Republicans who control the state Senate rejected Gov. Andrew Cuomo’s proposal to implement a payroll tax on employers in an effort to counteract the federal tax overhaul. At a press conference in Albany on Tuesday morning, Senate Majority Leader John Flanagan told reporters that his conference was not at all supportive of Cuomo’s payroll tax idea, which the Democratic governor unveiled last week in his state address to legislators.
“I don’t like the payroll tax at all. I haven’t met any one of my colleagues who likes this—the payroll tax. People pay enough taxes already,” the Long Island Republican said.
Cuomo last week said he would soon announce a “major shift” in the state tax code that could “restructure the current income and payroll tax system.” Details on his tax plan are slated to be released later this month. A proposal to impose a payroll tax on employers, which is still legally deductible on federal taxes, would be an effort to stave off the effect of the federal tax overhaul on New York residents, many of whom stand to lose some of their state and local tax deductions.
The tax overhaul Trump signed in December caps a deduction for state and local taxes at $10,000—the deduction was previously unlimited—which may increase the federal tax liability for many homeowners in high-tax states such as New York and New Jersey. Cuomo argued that the federal tax law was “illegal” and said he would pursue a lawsuit to challenge the newly enacted law.
While the Cuomo administration “is exploring a variety of legal claims in response to the divisive federal SALT law,” legal experts doubt that the pending lawsuit has a solid legal basis.
Several Republicans in the Senate also have cast doubt on whether the state could successfully sue over the federal tax overhaul. Both Flanagan and his deputy, Sen. John DeFrancisco, R-Syracuse, said last week that the state was unlikely to win in such a lawsuit.
“We can’t sue our way into a better business climate. We can’t litigate more affordable taxes. We need to be proactive and do our part to make New York more affordable and create a better business climate,” state Sen. Fred Akshar, a Republican from the Southern Tier, said Tuesday.