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NY, NJ Republicans reject tax plan over elimination of state deductions

October 25, 2017
In The News

WASHINGTON – Several Republicans in New York and New Jersey, upset at plans to eliminate state and local state deductions in the federal tax overhaul, say they will reject a budget bill Thursday that’s needed to kick start tax reform.

“I’m voting no,” Rep. Peter King (R-L.I.) told The Post.

Adopting the Senate-passed budget bill means accepting an amendment inserted by Sen. Shelley Moore Capito (R-W.Va.) that urges the elimination of deductions for state and local taxes on federal tax returns.

More than 44 million Americans rely on those deductions, especially in high-taxes states like New York, New Jersey and California.

“This is something that can change the very nature of Long Island forever,” King said.

GOP leaders are trying to work out a compromise.

One possibility is keeping the property tax deduction for middle-income earners, but not the deduction for local and state income taxes, according to one source.

“We think there is a way forward to help them with some of those local taxes, especially in the area of property taxes, and that’s where we’re having very good discussions with those lawmakers,” House Ways and Means Chairman Kevin Brady said Wednesday. “At the end of the day, we want taxpayers to be better off.”

But Rep. Lee Zeldin (R-NY) said he needs more assurances before he can sign off on the budget bill.

“There would need to be more progress made determining a solution on the SALT deduction issue in order for me to vote for the Senate resolution tomorrow,” Zeldin said in a statement to The Post. “This is a deduction that has been around for a century and was actually used once by President Lincoln to help finance the Civil War. This deduction prevents double taxation.”

Other New York GOP Reps. Dan Donovan and Claudia Tenney are undecided on the vote. Meanwhile, New Jersey GOP Reps. Tom McArthur and Leonard Lance have been outspoken critics of ending deductibility of state and local taxes.

If all the Republicans in high-tax states like New York, New Jersey and California were to vote no, that would be enough to sink the legislation and force House and Senate leaders to hash out a compromise budget bill in a conference committee.

But House leaders believe they have enough votes to pass the budget.

Rep. Chris Collins (R-NY) said he’ll support the Senate budget bill because it will open up the parliamentary procedure called reconciliation that will allow Republicans to pass the future tax reform legislation in the Senate with 51 votes instead of the 60-vote threshold that requires Democrat help.

“The SALT language is a message or sense of the Senate nothing more,” Collins said of the Capito amendment. “We have to get the budget to get tax reform.”