Audio & Rush Transcript: Governor Cuomo Holds Conference Call with California Governor Jerry Brown Regarding State and Local Tax Deductibility

Statement

Governor Cuomo: Good morning. It is a pleasure to be with my friend Governor Brown from California. We have quite a history together. We served as Attorney Generals together. I was a HUD Secretary when the Governor was Mayor, so we go way back, and it's my pleasure to join him today. We're talking about state and local tax deductibility, so called SALT provision. As you know, it would eliminate the deductibility of state and local taxes for federal tax purposes. I think the only reason that it's not universally rejected by the American people that this time is because it's confusing. I think they're trying to rush the vote in Congress before people actually understand what this would do. Because their tax reform frankly is a scam. This remind me of the old three card Monte players on the corner of 42nd Street. Using a hand full of states to finance tax cuts for their states. There's no policy or governmental rationale that could justify this. It's just a pure political power play. It violates every principle that they profess.

Congressman Ryan is supposed to be a disciple of the Heritage Foundation - it flies in the face of everything the Heritage Foundation said they believe. They would have to define it as heresy. It is the ultimate redistribution on an unprecedented level because it redistributes income from state to state. They say they believe in states' rights. This totally violates states' rights. This is imposing their view of what should be done - their federal view on state's like California and New York. They're in favor of reducing taxes - this is double taxation - this taxes the taxes that people pay. There's no rationale. It's just all forced. Their only possible rationale when pushed is they say, "Why should the other states subsidize states like New York and California?" They don't. New York and California are among the top donor states, which means we send much more money to Washington than we get back. If they want to play fair at all, just send us back the money that we sent to them and let's call it even.

As far as the congressional members in the New York Congressional Delegation that voted for this - seven out of nine voted against but two voted for it - I think it's modern day treason against the state. I think they are the Benedict Arnolds of today, because they voted against the interests of the people in their districts. Period. This is just the most cynical version of their politics, which is politics of division. They tried to divide this country using the issue of immigration. They tried to divide it by race, by religion and now they're dividing it by geography. The states that they happen to be taking from are coincidentally, primarily Democratic ones and I don't think that's an actual coincidence. They are trying to expedite the vote, if the states that are affected, if their congressional delegations actually acted in the interest of their state and their district, this would fail. So for those Congresspeople the question is, are you more loyal to your district or are you more loyal to your political party boss? And maybe it's a confusing topic and people don't understand it today, but I guarantee you they will understand it a year from today when they walk into an election booth. To my friend, Governor Jerry Brown, pleasure to be with you Governor Brown. I'll turn it over to you.

Governor Brown: Thank you Governor Cuomo. You laid it out very well, these issues. It's an incredible thing, right now, we're at the peak of recovery. We're more than seven months, seven years, recovering. The economy's tight, and the tax deduction, if there is a real economic impact, is going to have a more inflationary effect. Corporations have piles of cash, their salaries of their presidents and their chief executive offices and their top staff are immeasurably higher. Huge. A lot of the ordinary workers are not doing all that well.

For California and New York and the other states that deduct, California deducts tens and tens of billions of state and local taxes. At least for many, it's going to be a tax increase and at the same time, instead of being fair, corporations under any proposal that I've heard about will be able to take this deduction. On the other hand, the individuals, the families, they're going to have to, they lose it. They take it away. So very simply, this is an income transfer from people, human beings, men, women and children, to the impersonal entity called corporations. It's really all part of a system, by the way, that's going to award a lot of corporations that are in foreign countries. They take about a trillion dollars and that money, they're going to give a massive break, and only part of it will be paid back home in taxes in America.

So, we don't have all the details, but we do know this is an attack on California, New York and New Jersey and other states, with a few exceptions, that did not vote for Trump. So it's a gross manipulation of our tax code, I think, there's no other real reason than for political reasons. It's not going to benefit our economy, it's going to increase the deficit, it's going to penalize individuals by billions and billions. It is going to benefit corporations who already are not spending all the cash they have - a lot of it is going to mergers or maintaining cash reserves. So the whole idea is more ideological. Republicans made the promise, they failed in their other promises, and they are scared to death that their entire reason for being the majority will have no validation. So if they don't pass, by the Republicans, that is wrong economically, it's wrong morally because of the unfair distribution, it's bad policy economically. So by the way, the final point is this is not a regular process. This hasn't been [inaudible] in the kind of detail we need, by economists, it's being rammed through and that's unbecoming a democracy. We see the totalitarianism is being intensified in various parts of the world, it's really dismaying if not tragic to see the same kind of lack of transparency, the power of those in power, just grabbing what they want and not having a proper respect for, in this case, the minority party which is the democrats. For all those reasons, it's a bad, bad bill, it ought to be voted down, but at least it ought to be delayed and debated in a way so we all can really know exactly how this complex measure will actually work. But we know from the points we have so far is it'll be bad in those respects that I just outlined. Thank you.

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