Cuomo and Murphy Look for Major D.C. Reset

Murphy

Gov. Phil Murphy and Gov. Andrew Cuomo want their Congressional delegations “to lock arms” to repeal the $10,000 cap on the federal income tax deduction for local and state taxes and to make sure both states get a share of COVID relief from Washington proportionate to the impact felt by the two states.

The two Democrats made their case on a Feb. 5 joint zoom press conference folded into Gov. Cuomo’s daily COVID-19 briefing. Their pitch came not long after the Democratically controlled House and Senate signaled their intention to fast track $350 billion in pandemic aid for local and state governments proposed by President Biden.

Both Governors told reporters that the New York metropolitan was entitled to a greater share of the aid because it bore the brunt of the initial outbreak of COVID which the Trump administration had initially missed and then consistently played down.

“I believe that it is factually inarguable but that New York, New Jersey, Connecticut paid a higher price for COVID than other states and other parts of this country,” Cuomo said.  “That is just a fact. COVID came to United States from Europe, not from China, and those flights landed in New York and New Jersey and they populated the tri-state region. That’s why we had the explosion in the numbers early on. That’s why we had deaths here before they even had COVID tests, because the virus was coming for three months in the federal government had no idea.”

Murphy, who credited his partnership with Cuomo throughout the pandemic as having “saved lives…. on both sides of the Hudson”, told reporters COVID “clobbered” the region and it “desperately” needed the federal aid it gets to be apportioned accordingly.

Cuomo likened the COVID circumstance to “when a state gets hit by a hurricane that state gets relief. It’s not that every state gets relief. The places that paid the highest price with the emergency, and our state and our region paid the highest price for the emergency.”

Before the pandemic, both states had been hit hard by the so-called SALT cap on deductions that was part of the $1.7 trillion Tax Cuts and Jobs Act championed by President Trump and the GOP which sought to penalize higher cost of living and tax states like New York, New Jersey, Connecticut and California.

As a consequence of the cap, residents of those states saw the amount of their taxable income spike and the commensurate taxes due on that additional income.

“For the first time ever taxed the taxes that people pay,” Cuomo told reporters. “It was the first double taxation in history, and it was a pure redistribution of wealth, saying we’re going to take from the richer states and give to the poor states. They took from New York, they took from New Jersey, they took from Connecticut, they took from California, and they redistributed that money to Republican states.”

Cuomo continued. “So, we say to the Congress now, be fair. Repair the damage that was done with a hyper-political administration that preceded President Biden and be fair in the distribution of the COVID relief funds and fair is to distribute the COVID relief funds proportionate to the damage of COVID.”

“But they for the first time ever taxed the taxes that people pay,” Cuomo told reporters. “It was the first double taxation in history, and it was a pure redistribution of wealth, saying we’re going to take from the richer states and give to the poor states. They took from New York, they took from New Jersey, they took from Connecticut, they took from California, and they redistributed that money to Republican states.”

Cuomo continued. “So, we say to the Congress now, be fair. Repair the damage that was done with a hyper-political administration that preceded President Biden and be fair in the distribution of the COVID relief funds and fair is to distribute the COVID relief funds proportionate to the damage of COVID.”

Murphy asserted the GOP cap on the deductibility of local and state taxes was “not for any practical purpose, but completely based on politics and New York and New Jersey were already disproportionately giving more Washington than we get back from Washington to begin with…. I think in New Jersey alone, Governor, I believe it’s been an increment of $3 billion out of the pockets of our homeowners in the state. It’s high time we got this thing off the books.”

Cuomo estimates the SALT cap costs New York State $12 billion annually, or $34 million a day.

According to the Rockefeller Institute of Government, in 2019 New York State ranked last of all 50 states in the nation relative to its rate of return from the federal government sending $22.79 billion more the Washington than it receives back.

New Jersey ranked 49th, sending $10.3 billion more in tax payments than it got back in federal spending.

Throughout the close of President Trump’s tumultuous tenure Congressional Democrats were stymied in their attempts to send hundreds of billions in pandemic aid to backstop state, county and local budgets hit by a sharp decline in tax revenue and at the same time cover the unanticipated costs of the once in a century public health crisis on track to kill 500,000 Americans.

New York State has 27 seats in Congress and New Jersey 12. Over the last 20 years, both states have lost Congressional seats as their populations shifted south and west to states that get more in federal spending than they pay in federal taxes.

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