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

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Gov. Andrew Cuomo's top budget official says the Democrat wants to separate the state's tax rates from the federal rates to keep New Yorkers from a $1.5 billion income tax increase.

Budget Director Robert Mujica old lawmakers during the Feb. 8 joint Senate and Assembly budget hearing on taxes that Cuomo plans to detail the proposal in an amendment to the spending plan he released last month.

Mujica testified that Cuomo's move would decouple the state tax code from the federal government's to restore deductibility many New Yorkers stand to lose under the new federal tax overhaul.

The Republican-controlled Senate passed a similar plan last month.

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

Offering more details this week, Cuomo said his proposal would create a voluntary payroll tax to replace the state income tax for employees of companies that decide to make the change.

The recently enacted federal tax law will raise many New Yorkers' federal taxes by sharply capping a deduction for state and local taxes that was especially popular in high-tax states like New York.

But payroll taxes remain deductible at the federal level. Mujica told reporters Monday that switching to a payroll tax wouldn't cost employees or companies extra in state taxes.

Republicans and business leaders have expressed skepticism about the idea, which must be approved by lawmakers.
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