President Trump’s budget director defended a tax reform plan to eliminate the deductibility of state and local taxes.
ALBANY — President Trump’s budget director defended a tax reform plan to eliminate the deductibility of state and local taxes by saying it’s not Washington’s fault New York’s taxes are so high.
Gov. Cuomo, state Democrats and even some Republicans have said high-tax states like New York would be severely hurt if Congress eliminates or changes the federal deductibility of state and local taxes.
“Whose fault is that?,” White House Budget Director Mick Mulvaney told regional reporters, according to the Buffalo News . “Is it the federal government’s fault that New York taxes are so high that they’re driving people out of the state?”
Mulvaney added that “I don’t think it’s up to the federal government to save New York from its bad decisions.”
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Cuomo and state Controller Thomas DiNapoli said eliminating or changing the federal deductibility could cost New York billions of dollars.
But Mulvaney, according to McClatchy, said it’s not fair that taxpayers in low-tax states like his home state of South Carolina are helping to subsidize high-tax states like New York.
“If our lives are entirely, exactly the same, we make the same amount of money, we have the same car, our kids go to the same schools — but you live in New York City, and I live in South Carolina, why should I pay more federal taxes than you do?,” he said. “Because that’s the way the world works right now. And I think you could make the argument that is not fair, that is not right.”
He also said other changes in the tax reform bill, like a likely doubling of the standard deduction, would offset the loss of deductibility for most people.
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In a statement, Cuomo shot back at Mulvaney, and said the budget director “should know better and he does.”
He noted that New York sends $48 billion more to the federal government in taxes than it gets back in services.
“I’ll make it simple: Just give New York the $48 billion we send to Washington that makes us the number 1 donor state in the nation and he and the President can do whatever they want with state and local tax deductibility,” Cuomo said.
But Mulvaney wanted no part of a donor state argument.
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“The system is not set up so that states get back the same amount of money they put in,” he said, according to the Buffalo News.
He also dismissed Cuomo’s repeated argument that eliminating the deduction would amount to double taxation on New Yorkers.
“I’m like: ‘No, we’re only taxing you once. Somebody else just happens to be taxing you, but we’re only taxing you once,'” Mulvaney said.
The Senate would eliminate the deductions completely while the House version, which could be voted on as soon as Thursday, would eliminate deductions on state and local income taxes and cap at $10,000 deductions for local property taxes.
