Governor Cuomo is warning that the federal tax reform law that capped the income tax deduction for state and local taxes or SALT at 10,000 is already prompting wealthy people to leave the state.
And as Samantha DiMascio reports, their exodus is cutting into New York’s tax revenues forcing Cuomo to reconsider his budget proposal.
“$2.3 billion as a drop at this point in revenues is as serious as a heart attack.”
Governor Andrew Cuomo listing a number of possible contributing factors, but he’s primarily pointing to the $10,000 cap on state and local tax deductions. Since it took effect last year, he says the state is just now seeing the impact for the first time.
The governor says New York has one of the most progressive tax codes in the country. The 1% the wealthiest New Yorkers, produce nearly half of the state’s personal income tax revenues but he acknowledged that also creates a fragile economy because you’re now relying on a very small amount of people.
“Tax the rich tax the rich, well what happens when they all leave?”
Comptroller DiNapoli says the legislature must now work together to figure out a solution to make up the difference, “We do have to be prepared for a storm that is very much on the horizon.”
Cuomo says, “I don’t believe raising taxes on the rich, that would be the worst thing to do right now but I don’t think we can reduce taxes either.”