CT, NY, NJ to challenge new federal tax law in federal court

Connecticut Governor Dannel Malloy (WTNH / Joe Sferazza)

(WTNH) — Connecticut Governor Dannel Malloy and the Governors of New York and New Jersey say they are going to challenge the new federal income tax law in federal court.

Governors Malloy, Cuomo and Murphy said in a teleconference today that the new law amounts to “double taxation” here and in many other states and thus discriminates against residents of this region.

When President Trump signed the new federal tax law last month, he and Republicans hailed it as a major tax break for the middle class. And it’s true that some people will see lower federal taxes. But here in Connecticut and other states with high state income and local Property Taxes, many people will actually see their federal taxes go up because of new limits on the amount that can be deducted.

On the conference call with the other Governors Malloy said,  “This particular change will affect 171,118 tax filings in our state representing hundreds of thousands of  individuals and have a cost to them of over $10 billion.”

Under the old federal tax law, when you paid your local Property Taxes at your city or town hall, you could pay them with money that was not taxed at the federal level. Under the new federal tax law, you may have to pay your Property Taxes with money that is also taxed at the federal level. This is the basis for the claim that the new law is double taxation.

Under the new federal tax law, deductions for the Property Tax on your home are limited at $10,000 which Governor Malloy and the Governors of New York and New Jersey argue is too low and in addition to causing homeowners’ federal taxes to go up, will depress real estate values in their states.  U.S. Sen. Richard Blumenthal (D-Connecticut) said following today’s announcement, “It’s double taxation but it’s also severely discriminatory. That’s the legal lynchpin of their claim.”

The Republican leader in the State Senate, Sen. Len Fasano (R-North Haven) issuing a statement saying, “Gov. Malloy should spend more time focusing on Connecticut instead of playing Washington politics. Gov. Malloy claims he’s worried about the federal government hurting Connecticut, but what about all the hurt he has inflicted on state taxpayers over the last seven years? The proposed lawsuit stands on very shaky legal ground and seems to be an attempt to move the conversation away from Gov. Malloy’s own failures. To  best help Connecticut residents, our governor should be working to improve the state policies he actually controls.”

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