Island’s middle class was gutted when they lost the crucial and full SALT deduction,” Strober said. “Without the full SALT deduction, the next generation of Long Islanders will struggle to purchase their first homes and others will be driven to relocate out of state.”
The legislation, Suozzi said, has a bipartisan following from fellow Reps. Andrew Garbarino (R-NY), Young Kim (R-CA), and Chris Smith (R-NJ).