Some New Yorkers need to get ready for a 10 percent – or greater – decline in home prices if the tax bill approved by the U.S. Senate is signed into law, the New York Times reports.
While offering a huge tax cut for corporations and lower rates for the wealthy, the Senate tax bill will be an “economic dagger” for high-cost, high-tax, Democratic-leaning areas like New York City and its neighbors. Most significantly, the bill would eliminate the deduction for state and local income taxes, and would cap the deduction for property taxes at $10,000. Manhattan residents currently top the nation in state and local tax deductions, with nearly half taking an average annual deduction of more than $60,000. The loss of those deductions plus the cap on property tax deductions would lead to higher tax bills, which are expected to bring down housing values.
The Senate bill could increase the regional tax burden, complicating companies’ efforts to attract skilled workers. It could make it harder for state and local governments to pay for upgrades to the transit system and other infrastructure. And it could force cuts in federal programs that help immigrants, the elderly, and other low-income residents afford the region’s high cost of living.
That wouldn’t matter to the more than two-thirds of households nationwide that take the standard deduction, which would be nearly doubled under the bill. But in the New York area, high state and local taxes change the equation. In Manhattan and wealthy suburban counties, close to half of households itemize their deductions, and many could see an immediate tax increase.
One likely winner under the Republican tax plans: Wall Street. The corporate tax cuts contained in both the House and Senate versions would most likely be a boon to New York’s financial sector. That could mean higher returns for investors and bigger bonuses for Wall Street traders – which, in turn, could mean more spending at shops and restaurants and more sales-tax revenue for the city and state. Or not. Most experts said there was little doubt the bills would be bad for New York’s state and local budgets, and for the regional economy.
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