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Cuomo plans tax change to avoid $1.5B hit on taxpayers

ALBANY — Gov. Andrew Cuomo wants to separate the state’s tax rates from the federal rates to keep New Yorkers from a $1.5 billion income tax increase, the Democrat’s top budget official testified Thursday during a budget hearing.

Budget Director Robert Mujica told lawmakers during the joint Senate and Assembly hearing on taxes that Cuomo plans to detail the proposal in an amendment to the spending plan he released last month. He said the governor proposes to decouple the state tax code from the federal government’s, a move that would restore deductibility many New Yorkers stand to lose under the new federal tax overhaul.

“This issue was created in Washington, but we can fix it in New York,” Mujica said.

Under the new federal rules, the state stands to receive $1.5 billion in additional tax payments. Most of the new money would be paid by taxpayers who can no longer take advantage of former deductions.

Last month, the Republican-controlled Senate passed highly technical legislation that would tweak the state’s tax rules to separate it from the federal tax code. The Senate bill would restore many of the deductions New York taxpayers will lose at the state level under the new federal tax plan.

Major changes included in the recent tax overhaul in Washington will have a significant impact on the state’s own tax code, but the specifics are something Cuomo administration officials and the Legislature are still trying to figure out.

During the four-hour hearing lawmakers also questioned state officials about $1 billion in new taxes and fees included in Cuomo’s $168 billion budget proposal.

The new taxes include a $127 million levy on opioid manufacturers to pay for costs associated with the addiction crisis in many New York communities. Republican lawmakers voiced concern that consumers will bear eventually bear the costs of that plan if the companies raise prices on their painkillers.

Mujica said tax rates for corporations and individuals have gone down in New York. But Republican Sen. James Tedesco, of Schenectady County, said high tax rates keep driving people out of the New York, threatening to make it the “Empty State” instead of the Empire State.

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