How The GOP Tax Plan Could Impact NYC Residents

NEW YORK CITY HALL — More than three quarters of a million New York City families would pay nearly $5,000 more in income taxes under Republicans' proposed tax bill, city officials said Wednesday. Some 760,000 families, most of whom make $75,000 or less each year, would see tax hikes totaling $3.7 billion, according to a city analysis.

Most of the city's 3.9 million families who file federal tax returns wouldn't see a change in their tax bill, First Deputy Mayor Anthony Shorris said. A small fraction would save an average of roughly $1,000, he said.

The tax plan's changes to personal deductions that many families claim would have the biggest impact in New York, officials said. The cap on deductions for local property taxes alone would cost 617,000 families a total of $2 billion in extra taxes, city officials said.

Beyond the impacts on individuals, the House of Representatives bill hit city programs hard by limiting tax-exempt borrowing, which funds affordable housing and infrastructure projects, officials said. That could slow the pace of the city's plans to build and preserve affordable homes, Deputy Mayor Alicia Glen said.

"This is a story about businesses and wealthy people winning and working class families losing," Shorris said at a news conference Wednesday.

The House Ways and Means Committee released a tax bill last week that would cut income tax rates for many taxpayers, lowering the top rate to 35 percent. It also doubles the standard deduction but eliminates personal exemptions. The corporate tax rate would fall from 35 percent to 20 percent.

The plan would eliminate personal exemptions to help pay for the tax cut that could cost more than $1 trillion, according to some estimates. Those include deductions for student loan interest, state and local income taxes and certain medical expenses.

The cap on local income tax deductions would cost taxpayers across New York State $7.7 billion, according to a city analysis. And some 250,000 people in New York who currently deduct their student loan interest could no longer do so, official said.

Changes to rules for municipal borrowing would mean the city could no longer refinance bonds at lower interest rates before they mature, city Budget Director Dean Fuleihan said. That could make big infrastructure projects more expensive, he said.

The plan would also eliminate private activity bonds, which the city's Housing and Development Corporation uses to finance affordable housing projects, Glen said. That would jeopardize $2.6 billion in annual funding for affordable housing, putting thousands of homes at risk, she said.

That "would be a significant loss to our ability to do the work that we’ve been doing," Glen said.

Republicans in the U.S. Senate have yet to release their tax-reform proposal. The House plan has support from President Donald Trump but faces strong opposition from Democrats, including New York's delegation.

But because the tax plan would cause the federal deficit to balloon, Republicans will likely look to cut spending on programs that impact New York City, Shorris said.

“We fully believe it’s inevitable that there will be spending consequences," Shorris said.

While city officials said they're focused on fighting House plan in Washington, they haven't yet developed detailed plans for dealing with its consequences for the city budget.

Tom Davis/Patch contributed to this report.

(Lead image: New York City Hall is pictured in Manhattan. Photo via Morguefile)