New York governor Andrew Cuomo announced Monday that the state is facing a $2.3 billion tax-revenue shortfall, and argued that the deficit can be attributed to the “diabolical” recently passed federal tax-reform package.
Cuomo blamed the loss of tax revenue, the scale of which was unpredicted by state officials, on a provision in the Republican-led tax reform package that capped state and local tax deductions at $10,000, depriving the wealthiest New Yorkers of a significant tax break that defrayed the high state taxes imposed by Albany.
Those New Yorkers affected by the loss of the SALT deduction are now filing their income taxes in other states or using other means to circumvent their tax liabilities, Cuomo seemed to suggest.
“[Capping] SALT was an economic civil war,” Cuomo said at a news conference Monday at the Capitol, referring to the State and Local Tax deduction. “It literally restructured the economy to help red states at the cost of blue states. That’s exactly what it did. It was a diabolical, political maneuver.”
State comptroller Thomas DiNapoli joined Cuomo at the press conference and backed the governor’s bleak assessment of the situation.
“This is the most serious revenue shock the state has faced in many years,” DiNapoli said, endorsing Cuomo’s prescription that spending must be cut in the budget for this fiscal year, which begins April 1.
“We have some of the soundest financial footing this state has ever had,” Cuomo said. “But we must maintain that, and if we know there’s a cut, we’re going to have to take that cut into account when we do this budget and it has to change.”
Cuomo warned that the loss of revenue could not be made up by continuing to tax the wealthiest New Yorkers — the top 1 percent of whom already contribute 46 percent of all government revenue — at increasingly higher rates.
“I don’t believe [in] raising taxes on the rich. That would be the worst thing to do. You would just expand the shortfall,” he said. “God forbid if the rich leave.”