Governor Andrew M. Cuomo today issued a letter to President Donald J. Trump condemning the federal tax plan to eliminate or roll back state and local tax deductibility and calling on the President not to use New York as a piggybank for other states.
Here is text of the letter:
Dear President Trump,
I write to you on an issue that impacts every single American: pending federal tax legislation. I am not writing as a Democratic Governor to a Republican President, but rather as one New Yorker who cares about New York and the country to another. I often say to the New York State legislature, “we are Democrats and we are Republicans, but we are New Yorkers first.”
As you well know, the House is expected to release additional details of a “tax cut” plan this week that in reality amounts to a “tax increase” plan for states like New York. The current proposal primarily uses New York and California as the piggybank to make it possible to cut taxes for other states. By eliminating or rolling back state and local tax deductibility, Washington is sending a death blow to New York’s middle class families and our economy.
I understand the politics at play here. California and New York are “blue states.” I also understand that the political map dictates that most Republican members of Congress come from outside the Northeast and West Coast and their primary motivation is to help their states at any cost, even when it comes at the cost of middle class New Yorkers. But when the economies of New York and California suffer, and they will, the nation follows.
It’s clear this is a hostile political act aimed at the economic heart of New York with no basis on the merits. First, it is an illegal and unconstitutional double taxation that forces our middle class families to subsidize a tax cut for the rest of the nation, and it is contrary to every principle the Republican Party has always espoused. Second, it reverses all the bipartisan progress New York State has made in lowering taxes over these past few years. While we have lowered state income taxes, capped property taxes and are forcing local governments to consider shared services, this federal act would erase all those gains and in fact increase taxes. Eliminating state and local deductibility will result in a tax increase of $5,660 on average for one in three taxpayers in New York, or 3.3 million New Yorkers.
This backward tax plan has encountered much deserved resistance, including from Republicans in the Senate. Senate Finance Chairman Orrin Hatch said “I don’t think that’s going to go anywhere,” adding that state and local tax deductibility is “a system that’s worked very well.” In the face of this pushback, Republican leadership is now trying to salvage their tax plan with a so-called “compromise.” Their scheme is to allow a property tax deduction, but do away with the deduction for state income taxes. For middle class New York families, the average tax increase attributable to losing that deduction would be $1,715. And considering the original federal proposal would cost New York State taxpayers $18.6 billion, this “compromise” does little to help our state since it would still cost New York State taxpayers nearly $15 billion.
Another “compromise” that is being suggested, where only higher income individuals would lose the state and local deductibility, is a 3-card Monte game that could be played on 42nd Street in Manhattan. New Yorkers are not stupid. We know that if deductibility is eliminated on higher incomes it will have a ripple effect, forcing these New Yorkers to move out of the state, taking their tax revenue with them, thus increasing taxes on everyone else. New York will not be in a position to cut state taxes because both the original proposal, as well as the proposed compromise, will force the highest taxpayers from the state and deplete our revenue stream. As you know, five percent of New York State taxpayers account for nearly two thirds of our annual income tax revenue.
I understand why Paul Ryan would seek to hurt New York, but to ask New York Republican members of Congress to vote to raise taxes on their constituents is a betrayal against their state and their constituents. In fact, seven of nine Republicans from New York are against it. The two representatives who support it—Congressmen Collins and Reed—are the Benedict Arnolds of their time because they are putting their own political benefit above the best interests of their constituents.
Speaker Ryan’s only justification is that other states subsidize New York. He is just wrong. They don’t. The opposite is true. New York subsidizes every other state in the nation. We are the highest donor state which means we send $48 billion more in tax dollars to the federal government than we receive back in federal spending.
To be fair, this is not a new idea to pillage New York and California and send their wealth to other states. Congress tried it under President Reagan, but the gross injustice of it caused all but the most partisan and callous officials to drop support. Today’s proposals are no different. Our Congressional representatives should be saying it’s time New Yorkers get their money back. Instead, the current proposal would be taking even more revenue from the number one donor state. How unfair.
There is no middle ground here. Any of the proposed “compromises” will still destroy New York’s economy and harm the middle class. There can be no elimination, no “compromise,” and no cap on state and local tax deductibility.
New York needs your help. You can stop this. And you should not just as an American, but as a New Yorker.
Hurricane Harvey had just devastated Texas, the worst natural disaster up until two weeks later when the entire state of Florida was about to be destroyed by Hurricane Irma, as whole Caribbean island nations as well as the US territory of Puerto Rico had their infrastructure utterly decimated. And Hurricane Jose was on Irma’s tail. Meanwhile, Los Angeles and Oregon were being consumed by record wildfires. Congress had authorized $15 billion toward Hurricane Harvey relief and to replenish the nearly depleted funds of FEMA.
Indeed, in North Dakota on September 6, as Hurricane Irma was barreling toward Florida, Trump, the Tax-Cheat-in-Chief, gave an incoherent speech touting his tax plan that began with his incredulity in discovering that North Dakota was undergoing a massive drought.
“I just said to the governor, I didn’t know you had droughts this far north. Guess what? You have them. But we’re working hard on it and it’ll disappear. It will all go away,” Trump said.
Accuweather is projecting the cost of Harvey and Irma alone at $290 billion, or 1.5% of total GDP, which would erase the growth of the economy through year-end, according to Dr. Joel N. Myers, president and chairman.
That’s also more than one-fourth of the $1 trillion that Trump proposed for a 10-year infrastructure plan. Where will the money come from? And if all infrastructure spending has to be directed to Texas and Florida, where does that leave the rest of the country? Not to mention the $1 billion Trump is demanding as down payment on a $70 billion border wall.
Does this get you thinking that Trump and his administration, especially EPA Administrator and shill for the oil industry Scott Pruitt, should rethink their self-serving notion of climate change denial (self-serving because it is used to fuel their argument that they can overturn environmental regulations on the massively profitable fossil fuel industry)? Of course not.
But it should also cause them to rethink their totally corrupt plan for tax reform which is intended to starve the federal government of funds, balloon the budget deficit and national debt, all to shift more of wealth to the already fabulously wealthy. Especially when so many people have lost their businesses and jobs, which will certainly impact tax revenues.
Let’s just consider for a moment what taxes are supposed to be for. And yes, a considerable amount goes to pay for interest on bonds, but bonds are what are used to pay for infrastructure – they represent an investment in the future. And as we are considering how to replace the destroyed and decimated infrastructure, why not build back with sustainability in mind.
Just as in his speech declaring his decision to withdraw the US from the Paris Climate Agreement (forged with US leadership and signed by 195 countries), Trump, who took a $900 million tax deduction on his failed Atlantic City casino and probably has never paid 40% tax in his life,lies to rationalize his tax plan, beginning with the lie that the US is the highest taxed nation in the world (not true) and that workers wages will increase if only shareholders and CEOs and the wealthiest 1% could keep an even greater percentage of their money (history shows the opposite). (See New York Times, The False Promises in President Trump’s Tax Plan)
Remember: the wealthiest people used to be taxed at 90% – that was after World War II when the nation had to rebuild its treasury. We were able to afford the GI Bill which probably did more to create a middle class than anything since the New Deal. Now the wealthiest pay something between 35 to 40% – except that they don’t.
Trump (and Ryan) want to give a $170,000 annual windfall to the wealthiest Americans, while crumbs ($700) to the middle class who will lose the only tax deductions they can use. $170,000 times four years worth mean in terms of free money (from tax-paying schnooks) is a lot of dough to invest in politicians and policy with a spectacular return: policies like enabling Big Pharma Sharks to hike up life-saving drugs by 5000%; Oil Barons to make sure incentives for wind and solar energy don’t help these industries develop into competitors; real estate developers who can delight in the tax advantages that let them take a $900 million deduction and build without interfering regulations on lands that are needed to soak up flood waters and health insurance companies to raise premiums to pad profits.
Now this nation is looking at more than $290 billion just to recover from the climate disasters which are becoming more and more frequent, hitting the high density developed urban centers.
If taxes for those who have the means to pay don’t cover the cost, who does? Ryan and the Republicans love to talk about “sacrifice” but the only ones they demand sacrifices from are not the wealthiest or the corporations, but Social Security and Medicare recipients, struggling middle class kids who need to take out loans to pay for college. Their concept is to take money out of the consumer economy, which starts a downward unvirtuous cycle of economic contraction. How do we know?” Because we have seen this movie before: the Bush tax cuts. Meanwhile, median income has risen to its highest levels in 1999 (under Bill Clinton) and 2016 (under Barack Obama) and their tax-and-spending plans.
The Trump/Ryan tax “plan” requires a federal budget that slashes spending for infrastructure, for research and development, for education, for environmental protection (and of course, eradicating any mention of climate change), even slashing spending for diplomacy and foreign aid. It depends on slashing Medicaid and subsidies to keep health insurance affordable (that’s why they are so desperate to repeal Obamacare).
It slashes the tax rate for corporations which already do not pay the nominal 35% rate. Many highly profitable corporations – including General Electric, Pepco Holdings, PG&E Corp., Priceline and Duke Energy – paid nothing into federal coffers from 2008-2015 yet benefit from all the services the government provides including roads, public safety, an educated workforce, mass transit, a military to defend their shipping.
To get to a tax cut without obscenely increasing the national debt, the Republicans say they will get rid of “loopholes” like the mortgage credit and property taxes – that would only complete the decimation of the Middle Class and destroy any semblance of an American Dream. What would make more sense, if they really cared to “reform” the tax code and stop the income distribution from middle class to the already fabulous rich, is to take away the mortgage tax credits on 2nd, 3rd homes and such, and take away the many special deductions that real estate developers like Trump has benefited from, as well as the loopholes that let hedge fund managers shield all but a fraction of their income from taxes that wage-earners pay.
Indeed, the policies that Trump are proposing – specifically, eliminating the tax deduction for state and local property taxes – would hurt blue-states that tend to have higher state and local taxes because they tend to have higher property taxes but provide more services and get less in federal payments than they send to the government, while red-states that have low state and local taxes (and crappy schools and health care) get more from the federal government (paid for by blue states) than they send.
And what about Puerto Rico. which already was in economic disaster – having defaulted on $70 billion in debt – and basically written off by the US government. It’s infrastructure is now totally destroyed. How will it be rebuilt? Here’s what I imagine: Trump is so transactional, I can see a foreign country (China?) with big bucks and an interest in having a foothold in the Western Hemisphere buying Puerto Rico from the US. After all, what is $100 billion or $200 billion to put the island right?
Of course Trump’s tax “reform” plan – sketched out as if on the back of an envelope without any analysis – is really all about tax cuts to the wealthiest and to corporations. As Hillary Clinton said during a debate (which she won): “trickle down economics on steroids” from the guy who took a $900 million deduction for a failed real estate deal, which taxpayers – normal working stiffs – wind up paying for.
Those who have actually analyzed the plan have said that the wealthiest people – who have done astronomically well for decades, while middle class Americans have scarcely had a salary increase in 40 years, so that the gap between rich and poor has reached Grand Canyon proportions – would get a tax windfall of $170,000 a year, while middle class families would get something like $700. Where do the 1 percenters put that extra money which they scarcely need? Well, they invest in buying politicians and influencing policy, of course.
Tax “reform” figures into the Trump obsession with repealing Obamacare and leaving 32 million people without health insurance. It figures into the administration’s dismissal of the Gateway Tunnel project so important to the New York region’s infrastructure and economy.
But now, Trump’s Republican states are being whacked with climate catastrophes, and the money has to come from somewhere.
And let’s also be reminded that the growth in the economy – first, saving the nation from plunging into another Great Depression, and now rebounding to the highest median income, lowest unemployment rate ever and highest rate of health insurance coverage while reducing the poverty rate – happened because of Obama Administration policies and would have been even more effective in terms of raising wages and living standards if the Trump Administration did not steamroll back policies, like overtime pay, parental leave, and federal minimum wage and obstruct infrastructure development and the transition to clean, renewable energy.
People remark that the devastation in their neighborhoods from these massive climate disasters is like a bomb went off. Well, in wartime, taxes are raised – that’s how the rate on the wealthiest hit 90%, to pay off the World War II debt. This is wartime. This nation has to rebuild, and sustainably, responsibly. We need to invest in 21st and 22nd century technologies, to keep the United States a global leader. Otherwise, we will cede our leverage to China which has basically embraced the American model of spreading its political ideology (nominally, “Democracy”) through capitalism (nominally “free market” as opposed to centralized control) and is literally buying up influence over Africa and Asia.
Of course, Trump’s tax plan is Paul Ryan’s tax plan (Trump never actually had a plan), and the Republicans are content to let Trump destroy the nation and end the social safety net including Medicare, Social Security and Medicaid, and possibly embroil us in World War III, until they can get jam through the tax plan they have coveted since Reagan.
This is a statement from the Office of Barack Obama:
Immigration can be a controversial topic. We all want safe, secure borders and a dynamic economy, and people of goodwill can have legitimate disagreements about how to fix our immigration system so that everybody plays by the rules.
But that’s not what the action that the White House took today is about. This is about young people who grew up in America – kids who study in our schools, young adults who are starting careers, patriots who pledge allegiance to our flag. These Dreamers are Americans in their hearts, in their minds, in every single way but one: on paper. They were brought to this country by their parents, sometimes even as infants. They may not know a country besides ours. They may not even know a language besides English. They often have no idea they’re undocumented until they apply for a job, or college, or a driver’s license.
Over the years, politicians of both parties have worked together to write legislation that would have told these young people – our young people – that if your parents brought you here as a child, if you’ve been here a certain number of years, and if you’re willing to go to college or serve in our military, then you’ll get a chance to stay and earn your citizenship. And for years while I was President, I asked Congress to send me such a bill.
That bill never came. And because it made no sense to expel talented, driven, patriotic young people from the only country they know solely because of the actions of their parents, my administration acted to lift the shadow of deportation from these young people, so that they could continue to contribute to our communities and our country. We did so based on the well-established legal principle of prosecutorial discretion, deployed by Democratic and Republican presidents alike, because our immigration enforcement agencies have limited resources, and it makes sense to focus those resources on those who come illegally to this country to do us harm. Deportations of criminals went up. Some 800,000 young people stepped forward, met rigorous requirements, and went through background checks. And America grew stronger as a result.
But today, that shadow has been cast over some of our best and brightest young people once again. To target these young people is wrong – because they have done nothing wrong. It is self-defeating – because they want to start new businesses, staff our labs, serve in our military, and otherwise contribute to the country we love. And it is cruel. What if our kid’s science teacher, or our friendly neighbor turns out to be a Dreamer? Where are we supposed to send her? To a country she doesn’t know or remember, with a language she may not even speak?
Let’s be clear: the action taken today isn’t required legally. It’s a political decision, and a moral question. Whatever concerns or complaints Americans may have about immigration in general, we shouldn’t threaten the future of this group of young people who are here through no fault of their own, who pose no threat, who are not taking away anything from the rest of us. They are that pitcher on our kid’s softball team, that first responder who helps out his community after a disaster, that cadet in ROTC who wants nothing more than to wear the uniform of the country that gave him a chance. Kicking them out won’t lower the unemployment rate, or lighten anyone’s taxes, or raise anybody’s wages.
It is precisely because this action is contrary to our spirit, and to common sense, that business leaders, faith leaders, economists, and Americans of all political stripes called on the administration not to do what it did today. And now that the White House has shifted its responsibility for these young people to Congress, it’s up to Members of Congress to protect these young people and our future. I’m heartened by those who’ve suggested that they should. And I join my voice with the majority of Americans who hope they step up and do it with a sense of moral urgency that matches the urgency these young people feel.
Ultimately, this is about basic decency. This is about whether we are a people who kick hopeful young strivers out of America, or whether we treat them the way we’d want our own kids to be treated. It’s about who we are as a people – and who we want to be.
What makes us American is not a question of what we look like, or where our names come from, or the way we pray. What makes us American is our fidelity to a set of ideals – that all of us are created equal; that all of us deserve the chance to make of our lives what we will; that all of us share an obligation to stand up, speak out, and secure our most cherished values for the next generation. That’s how America has traveled this far. That’s how, if we keep at it, we will ultimately reach that more perfect union.