N.Y.C. Comptroller's Report Shows Trump Tax Plan May Cost City Billions

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Under the tax plan that President Trump proposed during his campaign, New York City could lose billions in federal revenue, according to the first-of-its-kind analysis of the plan, released by New York City Comptroller Scott Stringer on Thursday.

Speaking to reporters at the Dinkins Municipal Building, Stringer said proposed tax reductions are likely to be paid for by cuts in spending and services, while not doing much for ordinary New Yorkers.

"In order to make President Trump's campaign tax proposal permanent, Congress and the White House would have to pay for the plan with cuts to federal spending – including aid to state and local governments," according to Stringer's report. "That could shred the city's social safety net, further hurting low-income New Yorkers and decreasing quality of life in our city, even for those with marginally lower tax bills."

Additionally, the comptroller said the proposal would give big tax cuts to nearly all the millionaires in the city while raising taxes on many single parents, moderate- and middle-income New Yorkers, and working families.

"The numbers are alarming," he said.

The comptroller's office conducted its analysis of Trump's campaign proposal by examining the income tax records of 365,000 city residents.

Under the proposal, millionaires would get an average tax cut of $113,000, while almost half of single parents who make $25,000 to $50,000 would see a tax increase, the report showed. Those with incomes above $500,000 represent less than 2% of tax filers in the city, but would get two-thirds of the tax cuts, according to the study.

"What Trump promised during the campaign looks like a tax plan created for the Mar-a-Lago elites," Stringer said. "It's written by millionaires, for millionaires. President Trump wants to give his friends – and himself – a big tax cut, and force working New Yorkers to pay for it."

According to the report's findings, Trump's proposal would: cut existing tax brackets from seven to three, eliminating the head of household filing status and broadening tax brackets; drop the top marginal income tax rate for ordinary income to 33% from 39.6%; increase the standard deduction for single filers to $15,000 from $6,300, and to $30,000 from $12,600 for married filers; eliminate personal exemptions; repeal the alternative minimum tax and taxes carried interest as ordinary income; limit itemized deductions to $100,000 for single filers and $200,000 for married joint filers; allow above-the-line exclusions for child care costs up to the statewide average cost for four children and further provides an expanded EITC credit for low income households; and repeal the additional 3.8% tax rate on investment income and the 0.9% surcharge on wage income that were imposed on high-income filers as part of the Affordable Care Act.

The comptroller's study did say that the overall plan would give tax cuts to city residents of over $5 billion a year, but stressed that almost two-thirds of those cuts would go to tax filers making more than $500,000.

While the majority of residents would see a modest decrease in tax liability, possible funding cuts to the city could be significant. So whatever tax benefit middle-income New Yorkers might get could be offset by a declining quality of life due to cuts in social services and other programs, the report said.

The analysis comes as federal funds sent to the city are at risk of being cut or eliminated by the administration and Congress.

The study cited the estimated costs of Trump's tax proposal to the federal government over a 10-year period proposal ranging from $2.2 trillion to $3.3 trillion, according to the Tax Policy Center (Urban Institute and Brookings Institution) and the Tax Foundation.

In order to pay for it, Trump probably will propose cuts in federal aid to state and local governments, the study said. Trump's recently released "skinny budget" for fiscal 2018 proposes elimination of several federal aid programs that would result in at least $400 million in cuts to city programs, and potential cuts to billions of dollars in other unspecified federal aid, the report stated.

Programs proposed for elimination include community development block grants ($225 million), the low-income home energy assistance program ($23 million), Title II education grants ($108 million) and community services block grants ($48 million).

In addition, the budget would cut homeland security grants which support NYPD counterterrorism efforts, as well as funding to public housing and Section 8 rental vouchers by at least 13%, and would cut public housing capital funding by two-thirds, the study said.

The plan makes no mention of several city aid programs, such as the $1.8 billion of grants in the city's fiscal 2018 budget for temporary assistance for needy families, the $523 million for in child care and development block grants, the $206 million social services block grant, the $131 million for head start or the $302 million for the school lunch program.

"If President Trump moves forward with the tax plan he proposed during the campaign, I believe it will take New York backwards," Stringer said. "Embracing 'trickle-down' has never helped working families move up the economic ladder — it's a sleight-of-hand that helps America's wealthiest."

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