Attorney General James and Governor Hochul continue efforts to defend SALT deduction
Multi-state coalition files petition with U.S. Supreme Court to hear appeal
NEW YORK – New York Attorney General Letitia James and New York Governor Kathy Hochul today announced that New York, Connecticut, Maryland and New Jersey have filed a petition for certiorari with the United States Supreme Court to continue their lawsuit against the federal government for its unprecedented cap on state and local tax deduction, known as SALT. Today’s petition calls on the Supreme Court to reconsider an October 2021 decision by the United States Second Circuit Court of Appeals that upheld the district court’s dismissal of the state lawsuit, which argues that the SALT cap was a politically motivated offer by the former federal administration. interfere with the political choices of predominantly democratic states.
“This unfair cap has already placed a significant financial burden on countless working middle-class families in New York City, and in the years to come it is expected to cost New York taxpayers more than $ 100 billion,” said Attorney General James. “We brought this lawsuit to protect millions of New Yorkers from this harmful, misguided and blatantly political attack. New York will not be forced to pay more than its fair share, and we will continue to fight. “
“The SALT deduction cap is nothing less than double taxation for New Yorkers,” Governor Hochul noted. “Repealing the SALT cap would not only put more money in the pockets of New York families, it would give New York’s economy a much needed boost. I am proud that we are taking this matter to the Supreme Court to continue fighting on behalf of New York taxpayers. “
The lawsuit – which was originally filed in July 2018 in the U.S. District Court for the Southern District of New York – argued that the new SALT deduction cap was enacted to target New York and similarly situated states, that it interferes with the rights of states to make their own tax rulings and that this will disproportionately harm the taxpayers of those states. The top states with the highest average deduction for state and local taxes – the majority of which are Democrats – are New York, Connecticut, Maryland, and New Jersey.
The 2017 tax law reversed more than a century of precedent in the federal tax code, dramatically reducing the state and local tax deduction, capping it at $ 10,000. An analysis by the New York State Department of Taxation and Finance predicted that the cap would raise New Yorkers’ federal taxes by up to $ 15 billion per year. As one of the country’s major donor states, this attack is significantly more damaging to New York City than many other states. Prior to the enactment of the 2017 law, New York State already had the greatest disparity among any state when considering the amount of money New York sent to Washington, DC and the funding it received in return. Other donor states, including Connecticut, Maryland and New Jersey, are also injured.
In its September 2019 ruling, despite a ruling against New York State and its partner states, the U.S. District Court for the Southern District of New York agreed that the states had been aggrieved because of their argument that the cap State and local tax deduction can lower home prices. By effectively increasing state property taxes, the SALT cap will also reduce the value of a homeowner’s property, thereby discouraging home sales and lowering the income that states are able to collect by taxing those sales.
News reports also show anecdotal evidence that New Yorkers – especially top earners in the state – are already moving their homes and businesses to states like Florida due to the cap on SALT deductions. In New York City, the richest 1% of taxpayers make up 46% of state tax revenue, and their loss threatens the state’s ability to deliver on New York’s promise to provide opportunity for every person in the world. State.