ALBANY — The Cuomo administration introduced amendments to the executive budget late Thursday in the hopes that New York residents will be able to circumvent the newly enacted federal limits on the deductibility of state and local taxes.
Gov. Andrew Cuomo’s wide-ranging budget amendments, which mostly contain technical changes to legislative language, deal with a broad range of issues including taxes, specifically prohibiting sexual contact between law enforcement and individuals in custody, and early voting. Also included is an amendment that would prohibit a defendant from being able to ask a jury to find a harmed individual’s sexual orientation or gender expression to blame for a defendant’s violent reaction, the so-called gay panic defense.
The budget amendments create an optional payroll tax on employees whose income is over $40,000. Earlier this week, the Democratic governor announced that his administration would include an “employer compensation expense tax” in amendments to his executive budget proposal. Included in the amendments is also a proposal to set up charitable gifts trust funds to support education and health care that could be a way to circumvent the $10,000 cap on the deductibility of state and local taxes.
One of the charitable funds proposed by Cuomo “shall only be expended for the provision of elementary and secondary education for children in the state,” according to the bill’s language. Another fund, dedicated to health care, must be used for “the support of services relating to primary, preventive and inpatient health care, routine dental and vision care, hunger prevention and nutritional assistance, and other services provided to New York state residents with the overall goal of ensuring that New York state residents have access to quality health care and other related services.”
The amendment to the Cuomo’s proposed budget would allows cities, towns and villages to establish a 95 percent credit against charitable donations, meaning that if a taxpayer made a $10,000 contribution to a charitable fund, the taxpayer would receive a $9,500 tax credit on local property taxes.
The tax overhaul signed by President Donald Trump in December caps the aggregate deduction for state and local taxes at $10,000—which may increase the federal tax liability for homeowners in high-tax states such as New York and New Jersey. It’s unclear whether the federal government would be amenable to a charitable trust scheme.
Last month, Treasury Secretary Steven Mnuchin said the idea of skirting the deduction of state and local taxes through charitable donations is “ridiculous,” according to a White House transcript.
“I think it’s one of the more ridiculous comments to think you can take a real estate tax that you are required to make and dress that up as a charitable contribution. I hope that the states are more focused on cutting their budgets and giving tax cuts to their people in their states than they are in trying to evade the law,” Mnuchin told reporters at a White House briefing last month.
So far, New York, New Jersey and California are considering charitable funds as an end-around to the cap on state and local taxes.
Cuomo’s proposals, which also include decoupling the state’s tax code from the federal law, already have been skeptically received by Republicans who control the state Senate.
Asked by reporters earlier this week whether the tax reforms posed by Cuomo would be able to be negotiated before the start of the fiscal year on April 1, Senate Majority Leader John Flanagan said “no.” The Long Island Republican added that the idea of a payroll tax “makes my head spin” and that the “visceral reaction” from members of his conference is that they are opposed to it.
Also included in the amendments to the governor’s proposed budget is a ban on so-called gay and trans panic defenses. The proposal would prohibit a defendant from being able to ask a jury to find a harmed individual’s gender, gender identity, gender expression or sexual orientation to blame for a defendant’s violent reaction.
Eric Lesh, the executive director of the LGBT Bar Association of New York, praised the Cuomo administration’s proposal, which already has been banned by Illinois and California.
“This will help ensure that those who commit violent acts are unable to manipulate the anti-LGBT biases of the public to escape justice for their crimes,” Lesh said in a post on Medium.
Cuomo also has proposed a measure that would amend the penal law to prohibit sexual contact between law enforcement and individuals in custody. The proposal states that a person who is under arrest, detention or in custody is incapable of consenting.
The Cuomo administration also allocated $7 million for services and expenses related to early voting. During his annual state address, Cuomo said that he would pursue allowing New Yorkers to cast their votes up to 12 days before an election. A broad coalition of labor unions and good government groups had been asking for the governor to allocate $7 million in funding for early voting.