The NYSSCPA has formed a Tax Cuts and Jobs Act (TCJA) Ad Hoc Committee in response to the new federal tax law. The committee, chaired by Kevin J. McCoy, has as its mission “to review and analyze proposed changes that may develop in New York tax regimes and policy as [a] result of impacts of the federal Tax Cuts and Jobs Act.”
Among the most significant changes that the new law implements is a $10,000 cap on deductions for state and local income, property and sales tax (SALT). In letters to both houses of Congress before the law was enacted, the Society objected to proposed limitations on these deductions. These letters pointed out that the average property tax in six New York counties is higher than $10,000, according to the Office of the New York State Comptroller.
Gov. Andrew Cuomo, in his State of the State Address on Jan. 3, said that New York is considering work-arounds to the deductions cap, such as switching from an income tax to a payroll tax system or enabling New Yorkers to make tax-deductible contributions to the state government, in lieu of taxes. On Jan. 16, Cuomo included a payroll tax proposal in his fiscal year 2019 executive budget.
“In light of the changes to the federal tax law, the impact on New York state tax will be significant,” said McCoy. “The Society has decided it is important for us to be able to address the potential legislative and regulatory changes that will result.”
Gov. Cuomo recently convened a roundtable of tax experts to discuss potential state responses to the tax law, and the NYSSCPA was invited to participate. Philip J. London, the chair of the Society’s New York, Multistate and Local Taxation Committee, attended, representing the NYSSCPA and its TCJA Ad Hoc Committee. Other participants included members of the governor’s administration and representatives from the Business Council of New York, the New York Conference of Mayors, the AFL-CIO, the New York State Association of Counties, the Urban-Brookings Tax Policy Center, the Fiscal Policy Institute, and the Partnership for New York City.
“We are closely monitoring the proposals and we’re poised to react once they are announced,” London said. “We have a seat at the roundtable convened by the governor’s office to discuss their proposals and the implementation of them.”
On Feb. 15, Cuomo issued his 30-day amendments to the executive budget, including a proposal that would retain a state income tax but would also allow employers to opt in or out of a payroll tax to offset some income tax liability. The TCJA Ad Hoc Committee is reviewing this proposal and formulating a position on it.