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Trump open to changing property tax deduction law

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WASHINGTON — President Donald Trump says he’s “open to talking about’’ revisions in the 2017 tax law that placed a $10,000 cap on deductions for state and local property taxes.

“There are some people from New York who have been speaking to me about doing something about that, about changing things,’’ Trump said Wednesday in an Oval Office interview with Washington-based reporters for regional publications, including the Times Union. “It’s been severe on them.’’

Trump also doubled down on his comment from 2017 that people in upstate New York who are economically hurting should move out of state for better job opportunities.

“I love those people,’’ he said. “Those people are my voters. They’ve been treated very badly.’’

And, he added: “If New York isn’t going to treat them better, I would recommend they go to another state where they can get a great job.’’

Trump sat in his usual seat by the Oval Office fireplace under a portrait of Thomas Jefferson. And he bantered with reporters about the political figures in their home states and his views on multiple regional issues, such as the impact of tariffs on farmers and forest conservation in California to prevent wildfires.

Trump hit a raw nerve in 2017 when he first said, in a Wall Street Journal interview, that upstate New Yorkers should consider moving out of state. It came just as he was announcing a deal with FoxConn, a Taiwan-based electronic parts producer, to build a plant in Wisconsin.

It particularly irked officials in Oneida County, which had been competing with Wisconsin to land the FoxConn deal. And Governor Andrew Cuomo’s office took umbrage, with spokesman Richard Azzopardi saying: “We deal in facts — not fake news. The facts are unemployment has been cut nearly in half and private-sector jobs are at an all-time high in New York.’’

Trump said the FoxConn plant would employ 13,000 and would become “the eighth wonder of the world.’’ But late last month, a FoxConn executive said the plan had been scaled back and the Wisconsin site would instead be a research center that employed few blue-collar workers.

An incensed Trump got on the phone to complain. FoxConn said it would make flat-screen TV panels in Wisconsin. But FoxConn has a history of backing out on commitments, so it remains uncertain how the Wisconsin deal will work out.

The cap on local property tax and state income tax deductions, dubbed SALT, appears destined to hit New York hard. This is the first tax season with it fully in place, and many taxpayers are just waking up to the prospect of higher federal taxes — not lower, as Trump promised.

Along with Connecticut, New Jersey, and Maryland, New York is challenging the SALT cap in federal court, saying that Republicans in Congress and the Trump administration singled out 12 higher-tax, higher-cost states — most with Democratic governors, and most voting for Hillary Clinton in 2016 — for political purposes.

“How did they pick these 12 states?’’ Cuomo asked in a conference call last year. “Do you really think it’s a coincidence?’’

Last week, Cuomo and state Comptroller Thomas DiNapoli released a report outlining the impact. A total of 52 of New York’s 62 counties had average SALT deductions above $10,000, and the average New York taxpayer had SALT deductions that are more than twice the $10,000 cap, they said.

New York has the largest percentage of taxpayers getting a tax hike of any state, they added.

The Government Finance Officers Association calculated that without the SALT deduction, the average New York taxpayer (assuming a 25 percent marginal rate) who currently itemizes would face a tax increase of almost $1,800.

In the Albany-based 20th Congressional District, 33 percent of filers claimed SALT, according to the association. In the North Country’s 21st Congressional District, 23 percent claim it. And in the Hudson Valley’s 19th Congressional District, it was 31 percent.

A survey by the nonpartisan Tax Foundation found that New York leads the nation in terms of the value of the SALT deductions as a percentage of adjusted gross income: 9.4 percent.

Trump expressed surprise that the SALT deduction was an issue for middle-class people upstate. “It affects wealthy people,’’ he said.

But after a reporter repeated the perception that working middle-class homeowners look to the SALT deduction to make ends meet, Trump said he might be open to making changes.

“It would have to go through committee; it would have to be started by Democrats in the House,’’ he said. “I’d be open to talking about it. There are some people talking to me about this.’’ The president declined to say whom he’d been talking to.

During deliberations over the tax bill that Trump eventually signed into law in December 2017, Republicans from low-tax states — mostly in the South and West — argued that SALT enabled states like New York to shoulder less of a tax burden at their expense. New York countered that as the nation’s top “donor’’ state — sending Washington $35.6 billion each year — New York is the one subsidizing the low-tax, low-cost states.

Trump repeated many of the low-tax states’ arguments: “It makes all states the same.’’

He recalled that Ronald Reagan also wanted to end or limit the SALT deduction in the 1980s, but a New York City real estate mogul of the time, Lewis Rudin, fought against it and won.

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