New York State sends approximately a quarter trillion dollars a year to the federal government in taxes ($254 billion in FY 2018). According to the New York State Comptroller’s 2020 Balance of Payments report, in Fiscal Year 2018 “New York State generated $26.6 billion more in taxes paid to the federal government than it received in return through federal spending.”
In fact, New York is ranked 50 out of 50 states in relation to the tax dollars it sends to the federal government as compared with what it receives back. In other words, we are the most generous state in the country in sending our tax dollars to Washington to be distributed to other states.
SALT is the State and Local Tax deduction that New Yorkers have historically been allowed to apply to their state income and local property taxes. In 2017, the President and Congress ended that deduction capping it at $10,000.
I believe the full deduction should be restored, although I support the Build Back Better bill and the adjustment therein amending the deduction from $10,000 to $80,000. I believe this is a fair compromise for the time being.
Some oppose the deduction because it only benefits those who pay significant property and state income taxes. Many who live in the downstate New York region, however, would agree that we are among those who pay significant property and state income taxes. And even if you or I would not personally benefit from amending the SALT deduction, taking the deduction away takes money from the pockets of New Yorkers and sends it to other states. We are talking about states that have extremely low property or income taxes that then take our tax dollars to make up for the shortfall in their own tax collections. Why should they pay taxes in those states when New Yorkers are paying those taxes for them.
This is unfair and plain wrong.
We should restore the SALT deductions and reduce the balance of payments gap between New York and the federal government.