LOS ANGELES — The governors of California, New York and New Jersey lambasted Republicans in Congress for the tax bills that passed the Senate and House.
Calling the tax plan “fraudulent,” Calif. Gov. Jerry Brown joinedNew York Gov. Andrew Cuomo and New Jersey governor-elect Phil Murphy at a Monday press conference in vowing to do everything they can do to make sure it doesn’t pass.
Calling the tax bill a direct attack on the 12 "blue," states, i.e. strongly leaning Democratic, the governors said they are consulting with their state attorney generals to see what kind of lawsuits they can bring to stop the bill.
“We are working with the AG’s to tear up the floorboards to challenge this,” Murphy said.
The governors are also putting pressure on Congressional Republicans from their states to prevent passage.
“This is quintessentially a political challenge,” Brown said. “Our job is to communicate the fraudulence inherent in this tax bill. We want our members of Congress, and of the other nine blue states, to know they are hurting California and these states. These states are key implements of American prosperity."
"When Trump and his Senate allies attack California, New Jersey and New York, they are attacking a vital driver of the American economy," Brown said. "They need to see that the right thing to do is to defeat this bill.”
There will be no coming home for Republicans from the coastal states — and those with high property taxes — if this bill passes, Cuomo said.
Cuomo predicted Congress' mid-term elections next year would not go well for members of Congress who support the GOP tax bills.
The 12 states that would be most harmed by the elimination of the state and local tax deduction make up 40% of the country’s GDP, Cuomo said, adding that the tax bill is likely to crater the American economy by harming the states that are the key drivers of the country’s economy.
“If you assault the states that are generating 40% of the country’s GDP, how do they think there will be a net gain at the end of the day?” Brown asked.
The Senate tax bill is "negative overall for state and local government finances" -- and the negative overall effect would be felt most sharply in high-tax states such as California, New York and New Jersey, said Nick Samuels, a Moody's Investors Service analyst.
"Lower federal tax rates for businesses and individuals could result in a modest boost to hiring and consumption, positively affecting state and local revenues, Samuels said, but "the change to the state and local state (SALT) deduction would reduce disposable income for many taxpayers, likely outweighing the positive effect of lower federal rates on consumption in many municipalities and states."
The bulk of the tax breaks would go to large corporations, the governors said, which would see their tax rate drop from 35% to 20% in 2019. The House’s bill would make the corporate tax break effective by year-end.
The Senate version would allow a mortgage deduction up to $10,000, but Murphy said the average property tax bill in New Jersey is well over $10,000. In all three states, the cap on mortgage deductions for homes worth less than $500,000 would harm more than the wealthy, because the median price of a home in all three states hovers above that figure.
“To make policy through a political lens [by targeting blue states] is repugnant,” Cuomo said.
Just as Republicans started repeal and replace the day after Obamacare passed, “if they pass this, the next day, we are going to start repeal and replace on this divisive tax act.”
The bill had 500 pages of amendments, a lot of which were handwritten by lobbyists – and there are a lot of flaws in it, Murphy said.
“If we don’t succeed in the next few days, we have to take it to the limit,” Murphy said.
The state and local tax deduction has been in the tax code for 100 years, said Cuomo, who called the Senate’s tax bill “trickle-down theory on steroids.”
The tax bill is Step one in a Republican plan to gut social programs that benefit poor people and senior citizens, Cuomo said.
“First, they pass this bill that would create a $1.5 trillion deficit – and then Step 2, will be to come back and say, we have this deficit, so we are going to have to cut government spending,” Cuomo said. “And, the programs they will cut will be Medicaid, healthcare for children, Social Security benefits, and affordable and low income housing.”