May 3, 2018

HMM: New York Found a Fix for Some Hit by Tax Law. Employers Are Skeptical.

The idea, which became law last month, creates a new optional payroll tax that shifts the state and local tax deduction from individuals who can no longer fully take it to businesses that can. Employers are worried about compliance costs, interactions with union contracts, complexity across state lines and the difficulty of explaining to workers how a plan that might lead to smaller pay raises still puts more money in their pockets.

“It’s a creative approach by the governor’s office, and I give them credit for thinking through issues,” said Peter Faber, a tax lawyer at McDermott Will & Emery LLP in New York who advises large corporations. “As my clients consider the practical realities of implementing the scheme, they are concerned.”

The Wall Street Journal asked the 10 largest private employers in the state and in New York City, along with all Fortune 100 companies based in New York state, whether they would opt for the new payroll tax. None that responded said they would do so, though they have until Dec. 1 to make a decision for 2019.

Here’s a crazy idea. How about instead of Albany passing uncertain and incomprehensible new laws in order to circumvent national tax reform, instead they get their taxes and spending closer to national norms?

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