A new lawsuit brought by Governor Andrew Cuomo and Attorney General Barbara Underwood claims that the federal tax law passed last year is a partisan attack on fiscally progressive states, and could potentially cost New Yorkers upwards of $14 billion during this year alone.
Filed Tuesday in the U.S. District Court for the Southern District of New York, the suit focuses on a provision of the tax overhaul that will cap state and local tax deductions at $10,000. As a result of that far-reaching cap, nearly half of all city residents making between $50,000 and $75,000, and almost three quarters of those making between $75,000 and $100,000, will see their taxes increase, per an analysis released by New York City Comptroller Scott Stringer.
According to the complaint, the Trump administration's law goes against centuries of tax precedent, and represents an "assault on the States' sovereign choices" to determine its own fiscal policies. In addition to New York, the suit also includes Connecticut, Maryland, and New Jersey, all of which were allegedly targeted for their fiscally progressive policies and left-leaning demographics.
Members of the Trump administration have basically admitted as much. According to Treasury Secretary Steve Mnuchin, capping the popular deduction was intended to "send a message" to high-tax, high-income states, which tend to be Democratic. In an interview last year, Stephen Moore, a conservative economist and Trump tax advisor, boasted of a plan to "go after state and local taxes" that would effectively mean "death to Democrats."
The federal tax law will cost New Yorkers $14.3 Billion in 2018 alone.
Today I'm proud to announce that New York is the first state in the nation to take legal action against Trump's tax plan that benefits the 1 percent at the expense of middle-class families.
— Andrew Cuomo (@NYGovCuomo) July 17, 2018
"New York will not be bullied," said Attorney General Underwood in a statement. "This cap is unconstitutional—going well beyond settled limits on federal power to impose an income tax, while deliberately targeting New York and similar states in an attempt to coerce us into changing our fiscal policies and the vital programs they support."
"The federal government is hell-bent on using New York as a piggy bank to pay for corporate tax cuts and I will not stand for it," added Cuomo.
Asked whether the suit had a chance at succeeding, Michael Dorf, a constitutional law professor at Cornell, told Gothamist that the suit faces an "uphill battle," in part due to procedural obstacles that make it difficult to challenge tax law.
"There's a question of whether states can sue now as opposed to having to wait for taxpayers to bring a refund action," Dorf noted. "On the merits, it's not a crazy argument. It's just not obvious to me that the courts are going to buy it."
At the very least, the lawsuit appears to have re-opened the eternal debate over what constitutes "upstate."
— Bill Hammond (@NYHammond) July 17, 2018
In other Cuomo v. Trump news, Nixon ally and former gubernatorial candidate Zephyr Teachout is calling on the governor to issue a criminal referral allowing Attorney General Underwood to investigate activities related to the Trump foundation. According to Pulitzer Prize-winning reporter David Cay Johnston, a referral from Cuomo would allow Underwood to open an investigation that could lawfully put the president's tax returns in the public record.
A spokesperson for Governor Cuomo did not immediately respond to a question about whether a criminal referral is forthcoming.