Donovan leads call to keep federal deduction for state, local taxes

U.S. Rep. Dan Donovan (R-NY) led members of New York’s Republican congressional delegation in calling on the Trump administration to reconsider a proposal to eliminate the federal deduction for state and local taxes (SALT).

In a letter to Treasury Secretary Steven Mnuchin, Donovan, U.S. Rep. Elise Stefanik (R-NY) and five additional members of the state’s delegation noted that the move would add $14.8 billion per year to the state’s tax burden — and the state already sends more money to the federal government than it gets back.

“The SALT deduction affects filers’ taxable income, so its elimination would push some people into higher marginal tax brackets and would thus reduce incentives to work and invest,” the letter states. “In fact, eliminating the SALT deduction would reduce long-run GDP by 0.4 percent and would lead to over 200,000 jobs lost.”

The state and local tax deduction affects New Yorkers disproportionately. The state has 3.2 million residents who claim the SALT deduction, and the vast majority of New Yorkers who itemize make up primarily lower- and middle-income households, the letter said.

Simplifying the tax code by reducing the rates and making the system fairer is long overdue, Donovan said, but New Yorkers who already face high living expenses and pay their share of taxes shouldn’t have to shoulder the burden.

“The elimination of the SALT deduction — without guaranteeing a net-benefit for those who rely on it — would be reckless and devastate middle-class Americans,” Donovan added. “My priority will always be to deliver meaningful tax relief that helps hardworking families and businesses keep more money in their pockets. I support the administration’s overall goal to streamline our tax code, and I look forward to working with leadership to ensure the needs of New Yorkers are represented and included in the final plan.”

Stefanik said she also remains committed to pursuing fundamental tax reform that grows the economy, and she applauded the Trump administration for making it a priority.

“As the details are worked out between Congress and the White House, I join my colleagues in calling attention to the importance of maintaining the state and local tax deduction for families in the North Country and across New York,” Stefanik said. “Eliminating this deduction would slow the growth of our economy and cost our state jobs.”

New York has been a net payer to the federal government for decades, the letter notes, with New York City residents paying $96 billion in personal income taxes and receiving about $61 billion back from the federal government.