New York State's Enacted 2019 Budget And Tax Reform Good For PIT Bondholders, But For Taxpayers It Depends

NEW YORK (S&P Global Ratings) June 6, 2018--The Tax Cuts and Jobs Act of 2017 and its extensive changes to the federal internal revenue code have significantly affected New York State tax burdens and tax receipts in S&P Global Ratings' view. As a result, the state's fiscal 2019 enacted budget decouples the state's income tax from the federal tax law. In addition, state officials introduced various solutions to limit the impact on New York State's taxpayers. The 2019 budget came up with two creative solutions to help both taxpayers and personal income tax (PIT) bondholders. The solutions, outlined further below, would reduce the financial burden on state taxpayers caused by the reduction in the state and local tax (SALT) deduction

...NEW YORK (S&P Global Ratings) June 6, 2018--The Tax Cuts and Jobs Act of 2017 and its extensive changes to the federal internal revenue code have significantly affected New York State tax burdens and tax receipts in S&P Global Ratings' view. As a result, the state's fiscal 2019 enacted budget decouples the state's income tax from the federal tax law. In addition, state officials introduced various solutions to limit the impact on New York State's taxpayers. The 2019 budget came up with two creative solutions to help both taxpayers and personal income tax (PIT) bondholders. The solutions, outlined further below, would reduce the financial burden on state taxpayers caused by the reduction in the state and local tax (SALT) deduction and help insulate PIT bonds from dilution caused by the solutions. Whether these solutions will actually lead to taxpayer relief is still in doubt because the IRS has already released a statement challenging their validity, but PIT bondholders seem to be on surer...

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