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CT bands with NY and NJ to challenge federal tax bill in court

Gov. Dannel Malloy. (File photo)

NORWALK, Conn. – This is a press release, presented in a slightly altered format from which it was sent:

GOVERNORS MALLOY, MURPHY, AND CUOMO LAUNCH COALITION TO SUE THE FEDERAL GOVERNMENT OVER FEDERAL TAX BILL

Elimination of Full State and Local Deductibility Unfairly Targets Connecticut, New Jersey, and New York

(HARTFORD, CT) – Connecticut Governor Dannel P. Malloy, New Jersey Governor Philip D. Murphy, and New York Governor Andrew M. Cuomo today announced that they are launching a multi-state coalition to sue the federal government to challenge the new GOP tax bill that eliminates the full state and local tax deductibility.  This provision effectively preempts the states’ ability to govern by reducing the ability to provide for their own citizens and unfairly targets them and similarly situated states in violation of the constitution.

“The GOP tax legislation gave massive handouts to the wealthiest one percent and stuck middle class taxpayers with the bill,” Governor Malloy said.  “In short, this law does real harm to Connecticut taxpayers, who stand to lose over 10 billion dollars in state and local tax deductions.  Hundreds of thousands of residents could see a tax increase even as their property values decrease.  The coalition we launch today will fight against the discriminatory impacts of this shortsighted and damaging Republican law on our states.”

“Capping the state and local tax deduction had nothing to do with sound policy,” Governor Murphy said.  “It is a clear and politically motivated punishment of blue states – like New Jersey and our neighbors – who already pay far more to the federal government than we receive.  We will not stand by and allow this to happen.  I pledged that my administration would explore every legal mechanism to fight for New Jersey taxpayers, and that is exactly what we are doing today.  I am proud to have Governors Cuomo and Malloy join New Jersey in our efforts.”

“New Yorkers will not stand idly by as the federal government fires an economic missile at the fiscal health of our state,” Governor Cuomo said.  “The elimination of full state and local deductibility is a blatantly partisan and unlawful attack on New York that uses our hardworking families and tax dollars as a piggy bank to pay for tax cuts for corporations and other states.  This coalition will take the federal government to court to protect our residents from this assault.”

 

 

This press release was posted as a public service. A press release is a written announcement submitted to news organizations to publicize an event or activity, a milestone or a point of view. NancyOnNorwalk has not researched the assertions made and takes no responsibility for the content.

15 comments

Joe January 27, 2018 at 1:57 am

It’s not fair and equitable that our countrymen in Fl, Tx, Ala. and the rest of the states have to pay for our big Connecticut taxes.

M. Murray January 27, 2018 at 7:47 am

Shouldn’t they start a coalition to find out what the other states are doing right and what we are doing wrong that we charge so much in taxes for our citizens and other states charge so much less? Are we paying too much for services that are not given to citizens of other states? Are we handing out too much money? Misspending it? Are we sure that CT citizens and corporations will be paying more total tax dollars now than before? Average income is pretty high here and a lot of people seem to think they will be getting more back.

Education101 January 27, 2018 at 8:50 am

Perhaps CT municipalities should file suit against the state on the same grounds and legal theories the state is now pursuing against the federal govt. Somewhat hypocritical . . . just saying.

Stuart Wells January 27, 2018 at 9:56 am

The cost of living in Fairfield County is much higher than the national average. This is mostly due to the cost of housing. In Norwalk, housing costs are twice the national average. The surrounding towns (Darien, New Canaan, Wilton, Westport) experience housing costs that are, on average, three times Norwalk’s — That’s six time the national average.
Teachers, cops, firefighters, etc. have to live somewhere in the area, and their pay has to be enough to afford their housing costs. That is why their pay is higher than in states with low housing costs. Ditto for our real estate taxes, which are mostly used for municipal payrolls.
Maybe everyone in Fairfield should cut the price on his or her house in half. Teachers, cops, and firefighters could afford to live here for a lot less and we could cut their salaries — and, thus, our real-estate taxes. The bank’s wouldn’t mind cutting our mortgages in half, would they? That forgiven debt would, of course, be taxable income, but no one should mind paying taxes on that money because we just got a great big middle-income tax cut — didn’t we? So, anyway, after we absorb the loss of half the equity in our houses, and pay the taxes on the forgiven mortgage debt, our real estate taxes going forward will be less.
We ought to be about even on that trade-off after about 30 years and after that it everything will be just great!
Of course, Norwalk is still located near New York City, and so people working there will continue to live in the area and bid up the price of housing. So for this plan to work long term we will have to relocate Fairfield County to somewhere far away from big cities, and the sea — the Dakotas come to mind — and on the plus side we will not have to worry about rising sea levels.

M. Murray January 27, 2018 at 10:18 am

Or maybe we stop subsidizing everything and let apartments fall to fair market value and stop mortgage bailouts on people who bought houses they couldn’t afford.

Nora K King January 27, 2018 at 12:13 pm

Folks – the reason our value is so much higher is limited land and the fact we are located outside of a major employment hub. We should not be penalized based on where we live. The tax law is unfair and needs to be fixed. This is a good move and I am thankful that CT woke up and joined the other states.

The Norwalker January 27, 2018 at 12:41 pm

Most States that have low state and local taxes use extremely high amounts of Federal Aid 10% or more per person than states like Connecticut, New Jersey and Massachusetts. If those states started charging their residents the state and local taxes needed to run their State, then Federal taxes would be lower for all of us.

New Hampshire is one exception they have low local taxes and require little Federal Assistance from the Federal Governmengt. Their neighbor Maine is the complete opposite that relies heavily on Federal Aid.

Even though it is criminal how some states let the rest of the Nation pay their bills for them, Connecticut Government could become more efficient and reduce redundancies.

Most of the Welfare States with Low State and Local Taxes are shown in red on this map below:

https://taxfoundation.org/states-rely-most-federal-aid/

Donna Smirniotopoulos January 27, 2018 at 1:14 pm

I am not happy that the SALT deduction is now capped at 10k. I don’t know if I’m any more or less unhappy than residents of Florida who pay no state income tax and have therefore never enjoyed the SALT deduction. And I don’t know how happy I would have been living in Washington State, inarguably a politically liberal state which nonetheless has the most regressive tax burden in the country, with the poorest residents covering the biggest chunk of the state budget (due in part to a high gas tax), The cap on SALT certainly can be seen as a blue state punishment. Then again, blue states have been punishing themselves for years with aggressive spending. In CT that spending means, in part, that the biggest employer in the state, Hartford, needs to whittle away at its payroll. Reducing the size of state government could reduce the state tax burden, making CT a more attractive place to live, work and do business.

Not sure I’m ready to jump on the lawsuit bandwagon. Depends on how much taxpayer money Malloy plans to invest in this fight.

Rick January 27, 2018 at 1:25 pm

Hundreds of thousands of residents could see a tax increase even as their property values decrease. ( pros keep breaking down could see, its not written in stone)

Is this true for the mall as well?

This tax change is a political assault on blue states, now we need something for city hall.

Ct has been unfair to its legal residents maybe someday we will all be equal.

One Ct mother recently said “I’m in Ct paying more for my daughter in Minn. and Im ok with it ” Now that’s an American.

Steve January 27, 2018 at 5:13 pm

Really, some people here think that Alabama has paid a disproportionate tax and we’ve been leaching off them all these years? T’hey must be living in bizarro world. Proportionally CT is always amongst the highest payers of Federal income tax and states like Alabama amongst the lowest. On the otherhand, Alabama must be doing something right cuz they live off Federal largesse. Ct and the northeastern states generally receive some of the lowest payouts from the Fed govt. Sorry, Ct’s been subsidizing Alabama an others for ages. The GOP just added to that subsidy. Envy Alabama? Historically poor schools, high crime rates with especially high homicide rates—oh yeah they have low taxes and the top college football team in the country (of course Ct has the top college women’s BB team and regularly amongst the best men’s). Both Ct and Alabama don’t have a major professional sport.

Steve January 27, 2018 at 5:20 pm

Alabama homicide rate 4x that of ct. Schools Ct- 8, Alabama 44, fed tax paid to fed govt (per capita). Ct-#1, Alabama 37

Donna Smirniotopoulos January 27, 2018 at 8:44 pm

@Steve, I get your point about federal tax dollars going to poor states like Alabama. But the economic problems in blue states predate Trump. Our state government is bloated and breaking under its own weight. The SALT cap will drive that point home to voters whether we like it or not. Picture this. A low income person with congestive heart failire is elligible for Huskey. When he sees his cardiologist, he is examined by three or four staff members, plus the front office staff checking in and out. One of those people is the cardiologist, another an RN and another a PA or CNP. For this level of service, Huskey pays the practice $15 per visit. And some in blue states are worried about raising the minimum wage. We have a broken social safety net system in CT which seems to exist in the service of itself and not those who need help. The SALT cap is a wake up call. We’ve overspent and grown our state government too big. It needs to be right-sized.

Trump’s failure to reform the tax on carried interest is a huge giveaway to the hedge fund folks. But otherwise most people are getting a big tax break. CT and NJ and NY need to spend less or earn more if they intend to keep up current state spending levels.

Rayj January 28, 2018 at 2:42 am

But if standard decuction doubles, then itemizing will become unnecessary for many. This tax would hit the wealthier more, I should think.

Paul V. January 30, 2018 at 7:16 pm

I find it very ironic that the State of Connecticut is arguing for the Feds to allow Connecticut residents to be able to deduct their local property taxes when filing taxes. Just completed my taxes and Connecticut does not allow me to deduct local property taxes. What gives? Maybe the State should offer some relief and allow the deduction first.

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