DiNapoli: Trump tax plan would hit Hudson Valley hard
Jul 12, 2017
President Donald Trump's plan to do away with state and local deductions on federal income-tax returns would disproportionately affect those in the New York City suburbs, according to the state Comptroller's Office.
A report Wednesday from Comptroller Thomas DiNapoli found 34 percent of taxpayers in New York itemized their deductions in 2014, which allowed them to write off more than $67 billion in state and local taxes — including income and property tax — on their federal returns.
The rate was higher in the areas surrounding New York City, including Putnam County, where nearly 51 percent of taxpayers filed itemized returns, highest among New York's 62 counties.
Westchester and Rockland counties, meanwhile, had 46 percent and about 45 percent of filers itemize, ranking fourth and fifth among counties, while Dutchess County had 41 percent — good for eighth.
Trump, a Republican, released an outline of his tax plan in April, proposing to simplify federal tax returns by doubling the standard deduction while eliminating most itemized deductions, such as the state and local tax deduction that benefits high-tax states like New York.
In a statement, DiNapoli, a Democrat, warned that the "stakes are high for New Yorkers."
“There is a distinct possibility that President Trump’s plan will hurt New York’s middle-class taxpayers and working families and give a windfall to the wealthiest among us," he said. "We really need more clarity on the specifics of the plan to fully assess its impact on New York.”
The average deduction on itemized returns in New York was $35,997 in 2014, the most recent year of IRS data available.
It was the highest mark in the country, topping other high-tax states California and Connecticut, which came in at $35,391 and $33,011, respectively.
The national average was about $27,000.
Trump's administration has defended the proposal, arguing that the federal government shouldn't be forced to lessen the blow for states that charge high taxes.
At a Milken Institute forum in May, Treasury Secretary Steven Mnuchin said the Trump administration doesn't "think it's the federal government's job to be subsidizing states."
"Most people in America should be able to do their tax return on a big postcard," he said. "Most people would take the standardized deduction. And I must say, for people like me who live in California — and it's a gorgeous place to live — you're going to be stuck with higher taxes you can't deduct."
Trump's plan to double the standard deduction — it's currently $12,700 for joint filers and $6,350 for single filers — would benefit those who don't itemize, which includes about two-thirds of New Yorkers, according to DiNapoli's report.
Many who take the standard deduction have lower incomes. About 90 percent of New York filers who make less than $50,000 take the standard deduction, as well as about 45 percent who make between $50,000 and $99,000.
The impact of the repeal of state and local deductions would be more muted in western and central New York and the Southern Tier, where income levels and property values are lower than downstate, according to DiNapoli's report.
In Monroe County, for example, a third of taxpayers itemized their deductions in 2014. But the average deduction was $23,025 in 2014, below the national average.
Broome County had just 23 percent of taxpayers itemize, while Tompkins County had 31 percent. The average deduction was $20,902 in Broome and $25,761 in Tompkins.
Compare that to the Hudson Valley, where the average deduction was $49,115 in Westchester, $35,554 in Rockland, $30,979 in Putnam and $27,098 in Dutchess.
Gov. Andrew Cuomo, a Democrat, has railed against the Trump tax plan, likening his plan to repeal the state and local deduction to "double taxation."
"I believe it is unconstitutional and illegal because you now want to tax the tax that people pay to their state and local government," Cuomo said in May.