Cuomo proposes payroll tax that would allow workers to avoid federal tax hit


Gov. Cuomo proposed revisions to his $168 billion budget plan Monday that would dramatically restructure New York’s tax collection system in an attempt to thwart the new federal tax code that limits state and local deductions.

The proposal would give companies the option of collecting a 5 percent payroll tax on workers to replace the state income tax — an end-run around the federal law that imposes a $10,000 cap on deductions for state and local taxes.

Employers could be able deduct the payroll tax from their federal returns.

The voluntary payroll tax would be phased in over three years, with 1.5 percent collected the first year, 3 percent the second year and 5 percent the third year.

The plan would also create two charitable contribution funds — one for health care and the other education — to help pay for those essential services, which account for nearly half the state budget.

This report previously appeared at NYPost.com.



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