Hochul, James Defend Opposition to ‘Double Taxation’ of New Yorkers From SALT Cap

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Gov. Kathy Hochul and Attorney General Letitia James filed a petition for justices to review a lower court’s decision that the $10,000 cap on state and local tax deductions, known as SALT, was politically motivated, as New York and three other states fight to overturn the ruling in the U.S. Supreme Court.

A writ of certiorari was announced late on Monday, calling for the Supreme Court to review an October 2021 ruling by the U.S. Court of Appeals for the Second Circuit which rejected the claim by states that the Trump administration’s implementation of the SALT cap was little more than an attempt to interfere with decisions made by predominantly Democratic states.

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Connecticut, Maryland and New Jersey are also petitioners pushing for SCOTUS to help end the policy, which began in 2017 to limit the ability of states to allow full tax write-offs.

​​An analysis by the New York State Department of Taxation and Finance has calculated that the cap would increase New Yorkers’ federal taxes by up to $15 billion annually, according to James’ office.

“This unfair cap has already placed a significant financial burden on countless hardworking, middle-class families in New York, and in the years to come, it is expected to cost New York taxpayers more than $100 billion,” James said in a statement. “We filed this lawsuit to protect millions of New Yorkers from this harmful, misguided and blatantly political attack. New York will not be bullied into paying more than its fair share, and we will continue to fight back.”

The original lawsuit, filed in 2018, argued that SALT is not only an infringement on state sovereignty but also a violation of the 16th Amendment — which enables the collection of taxes on people’s incomes — something the Biden administration has not reversed.

“The SALT deduction cap is nothing less than double taxation on New Yorkers,” Hochul said in a statement. “Repealing the SALT cap would not only put more money into the pockets of New York families; it would deliver a much-needed boost to New York’s economy. I am proud we are taking this issue to the Supreme Court to continue to fight on behalf of New York taxpayers.”

But recently, legislators on Capitol Hill have made their own efforts to reverse the cap on deductions. For example, Rep. Tom Suozzi, a candidate for governor, is fighting to overturn the decision.

James’ office stated in a Monday press release that the $10,000 cap not only creates problems for homeowners, effectively reducing property values, but she also pointed to anecdotal evidence in the press that New Yorkers are leaving for states like Florida because of the cap on SALT deductions.

Mark Hallum can be reached at mhallum@commercialobserver.com.