ALBANY, N.Y. (NEWS10) – Would you be okay with making less, but still taking the same amount home? Governor Andrew Cuomo’s amended tax code was unveiled in part on Monday, explaining how the state could switch from an income to a payroll tax.
“We built our tax codes around the foundational premise that state and local taxes would be deductible,” Robert Mujica, State Budget Director, said.
Citing the recently passed federal limits on state and local tax deductions as the main reason the state should switch to a payroll tax, Mujica lays out how a tax code that took decades to put into place, can be changed in just a few months.
“It took a 100 years when we created the federal income tax system, so the point here is not changing it all immediately we’re providing for these changes to incrementally go into place.”
But what does this switch really mean for you? Well, your overall wage would be decreased, but in the end, you would take the same amount home every month and it would allow you to avoid the new cap on state and local tax deductions. But as many point out, selling this wage decrease will be no easy task.
“The employees will have to consider a lot of options. If you have a pension that is based on your wages, you have 401k contributions based on your wages, there is a lot of unintended consequences,” Ken Pokalsky, VP of NYS Business Council, said.
One’s pension would not be the only thing at risk if employees had to take a wage cut such as social security or new job opportunities. The other problem, according to the state’s business council, not all employers are on board.
“Most of our members though see it as complicated, they see it as raising some challenges on how they deal with their staffing and their payroll.”
If passed by the legislature, employers would be given the choice to opt into the payroll tax that would be phased in over three years beginning January 2019.
The deadline for these decisions to be made is April 1st.