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Thu Jan 4, 2018, 08:04 AM

Cuomo Plans to Sue U.S. Government Over State Tax Break Change

https://finance.yahoo.com/news/cuomo-plans-sue-u-government-202047608.html

New York Governor Andrew Cuomo said his administration plans to sue the federal government over the new Republican tax law, on the grounds that it’s unconstitutional because it discriminates against New York and other states that voted against President Donald Trump. “Make no mistake, they’re robbing the blue states to give money to red states,” Cuomo said during his State of the State speech in Albany Wednesday. “It is an economic civil war. It is illegal and we will challenge it in court as unconstitutional.”

Cuomo, who described the Trump presidency as “the most hostile federal administration in history,” said the changes to state and local tax deductions in the bill will raise New Yorkers’ property and income taxes by at least 20 percent. The governor added that New York state already contributes $48 billion more annually to the federal government than it gets back.

Critics of the state and local tax deduction have said the break effectively lets the federal government subsidize high-tax states. The bill signed by Trump on Dec. 22 sets a new $10,000 limit on state and local tax deductions for federal income taxes starting on Jan. 1.
The impact of the tax law “is a question of New York’s economic viability long term, a question of New York’s competitiveness long term,” Cuomo said. “The threat from this federal government is not going to derail the great state of New York, I promise you.”

In addition to challenging the law as unconstitutional, Cuomo said he plans to start a campaign to repeal and replace the new tax law. And, he said he’s considering workarounds to respond to the changes, including restructuring New York’s current income and payroll tax system, and creating new opportunities for making charitable contributions to support public programs.
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Should be interesting to see if this gains traction. If it does i'm sure other blue states will join and it will become a class action lawsuit.
I'm thinking the American people who are against the federal tax bill as a whole should sue the government.

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Response to onetexan (Original post)

Thu Jan 4, 2018, 08:18 AM

1. That seems to be an assertion without an actual argument to back it up. If "discriminating"

between states was unconstittional the entire system of the federal government's aid to states would be.

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

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Response to PoliticAverse (Reply #1)

Thu Jan 4, 2018, 09:32 AM

5. True, but there are instances which would clearly be discriminatory

though how one sorts them out is another matter.

If Congress voted to place a 30% income tax surcharge on one state, or the west coast, for example.

It would generally be recognized as discriminatory, but would it be illegal? One man, one vote? No taxation without representation? Equal protection of the laws?

Putting a specific dollar amount on the exclusion is rather unequal, because there are rich and poor states, rich and poor neighborhoods, rich and poor taxpayers.

If they had limited the exclusion to say, 80% of property taxes, that would be more equal for everyone, it would apply to every homeowner who pays property taxes. It would not effect only people with large homes in wealthy neighborhoods.

Penalizing one group while giving others a free pass is not a method of equal taxation.

If you're going to honor states' rights, you have to support the idea that states have equal rights.

Some states have fought federal legislation over outdoor billboards. They have the right to do that.

And "without apportionment"? That would be a huge court case. What does apportionment mean? Aggregate state dollar amounts? Tax rates? Types of taxation? So if every state is taxed $15 Billion all is fine? Even poor little Delaware and Rhode Island?

You gotta hand it to Trump. If a loophole can be found to screw everyone, he has the best people.

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Response to bucolic_frolic (Reply #5)

Thu Jan 4, 2018, 12:53 PM

13. This affects high-income/high-wealth people.

You can get pushed over the $10k deduction limit simply by having high income in high state/local-tax jurisdictions or by having very high property taxes, with any combination of the two working just as well.

It affects some states more than others.


Now, you can fall afoul of the AMT by having a high income and high deductions. It affects some states more than others. We like this disparate impact because it really only affects "the rich."


You can also have a higher effective average income tax rate if you have high income, esp. high capital gains. It affects some states more than others. We like this disparate impact because it really only affects "the rich." Although, really, a lot of people are bitter that the money goes from rich to poor, because it goes disproportionately to the poor outside their own state.

I liked one number I saw with reference to this. Apparently the average SALT deduction for NYC was $60k in 2016. Yes, the average deduction for those hardworking middle-class people we're so anxious to defend is higher than the median average household income for the country.

The net effect of the SALT deduction limitation is, oddly, to make the federal income tax more progressive. It's just that the result doesn't just hit the top 20%, and the result might be to decrease local (lic. New York City) and state taxes.

It also helps that it's a clear "they're out to hurt you, personally, because they hate you, and I'm going to defend you against their personal assault on your property" bit of theatre. Again, average SALT deduction in NYC was $60k. The average household income in my neighborhood is less than that.

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Response to bucolic_frolic (Reply #5)

Thu Jan 4, 2018, 01:05 PM

14. We don't have equal taxation.

We argue against equal taxation on moral grounds.

A flat tax is equal taxation. If you look at the lowest group of households, their effective income tax rate is negative and their nominal rate was 0%. Look at the highest group, their effective rate is over 20% and their nominal top rate was around 39%. "Penalizing one group while giving others a free pass is not a method of equal taxation." I guess it's a question of whether you think of the tax rates as "penalizing" or not. A lot of people like punishing the rich with high taxes, though, so for them it's clearly a penalty.

That's just federal income tax. Factor in payroll tax and things change a bit. Factor in state and property tax and things change again. The non-equality of tax rates is federal, it's state, it's local.

"Without apportionment" seems to have a pretty clear definition. State dollar amounts, by population. It would require that different states have different federal income tax rates in order to meet their revenue requirements. Think of it as tax farming or the way that the Romans apportioned taxes 1 CE +/- 150 years.

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Response to onetexan (Original post)

Thu Jan 4, 2018, 08:21 AM

2. Words, Words, Words,

Give me actions.

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Response to onetexan (Original post)

Thu Jan 4, 2018, 08:41 AM

3. This is Cuomo indicating he is running for President in 2020

 

I don't think the lawsuit stands a chance in court

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Response to Lurks Often (Reply #3)

Thu Jan 4, 2018, 09:04 AM

4. agree, may not have any legal standing but Cuomo does have a law background and grounds are not

mentioned in the article - details are rather scant. But even as a symbolic gesture i am glad to see someone has the balls to take on a legal challenge of this pathetic tax bill whose aim is to harm us little people, given no blue members of Congress has done it yet. If Cuomo's the man, all the more to him!

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Response to onetexan (Reply #4)

Thu Jan 4, 2018, 11:48 AM

9. Except that the KGB/GOP made a point of actually admitting they were punishing the Blue states

on national TV. Not just one of them but several and they thought it was very funny. I kept saying that like Trump, their arrogance might come to bite them in the butt. They said it and there is tape of them saying it and now they can't unsay it.

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Response to OregonBlue (Reply #9)

Thu Jan 4, 2018, 12:44 PM

12. whoa, thanks for posting, i did not hear of this

that then would lend some credence to the suit to not have it thrown out at face value.

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Response to onetexan (Original post)

Thu Jan 4, 2018, 09:53 AM

6. Not a big fan of....

The Cuomos; however depending on the results of elections in 2018, the states need to be ready to circumvent the commie rethugliCONs.

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Response to onetexan (Original post)

Thu Jan 4, 2018, 10:37 AM

7. States all have differing demographics than the country as a whole

Since no state has the same demographics as the entire country as a whole, every single federal policy affects some states differently than others

Taxes on the rich will impact Massachussetts residents more than Kentucky. Increased regulations on the auto industry have a much bigger impact on Michigan than in Montana. Medical device taxes affect Tennessee and Indiana way more than Illinois. Just the way it is and doesn't make it illegal.

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Response to onetexan (Original post)

Thu Jan 4, 2018, 10:37 AM

8. Seems like it would be diffficult to prove that this was indeed the motivation unless there are some

emails...

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Response to Nitram (Reply #8)

Thu Jan 4, 2018, 11:49 AM

10. There is live tape of various KGB/GOP leaders admitting it in interviews and snickering.

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Response to OregonBlue (Reply #10)

Thu Jan 4, 2018, 01:13 PM

15. Did they admit intent or outcome?

There's a large difference.

In my Serbian language class in college the professor doled out work like he always did. It was the curriculum. At the end of the academic year some kids failed or nearly failed. They were mostly heritage speakers and had it easy at first, then got used to slacking off. Then during the second semester things got harder and they needed to work, but didn't always.

He laughed at them. (To be honest, we all did--they were arrogant as hell to start off with, and laughed at the rest of us.) But he didn't set out to make them fail. They weren't objective enough to see this. They left angry at him for "making them fail," and felt not so much wrong as wronged.

(The same thing happened in Czech class, except that the teacher didn't laugh at the kids who failed. He was more disgusted than amused by their utterly non-serious mien for most of the year.)

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Response to Igel (Reply #15)

Thu Jan 4, 2018, 02:14 PM

16. Not sure. Need to go find some of the interviews.

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Response to onetexan (Original post)

Thu Jan 4, 2018, 12:15 PM

11. I wonder if other states will get in

This is something I can see governor elect Phil Murphy (NJ) joining in on once he takes office.

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