New York Will Sue Over GOP Tax Law, Governor Says

ALBANY, NY — New York state officials will sue to overturn a federal tax overhaul that they say wrongly targets Democratic states, Gov. Andrew Cuomo announced Wednesday.

In his annual State of the State address in Albany, the Democratic governor said the lawsuit will be part of a three-pronged effort to undo the Republican tax bill that President Donald Trump signed into law last month.

The new law launched an "all-out direct attack" on New York and other high-tax, liberal states by limiting federal income tax deductions for state and local taxes, violating the U.S. Constitution's protections of state sovereignty and individual rights, Cuomo said.

"We believe it is illegal and we will challenge it in court as unconstitutional — the first federal double taxation in history, violative of states' rights and the principle of equal protection," Cuomo said in his 90-minute speech.

Cuomo, who's running for a third gubernatorial term this year and is rumored to be mulling a 2020 presidential bid, also pledged to launch a "repeal and replace" campaign against Congressional Republicans' Tax Cuts and Jobs Act.

Officials are also considering a "major shift" in policy that would move the state to a payroll tax system, reducing the reliance on income taxes to get around the federal law's new limits to state income tax deductions, Cuomo said.

As Congress was debating it, Cuomo decried the bill as a disaster for Democratic-leaning "blue" states that pay more in taxes than they get back in federal aid — a $48 billion disparity in New York. The new law will effectively hike New Yorkers' property and income taxes by as much as 25 percent, Cuomo said Wednesday.

"Remember the old adage, robbing Peter to pay Paul? Well, they changed it. Now they’re robbing the blue states to pay for the red states," he said. "... It is an economic civil war."

Cuomo contemplated suing over the tax bill before Congress passed it last month. His pledge to move forward with a lawsuit — among dozens of proposals in his annual speech — drew extended applause from the hundreds of lawmakers, officials and advocates in the audience.

Gov. Jerry Brown of California and Gov. Phil Murphy of New Jersey, both Democrats, have also reportedly considered lawsuits to stop the tax law.

The law threatens New York's economic competitiveness and could exacerbate a projected $4 billion budget deficit, Cuomo said — though the latter problem lingered well before Trump signed the bill.

The tax overhaul is part of what Cuomo cast as a barrage of attacks from a federal government that is "the most hostile and aggressive toward New York in history." He also cited the Trump administration's efforts to cut federal health care funding and roll back protections for immigrants, though he only mentioned the president — himself a New Yorker — by name once.

"By taxing our state and local taxes, they made us less competitive and they are helping other states at our expense," Cuomo said. "They are continuing their divisive politics and evolving it into an even more divisive government."

Republican lawmakers, including Treasury Secretary Steven Mnuchin, have suggested that high-tax states lower their own taxes to prevent residents from moving elsewhere upon seeing their taxes rise.

This story has been corrected to reflect the number of times Cuomo mentioned Trump by name: one.

(Lead image: Gov. Andrew Cuomo gives his 2018 State of the State address in Albany on Wednesday. Photo by Mike Groll/Office of Gov. Andrew M. Cuomo)