Year-Over-Year Declines in State's Largest Revenue Stream - Personal Income Tax Receipts - Higher Than Anticipated in New York and Other Blue States
Estimated Payments are $2.3 Billion Below Forecast
Governor Cuomo: "To me, there is no more vital long-term issue for the state from a financial point of view than SALT...It has created two different tax structures in this country. And it has created a preferential tax structure in Republican states."
Governor Andrew M. Cuomo announced he will travel to Washington D.C. tomorrow to meet with President Trump on the devastating impact of the elimination of full state and local tax deductibility. Earlier this month, Governor Cuomo and State Comptroller DiNapoli delivered an update on State revenues, after the Division of the Budget observed a decline by $2.3 billion in estimated payments of Personal Income Tax receipts in December and January. The Governor and Comptroller attributed the decline to the federal tax legislation's elimination of full state and local tax deductibility, which disproportionately impacted New York and other predominantly Democratic states.
Amendments to the 2020 Executive Budget will include revisions to reflect updated impacts to the State financial plan. While other states have experienced the detrimental impacts of SALT, as the number one donor state in the country sending Washington $35.6 billion each year, New York continues to feel the disproportionate effect.
AUDIO of the Governor's remarks is available here.
PHOTOS of the event will be available on the Governor's Flickr page.
A rush transcript of the Governor's remarks on SALT is available below:
I have a meeting scheduled with President Trump tomorrow afternoon—mid-afternoon. So I will be going down to meet with him. The topic of the meeting is going to be the revenue shortfall in New York State in the effect of the so-called SALT provision. I requested the meeting. The President has spoken about SALT over the past few days. It's come up in interviews. But to me, there is no more vital long-term issue for the state, from a financial point of view than SALT. What it does is it has created two different tax structures in this country. And it has created a preferential tax structure in Republican states.
It has redistributed wealth in this nation from Democratic states—we're also called blue states—to red states. You have an administration that loves to say they're against redistribution. They have done it on the highest level imaginable. This is not individual to individual redistribution. This is not a rich person to a poor person. This is literally taking from the richer states transferring to the states with less income.
Just a couple of numbers for you to remember. SALT costs New York $15 billion that we transfer to the federal government. We pay more than any other state for the SALT deduction. New York already sends the most money to Washington D.C. of any other state. New York sends more money to Washington D.C. than any other state. Senator Daniel Patrick Moynihan, God rest his soul, railed about this for years. The inequity of the New York relationship to the federal government. We are the number one donor state. Net $35 billion going to Washington. The top 10 donor states send a combined $95 billion more to Washington than they get back. Top 10 send $95 billion. 40 states get more than they give. 40 states get more than they give.
So not only is it a policy of redistribution, you're taking from the 10 donor states and you're giving to 40 states. 10 states contribute, 40 states take more than they put in. How do you possibly justify that in terms of equity, fairness, justice? On any level, how is this fair? Literally, 10 support 40. And coincidentally, there happens to be a political coincidence that the 10 happen to be democratic states and the 40 happen to be republican leaning.
Well, these are high-tax states. Baloney. We have controlled spending like few states in the United States have controlled spending. We've controlled spending more than past Republican governors have controlled spending. Well, these are states with high debt. Baloney. We have cut the debt during my tenure. These are states that aren't well managed. Well, maybe that's their opinion. But companies called Moody's and Fitch and S&P that supposedly know something about this and are impartial experts have given us the highest credit rating since 1972.
This is not an academic discussion, my friends. This is real life. This changes the economic trajectory of the state. People are mobile. And they will go to a better tax environment. That is not a hypothesis. That is a fact. People act in their own economic interest. Businesses act in their own economic interest.
If you set up two economic realities, and one is much more favorable than the other, and they are mobile, they will move. You look at what's happened now, just recently, in the numbers we've seen, SALT has been talked about for now over a year, right? So people have had a chance to adjust and to react. And you're seeing a drop in the states that are effected by SALT. New York, New Jersey, Connecticut, California, Massachusetts. It's not just a New York issue. I've spoken with Governor Baker in Massachusetts. I've spoken with Governor Newsom in California. I've been speaking with the National Governors Association—Democratic Governors Association. This is a real and pressing issue. Well maybe it's happening all across the state and all across the nation and there's no connection between SALT states and non-SALT states. Well then why have the other states that weren't effected by SALT not seeing the same kind of impact that we have seen? It is, by definition, SALT because you are creating economic incentives. And this is what we know and this is what we do all day long. This is why we have economic incentive programs in this state because we know when businesses make decisions, economics matter.