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Hearings Joint Economic Committee Congress of The I3 533 S. HRG. 99-434 THE IMPACT OF REPEAL OF THE DEDUCTIONS FOR STATE AND LOCAL TAXES HEARINGS BEFORE THE SUBCOMIITTEE ON MONETARY AND FISCAL POLICY OF THE JOINT ECONOMIC COMMITTEE CONGRESS OF THE UNITED STATES NINETY-NINTH CONGRESS FIRST SESSION JUNE 10, JUNE 24, AND JULY 15, 1985 Printed for the use of the Joint Economic Committee U.S. GOVERNMENT PRINTING OFFICE 54-102 0 WASHINGTON: 1986 AA_lfn'9 n - A; - 1 * JOINT ECONOMIC COMMITTEE r [Created pursuant to sec. 5(a) of Public Law 304, 79th Congress] HOUSE OF REPRESENTATIVES SENATE DAVID R. OBEY, Wisconsin, Chairman JAMES ABDNOR, South Dakota, LEE H. HAMILTON, Indiana Vice Chairman PARREN J. MITCHELL, Maryland WILLIAM V. ROTH, JR., Delaware AUGUSTUS F. HAWKINS, California STEVEN D. SYMMS, Idaho JAMES H. SCHEUER, New York MACK MATTINGLY, Georgia FORTNEY H. (PETE) STARK, California ALFONSE M. D'AMATO, New York CHALMERS P. WYLIE, Ohio PETE WILSON, California DANIEL E. LUNGREN, California LLOYD BENTSEN, Texas OLYMPIA J. SNOWE, Maine WILLIAM PROXMIRE, Wisconsin BOBBI FIEDLER, California EDWARD M. KENNEDY, Massachusetts PAUL S. SARBANES, Maryland Scorr LILLY, Executive Director ROBERT J. ToSTERUD, Deputy Director SUBCOMMITTEE ON MONETARY AND FISCAL POLICY SENATE HOUSE STEVEN D. SYMMS, Idaho, Chairman CHALMERS P. WYLIE, Ohio ALFONSE M. D'AMATO, New York Vice Chairman EDWARD M. KENNEDY, Massachusetts BOBBI FIEDLER, California PAUL S. SARBANES, Maryland LEE H. HAMILTON, Indiana DAVID R. OBEY, Wisconsin (II) CONTENTS WITNESSES AND STATEMENTS MONDAY, JUNE 10, 1985 Page D'Amato, Hon. Alfonse M., member of the Subcommittee on Monetary and Fiscal Policy, presiding: Opening statement ........................................................... 1 Moynihan, Hon. Daniel Patrick: Opening statement ............................................... 7 Koch, Hon. Edward I., mayor, city of New York, accompanied by Clair Town- send, deputy mayor of finance................................................................................... 13 Marchi, Hon. John J., New York State senator, accompanied by Abe Black- man, director of fiscal studies.................................................................................... 33 Caruso, Phil, president, Patrolmen's Benevolent Association of the City of New York, Inc ............................................................ 41 Barell, Martin C., chancellor, New York State Board of Regents, University of the State of New York ............................................................ 52 Feldman, Sandra, executive director, United Federation of Teachers, and vice president, American Federation of Teachers, AFL-CIO ................... ................... 64 Mahoney, Hugh, special assistant to county executive, Nassau County, NY ...... 75 Cuomo, Hon. Mario, Governor, State of New York ................................................... 79 Rousseau, Jean J., Sr., vice president, Merrill Lynch Capital Markets ................ 90 MONDAY, JUNE 24, 1985 D'Amato, Hon. Alfonse M., member of the Subcommittee on Monetary and Fiscal Policy, presiding: Opening statement ........................................................... 103 LaFalce, Hon. John J.: Opening statement................................................................. 104 Regan, Hon. Ned, comptroller, State of New York ................................................... 108 Morin, Lucien A., county executive, Monroe County, NY ....................................... 112 Ryan, Hon. Thomas P., Jr., mayor, Rochester, NY ................................................... 115 Riley, Donald J., supervisor, town of Greece, NY, on behalf of the National Association of Towns and Townships ............................................................ 118 Riedman, John, vice chairman, Rochester Area Chamber of Commerce .............. 122 Johnson, Gordon, executive director, Citizens Tax League of Rochester and Monroe County ............................................................ 123 MONDAY, JULY 15, 1985 D'Amato, Hon. Alfonse M., member of the Subcommittee on Monetary and Fiscal Policy, presiding: Opening statement ........................................................... 131 Anderson, Hon. Warren, majority leader, New York State Senate ....................... 132 Whalen, Hon. Thomas M., mayor, Albany, NY ......................................................... 137 McGowan William L., president, New York State Civil Service Employees Association, Inc., AFSCME Local No. 1000 ............................... 140 Bennett, Howard, president, Teamsters Local No. 294 ............................................. 142 Apkarian, Harry, chairman, Mechanical Technology, Inc ................... ................... 145 Staro, Charles M., executive vice president, New York State Association of Realtors, Inc ............................................................ 151 Hankin, Robert, president, New York State Builders Association, accompa- nied by Robert Wieboldt, executive vice president ................................................ 153 Rappleyea, Clarence D., Jr., minority leader, New York State Assembly ............ 155 (in) IV SUBMISSIONS FOR THE RECORD MONDAY, JUNE 10, 1985 P Barell, Martin C.: Prepared statement........................................................................ 55 Caruso, Phil: Prepared statement................................................................................. 43 D'Amato, Hon. Alfonse M.: Written opening statement .......................................... 3 Feldman, Sandra: Prepared statement........................................................................ 67 Koch, Hon. Edward I., et al.: Prepared statement ..................................................... 16 Marchi, Hon. John J., et al.: Prepared statement ..................................................... 35 Moynihan, Hon. Daniel Patrick: Written opening statement ................................. 9 Rousseau, Jean J., Sr.: Prepared statement............................................................... 93 MONDAY, JULY 15, 1985 Elisha, Paul H., executive director, New York State Common Cause: State- ment of ............................................................ 159 THE IMPACT OF REPEAL OF THE DEDUCTIONS FOR STATE AND LOCAL TAXES MONDAY, JUNE 10, 1985 CONGRESS OF THE UNITED STATES, SUBCOMMITTEE ON MONETARY AND FISCAL POLICY OF THE JOINT ECONOMIC COMMITTEE, Washington, DC The subcommittee met, pursuant to notice, at 9:30 a.m., at 24 Federal Plaza, New York, NY, Hon. Alfonse M. D'Amato (member of the subcommittee) presiding. Present: Senators D'Amato and Moynihan. Also present: Robert Salomon, legislative assistant to Senator D'Amato. OPENING STATEMENT OF SENATOR D'AMATO, PRESIDING Senator D'AMATo. I am going to ask those people who are still going about their business and setting up their equipment to see if they can't hold the noise level down. This is the Subcommittee on Monetary and Fiscal Policy of the Joint Economic Committee which is convening here in New York. Senator Moynihan, a member of the Finance Committee, as well as senior Senator of the State of New York, has graciously agreed to participate in this hearing and bring his expertise to bear. So that we may hear our first witness now, I ask that my open- ing statement be placed in the record in its entirety so that we can save time. Let me briefly point out, though, several features. - What will the impact of doing away with the deduction of State and local taxes be? According to the Internal Revenue Service, and some other data, over 33 million people in the United States of America will lose some $35 billion as a result of the loss of the de- ductions from State and local taxes; 28 million of these people make between $22,000 and $50,000. So we are not talking about wealthy Americans. We are talking about working middle-class families; 28 million families making between $22,000 and $50,000 will comprise the basic loss of that $35 billion. Second, in 1982, New York City residents deducted $986 million in State and local taxes, and saved an average of $1,100 from their Federal taxes. The fact is that this is going to be a blow to the average resident of the city of New York; $1,100 is a lot of money for middle-income people. (1) 2 One other aspect. What does double taxation cost individuals paying taxes in New York? In other words, I believe we have to have some reciprocity. I will ask the Governor this question. It would seem to me that if we deduct State and local taxes from our Federal income taxes, then people who pay city taxes should also have the ability to deduct those taxes from their State taxes-that would save those people who work in the city of New York some $80 million. In order to fully address the issue of fair play, we will have to ask the State legislature to address the issue of double tax- ation as well. With that, I am going to ask that the balance of my opening statement be placed in the record in its entirety. [The written opening statement of Senator D'Amato follows:] 3 WRrrrEN OPENING STATEMENT OF HON. ALFONSE M. D'AMATo THIS HEARING WILL ANALYZE THE IMPACT OF TREASURY'S PLAN TO REPEAL THE FEDERAL TAX DEDUCTION FOR STATE AND LOCAL PROPERTY, SALES, AND INCOME TAXES. I WOULD LIKE TO THANK OUR DISTINGUISHED WITNESSES FOR TAKING THE TIME TO TESTIFY TODAY, ESPECIALLY GOVERNOR CUOMO AND MAYOR KOCH. REPEAL OF THIS VITAL DEDUCTION WILL HAVE A DEVASTATING IMPACT ON THE EDUCATION OF OUR CHILDREN AND ON OUR ECONOMY, BUT IT IS THE ADVERSE IMPACT ON THE PEOPLE THROUGHOUT THE NATION THAT IS OF THE MOST CONCERN
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