Skip to main content

Your local charity, the state government

New York governor offers ‘protection’ from new federal tax law through donations to state government

Your local charity, the state government

Andrew Cuomo (Hans Pennink/AP)

A New York moment:

A lot of attention up here in the Northeast has focused on the (likely frivolous) lawsuit that New York, New Jersey, Connecticut, and Maryland recently filed against the new federal tax law. Although the federal tax reform passed last year reduces New York’s federal tax burden overall, it sets a $10,000 cap on state and local tax deductions.

That means potentially higher taxes for residents of states that already have high local taxes—not a popular prospect for leaders of those high-tax states. Most New Yorkers were already taking the standard deduction, so this higher cap won’t affect them. But the state gets a lot of its revenue from bigger earners and doesn’t want them to leave.

Recently New York Gov. Andrew Cuomo, a Democrat, got the Legislature to pass a, shall we say, creative workaround in the annual budget that has drawn less attention. The new budget allows New Yorkers to “donate” to two state charitable funds, get the federal charitable contributions deduction, and receive credit for having paid local taxes.

In response, the IRS published a notice saying it would issue regulations addressing such schemes, with all indications the agency was not happy about them. The IRS referred to such proposals as “state efforts to circumvent the new statutory limitation on state and local tax deductions.”

Worth your time:  

If you felt like the McDonald’s Monopoly game in the 1990s was rigged, you were right. Mobsters set up a system to acquire the winning pieces and controlled about $24 million in winnings. A lot of the fraud took place near my hometown of Asheville, N.C., which explains why I never won, despite many hash browns purchases. The court case began on Sept. 10, 2001, so it didn’t get a lot of media attention at the time.

This week I learned:

The excellent documentary about Fred Rogers, Won’t You Be My Neighbor?, has struck a chord with audiences, and is now among the top 15 documentaries of all time in box office earnings.

A court case you might not know about:

Here’s a perfect example of how Supreme Court rulings can ripple out to seemingly unrelated issues. On Friday a federal judge ruled in favor of the city of Chicago after the Trump administration attempted to cut federal grants because of Chicago’s sanctuary city policies. Lawyer Ilya Somin noted that the judge used as one basis for his ruling a Supreme Court ruling from last term, Murphy v. NCAA.

In Murphy, the high court struck down the federal ban on sports betting, ruling that the ban coerced state and local governments to enforce federal law. That “commandeering,” which the Republican-appointed judge said the Trump administration was doing by pressuring Chicago to carry out federal immigration duties, is a violation of the 10th Amendment.

Culture I am consuming:

Mad Max: Fury Road is one of my favorite movies (alongside the 1995 film Sense & Sensibility, so it’s not all R-rated action flicks here). I rewatched Fury Road recently, along with the special features on the elaborate filmmaking process. The movie employs very little CGI, relying on incredible real-life, high-speed stunts in a story that is a road chase from start to finish.

Email me with tips, story ideas, and feedback at ebelz@wng.org.