Gov. Andrew M. Cuomo this afternoon signed legislation in Westchester County that enacts a series of reforms to the New York state Tax Code as a means to counteract portions of the federal Tax Cuts and Jobs Act that was signed into law by President Trump in December and deemed harmful to the state”™s residents by the governor.
“New York will not stand idle while the federal government takes aim at the economic heart of our communities and takes from the hardworking men and women of this state to benefit this country’s wealthy and corporations,” Cuomo said at the headquarters of Local 456 of the Teamsters Union in Elmsford.
“These changes to the state tax code will help preserve New York”™s economic competitiveness and protect state and local tax deductibility ”“ a basic tenet of tax law that has been part of the modern federal income tax since it was created.”
The newly signed law in part creates an Employer Compensation Expense Program (ECEP) that allows business owners to help their workers maximize deductibility. While the federal Tax Cuts and Jobs Act eliminated full state and local tax deductibility for individuals, businesses were not included in these limitations.
[vsw id=”bqjcqx83itI” source=”youtube” width=”650″ height=”440″ autoplay=”no”]Under this new program, employers who choose to join will be subject to a 5 percent tax on all annual payroll expenses in excess of $40,000 per employee, phased in over three years beginning on Jan. 1, 2019. “The progressive personal income tax system will remain in place and a new tax credit corresponding in value to the ECEP will cut the personal income tax on wages and ensure that state filers subject to the ECEP will not experience a decline in take-home pay,” according to a press release. The program is “designed to be revenue neutral for the state.”
Westchester County Executive George Latimer, who attended the press conference, said most county residents pay more than $10,000 a year in taxes for schools, local government and state government. “The last federal budget robbed Westchester ”“ and our residents”™ way of life was threatened. I want to thank Governor Cuomo for this creative plan to help county taxpayers, and legislators for recognizing how imperative this issue is. We support it, and will do everything in our power to implement it.”
Another section of the law lets local governments set up charitable gift reserve funds and to offer real property tax credits to incentivize contributions to these funds. Under the law, the funds may receive unrestricted charitable contributions for the purposes of addressing education, health care and other charitable purposes. This program is optional and available to counties, cities, towns, villages and school districts.
Another aspect of the new law is that it decouples the state tax code from the federal tax code, “where necessary, to avoid more than $1.5 billion in state tax increases brought solely by increases in federal taxes.”
According to a recent report released by the State Department of Tax and Finance, the elimination of full state and local tax deductibility alone will cost New York an additional $14.3 billion.
