The tax bill approved by the Senate is many things, offering a huge tax cut for corporations, lower rates for the wealthy, and a big victory for Republicans and the White House.
It is also an economic dagger aimed at high-tax, high-cost and generally Democratic-leaning areas — most notably New York City and its neighbors.
The bill, if enacted into law, could send home prices tumbling 10 percent or more in parts of the New York area, according to one economic analysis. It could increase the regional tax burden, complicating companies’ efforts to attract skilled workers. It could make it harder for state and local governments to pay for upgrades to the transit system and other infrastructure. And it could force cuts in federal programs that help immigrants, the elderly and other low-income residents afford the region’s high cost of living.
Most significantly, the bill would eliminate the deduction for state and local income taxes, and would cap the deduction for property taxes at $10,000.
That wouldn’t matter to the more than two-thirds of households nationwide that take the standard deduction, which would be nearly doubled under the bill. But in the New York area, high state and local taxes change the equation. In Manhattan and wealthy suburban counties, close to half of households itemize their deductions, and many could see an immediate tax increase.
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Source: The New York Times (via The Empire Report)