As Washington, D.C. Begins Federal Tax Reform Push, Latest Pronouncements to Include Repeal or Cap Itemized Deductions for Mortgage Interest, State and Local Taxes Raise Major Concerns.
Suffolk County, NY - April 6, 2017 - Suffolk County Executive Steve Bellone today joined with county legislators and local business leaders to call on the Federal Administration to withdraw proposals that would eliminate itemized deductions on federal tax returns. As the Administration undertakes an effort to overhaul the federal tax code, the County Executive denounced recent reports that would consider repealing or capping tax deductions as part of any final package.
“Any attempt by Washington to eviscerate these critical financial incentives under the guise of tax reform is a nonstarter and should be dead on arrival,” said Suffolk County Executive Steve Bellone. “Instead of making it more costly to own a home on Long Island, the federal government should do more to lower taxes for hardworking homeowners and not the other way around.”
“The reason why this is so disastrous for Long Island is that it inequitably penalizes us for being a high-cost, high-tax region,” said Matt Cohen, Long Island Association Vice President of Government Affairs & Communications. “While we all support reducing the federal deficit, we all support federal tax reform and trying to make the system more equitable. This would actually make it less equitable for Long Island, and thus, we cannot have federal tax reform on the backs of Long Islanders.”
“For Suffolk County residents who already pay a steep price in property taxes, this federal proposal will have a cascading, negative impact on our residents and our economy,” said Suffolk County Legislator William ‘Doc’ Spencer. “I stand in solidarity with the Long Island Association, our County Executive Steve Bellone, the Huntington Chamber, and all of our Suffolk County residents and businesses to call upon our federal representatives to oppose this proposal that would repeal the mortgage tax interest deduction.”
“It’s important that area residents have a full understanding as to the debate that’s about to go on down in Washington when it comes to significant tax reform,” said Suffolk County Legislator Steve Stern. “Whether you are a local business owner or a middle class Suffolk County resident looking forward to a reduction in your taxes as it was promised along the campaign trail, it’s important for all of us to understand what the impact to each of us will actually be if you have a proposal such as this one that would be implemented.”
“Undoubtedly the proposed changes to the tax code will affect everyone in Suffolk County and throughout New York State. If the purposed changes are passed and become law, the financial impact will be very significant,” said Robert Ansell, Huntington Chamber of Commerce Executive Board Member. “As everyone is aware two thirds of the county’s gross domestic product is consumer spending the elimination of the mortgage interest state income and real property tax deductions not only puts a significant damper on incentivizing home ownership, but also means that families will have less disposable income to spend on their communities and on their local businesses. In turn that will have a negative impact on local economies.”
The County Executive was joined by representatives of the Long Island Association, Huntington Chamber of Commerce, Long Island Housing Partnership, and homeowners to raises concerns about the total cost and overall economic impact.
According to a recent Long Island Association report, the elimination of income tax deductions for mortgage interest, including state and local taxes, would cost Long Island homeowners additional hundreds, if not thousands, of dollars added to their annual tax bill. The report estimated that the Long Island economy alone would lose over $732 million annually through the repeal of the mortgage interest deduction. For Suffolk County, this would amount to over $341 million each year.
While every homeowner would be affected by the repeal of the mortgage interest deduction, those earning between $75,000 - $100,000 in adjusted gross income would see a tax increase of over $860 per year. Those earning between $100,000-$200,000 would see an even higher increase to over $1,260 and those who earn more than $200,000 would see a tax increase of over $3,500.
According to an analysis conducted by the Suffolk County Department of Economic Development, assuming that each tax return represents two individuals, the following would be impacted by the repeal:
All Deductions – more than 357,770 tax returns and more than 715,000 Suffolk County residents would be impacted.
Mortgage Interest Deductions – more than 248,000 tax returns and approximately 497,000 residents would be impacted.
Property Tax Deductions – more than 310,000 tax returns and approximately 620,000 residents would be impacted.
State Income Tax Deductions –more than 294,000 tax returns and approximately 595,000 would be impacted.
In addition, a number of itemized deductions could also be jeopardized if the Administration opts to eliminate the state income tax and real estate tax deductions. The proposed changes to the code additionally threaten the region’s housing market, which has shown signs of recovery, but has not yet regained all of what it lost as a result of the mortgage crisis.
Under County Executive Bellone, Suffolk County has made significant strides in recent years to rebuild the local housing market through innovative strategies. These include implementing the Suffolk County Foreclosure Prevention Hotline (853-HOME), launching the Suffolk County Landbank Corp. to revitalize brownfields that withered from neglect and tackling zombie homes that depress neighborhood home values.