New York and Connecticut are seeking to appeal a U.S. District Court decision upholding the imposition of a new statutory cap created by the 2017 federal tax reform legislation that capped state and local tax (SALT) deductions at $10,000.
The lawsuit, which was filed in conjunction with Maryland and New Jersey in July 2018, argued that the cap was politically motivated against predominantly Democratic states and would result in depressed home prices and lower spending and business sales. Connecticut’s Attorney General William Tong claimed the SALT cap would cost the state $2.8 billion annually, while his New York counterpart Letitia James argued the cap would cost the Empire State more than $100 billion a year.
The court decided against the states in a Sept. 30 ruling. The new appeal was filed with the U.S. Court of Appeals for the Second Circuit.
“President Trump and Congressional Republicans raised taxes for millions of middle-class Americans – intentionally targeting people who live in states such as Connecticut – while at the same time cutting taxes for corporations and the rich,” said Connecticut Gov. Ned Lamont. “Federal tax laws should not be written based on who lives in ‘blue’ states and who lives in ‘red’ states. Working as a coalition, we will fight to fully restore the SALT deduction and stop this politically-motivated attack.”
“The Trump Administration’s SALT policy is retribution politics – plain and simple,” added New York Gov. Andrew Cuomo. “New York is already the nation’s leader in sending more tax dollars to Washington than we get back every year, and we will not allow this administration to pick the pockets of hard-working New Yorkers to fund tax cuts for corporations and send even more money to red states. We will continue to fight this unconstitutional assault until it is repealed once and for all.”