States sue over federal cap on tax deductions

States sue over federal cap on tax deductions
Four Northeastern states argue that the limit on SALT deductions infringes on their rights
JUL 17, 2018

Four Democratic-led Northeastern states sued the Trump administration to invalidate the new $10,000 cap on the federal tax deduction for state and local taxes. New York,New Jersey, Connecticut and Maryland claim the sweeping 2017 federal tax law "targeted" the states and overturned more than 150 years of precedent. The state and local tax deduction is essential to prevent federal tax powers from interfering with constitutionally guaranteed state rights, according to the lawsuit. The tax law resulted from a "hyper-partisan and rushed process" that will disproportionately harm taxpayers in the four states, New York Attorney General Barbara Underwood said in a statement. Ms. Underwood said a state analysis found that the cap will increase New Yorkers' federal taxes by $14.3 billion in 2018 alone and another $121 billion between 2019 and 2025. According to the complaint, filed Tuesday in Manhattan federal court, the new cap on the so-called SALT deduction will make it more difficult for the four states to maintain their taxation and fiscal policies, thus "hobbling their sovereign authority to make policy decisions without federal interference." The case is State of New York, 1:18-cv-06427, U.S. District Court for the Southern District of New York (Manhattan). (More: Homeowners looking to dodge property tax caps turn to Alaskan trusts)

Latest News

Corient adds $5B New York multi-family office Seven Bridges
Corient adds $5B New York multi-family office Seven Bridges

The deal extends the acquisitive mega-RIA's rapid 2026 expansion as industry consolidation hits record levels nationwide

Navigating the straight
Navigating the straight

As recent Middle East tensions put the Strait of Hormuz back in focus, a structured process with purpose can help protect investors against their natural self-sabotaging tendencies in choppy markets.

Commonwealth-affiliated Longwave hires LPL staffer amid Pacific Northwest expansion
Commonwealth-affiliated Longwave hires LPL staffer amid Pacific Northwest expansion

ESG-focused Longwave Financial, a Commonwealth-affiliated firm approaching $1B AUM, acquired Seattle-based MG Financial and added a client services hire from LPL.

Securitize becomes RIA as tokenized assets near $37B record
Securitize becomes RIA as tokenized assets near $37B record

Tokenization goes mainstream with regulators watching prompting some firms to take a proactive approach.

Global tax reforms may offer US expats rare window of relief
Global tax reforms may offer US expats rare window of relief

A new Deloitte survey of 1,010 tax leaders finds OECD reforms and Safe Harbour rules could ease cross-border tax burdens for Americans abroad.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income