New York, high-tax states file appeal over SALT ruling
New York and three other Democratic-leaning states filed a notice of appeal on Tuesday, challenging a recent decision regarding the $10,000 cap on state and local tax deductions.
The notice of appeal, filed in the U.S. Court of Appeals for the Second Circuit, pertains to a Manhattan judge’s decision to dismiss a lawsuit filed by the four states in September. The judge said they failed to demonstrate that Congress exceeded its taxing authority by implementing the cap.
New York’s Democratic Gov. Andrew Cuomo and the New York attorney general suggested at the time that they intended to appeal the ruling.
In a press release on Tuesday, New York Attorney General Letitia James said the measure has imposed a "heavy burden" on the state's middle class.
“This cap has already put a heavy burden on the hard-working, middle-class families of New York, and, in the years ahead, it is expected to cost New York’s taxpayers over $100 billion, which is why we will fight this senseless and unconstitutional law,” James said. “New York will not be bullied into paying more in taxes or changing its vital public investments because of Congress and the president’s partisan choices.”
NEW YORK, HIGH-TAX STATES DEALT SALT CAP BLOW IN COURT, BUT FIGHT LIKELY NOT OVER
HIGH-TAX STATE EXODUS SEEN ACCELERATING AS CONTROVERSIAL SALT CAP MAY BE HERE TO STAY
The press release from James’ office noted that New York’s highest earners are moving their homes and businesses “to states like Florida because of the cap on SALT deductions.”
“In New York, the top 1-percent of taxpayers account for 46-percent of state income tax collections and losing them threatens the ability of the state to deliver on New York’s promise of providing opportunity for every person in the state,” the press release read.
Trump has slammed high-tax states, particularly New York, over its tax laws, saying they are causing people and businesses to flee the state in “record numbers.” Trump, himself, recently announced his decision to change his primary residence to Palm Beach, Florida.
Florida received more movers than any other state last year, while New York's outflows to the Sunshine State were the highest – 63,772 people. New York had the third-largest outflows of any state, with 452,580 people moving out within the past year.
Meanwhile, the exodus from high-tax states may continue to heat up. Many experts told FOX Business they saw a spike in inquiries about establishing a new domicile during tax season, when taxpayers began to see the financial repercussions before their eyes.
The financial benefits of moving from a high-tax state to a low-tax state can be substantial. Individuals earning $650,000 can save more than $69,700 in taxes per year by moving from New York to Florida
New York, New Jersey, Connecticut and Maryland initially filed a lawsuit in July 2018 in the Southern District of New York, arguing that the SALT cap – implemented under the Tax Cuts and Jobs Act – disproportionately harmed taxpayers in Democratic states. The government had asked for the suit to be dismissed.