Cuomo also said he’s developing a plan to shift the state from a personal income tax to a system of payroll taxes levied on employers, who’d still be allowed to deduct such levies on their federal taxes by law. Tax officials in Connecticut are considering a similar idea, according to the Connecticut Mirror.
Replacing state income taxes with payroll taxes would be a complicated process -- requiring employers to adjust wages and potentially create a system of tax credits. It would also offer greater economic benefits than would the charitable-giving strategy, since a shift to payroll taxes would also apply to taxpayers who don’t itemize, according to David Kamin, a New York University School of Law professor.
Proposals from New York and California are “interesting, but unlikely to succeed for both legal and practical reasons,” Jared Walczak, a senior policy analyst at the conservative-leaning Tax Foundation, said in a report Friday.
“If states are genuinely concerned about the effects of their tax codes absent an uncapped state and local tax deduction, they should consider revisiting their tax rates rather than devising increasingly convoluted and legally suspect workarounds,” Walczak wrote.
This article was provided by Bloomberg News.