Work continues in Washington on the federal tax bill. A vote in the House of Representatives could be held this week. As currently constituted, both the House and Senate proposals are a disaster for Long Island and New York State.

Most notable is the attack on the current deduction for state and local taxes. This deduction has been part of the IRS Code since the inception of the modern income tax in 1913. It is based on the premise that an individual’s income should not be double taxed by different levels of government.

The Senate bill would completely repeal the deduction. In New York State, the impact on our residents would be devastating. This would cost 3.3 million taxpayers $17.5 million in increased tax liability every year. On Long Island, 943,959 taxpayers would pay an additional $4.3 billion in federal income tax annually. The House bill is nearly as bad. It eliminates the deduction for state income taxes, and caps the deduction on property taxes at $10,000, eliminating 71% of the benefit to taxpayers from the deduction.

Both bills also provides for a cap on the deduction for mortgage interest. The House bill would also eliminate deductions for some medical expenses and the ability to deduct student loan interest. Finally, the plan would eliminate the historic preservation tax credit which has been critical in our region’s historic districts to preserve and rehabilitate historic buildings.

According to the Rockefeller Institute, under the current tax code, New York sends $48 billion more to Washington in revenue than it gets back in services. These tax proposals will only exacerbate this inequity. Middle class New Yorkers would be subsidizing tax reductions that primarily benefit the wealthy in other parts of the nation.

As the Chair of the Assembly Committee on Small Business, I co-chaired a hearing on state economic development on November 13, 2017. I asked Howard Zemsky, the CEO of the Empire State Development Corporation what effect the tax proposal would have on the State business climate. His response was disturbing.

The proposed federal tax plan will make New York State “less competitive”. He added that it would “derail the economic expansion that we have seen”. In particular, with the loss of state and local tax deductibility, caps on mortgage interest, and the elimination of the historic tax credit, the real estate and building industry will be negatively impacted. These industries, together with farming, fishing, and tourism, are the cornerstones of our local economy.

The effect of these proposals is clear. The negative tax balance of payments that New York now endures will get worse. Our hard earned tax dollars will go to wealthy taxpayers in other parts of the country to lower their taxes. New York State will become less competitive economically. It will cost our communities jobs and opportunity.

Finally, just to clarify. The deduction on state and local taxes provides no benefit to the state treasury. It is not state government, but its residents, who benefit directly from the deduction. New Yorkers will have less of their own money to spend and their desire to invest in our quality of life including education, quality health care, and a clean environment will be impaired.

It is often the case in our State Capitol that geography is a greater influence on policy party politics, as Long Island legislators join together, regardless of political stripe, to protect the interests on Long Island. Washington is no different. The federal tax bill is about more than Republicans and Democrats, it is also about geography. In this case, New York State is under attack. It is heartening that regardless of political party, all of Long Island’s federal representatives have joined together to oppose these tax proposals.

I support tax reform. I also support equity and fairness. The tax code should be progressive and reflect the ability of each citizen to pay their share. This proposal fails on all accounts. The bulk of the benefits go to the wealthy and the Congress is picking the winners and losers depending on what state they live in. I urge the Congress to reject the current plan and start over.