Bracing for what could be a big financial hit for high-income earners in New York State, Gov. Andrew Cuomo wants to soften the blow.
The governor wants to shift from a state income tax to a payroll tax. Another idea, which has received less attention, would create two new state-controlled charities. New Yorkers could then donate to funds for healthcare and education and write off those contributions on their federal taxes.
"This is an avenue that California is looking at," Cuomo said during his State of the State address last week. "It shows promise. It is more cumbersome. The tax credit would probably not be dollar for dollar."
But that approach could run into problems.
"We haven't gotten any definite statement from the IRS, but there is an argument that it's not really a charitable gift if you are doing it for the purpose of getting a tax deduction," said Carol Kellerman of the Citizen's Budget Commission.
Whatever changes they end up making to the tax code, the governor was hoping to have an agreement by the time the 30-day budget amendments are due at the end of February. But Republican Senate Majority Leader John Flanagan quickly dismissed that idea in a radio interview Monday.
"Yeah, that's not going to happen," Flanagan said. "That's not going to happen, because this is something that is very important."
Flanagan did not rule out passing some kind of tax overhaul as part of the budget due at the end of March. State Assembly Speaker Carl Heastie has been more supportive of the governor, a fellow Democrat.
"The idea of trying to mitigate what Washington has done to us is very real," Heastie said to members of the media. "We know it's going to have challenges, but to sit back and just let Washington pick the pockets of New Yorkers is just something that's unacceptable."
Cuomo has presented his tax changes as part of a series of options, without favoring any one single solution.