Cornell Economic Policy Expert Criticizes Tax Plan, with Surprising Benefactors

Dec 20, 2017

How might the new tax bill passed Wednesday by Congress impact New Yorkers?

A Cornell University Professor Law who specializes in financial and monetary law and economics is not impressed by the G-O-P’s $1.5-Trillion federal tax cut bill.  Robert Hockett feels that the Republican majority had a lack-luster year of getting things done and this was its last chance.  He calls the plan, which places a cap on state and local tax deductions - a Civil War Tax Bill.

“In that case, whether you be Republican or Democrat, and indeed it might even hit Republicans worse, because where the deduction, the threshold is reached is low enough that most sort-of middle-class to upper-middle class New Yorkers are going to feel a pinch.  Because many of those New Yorkers are themselves Republicans, they’re going to be harmed as well.”  

He says the $10,000 SALT cap is like, in his words, the red states sticking-it to the blue states.

Cornell Professor Robert Hockett is an expert in monetary law and policy. He's worked with the Federal Reserve Bank and the International Monetary Fund.

“The SALT deduction, the mortgage interest deduction and the changes to the ACA, you and I are probably going to end up paying more on balance, if you add in not just what we pay in taxes but also what we pay for health insurance and other benefits of that sort.”

Hockett says the commercial real estate industry will receive the biggest gifts in the federal tax plan.

“And of course as we know there’s a fellow in the White House who’s in the commercial real estate industry.  And of course what a lot of people might not know, is that many Russian oligarchs and Chinese oligarchs are heavily invested in commercial real estate, precisely because it’s a form in investment that isn’t as carefully scrutinized or regulated as financial markets are.” 

He predicts that the base rate on federal taxes will only decline 0.8 % or 0.9% for the middle to upper-middle class compared to 4- to 6% for top income earners.  

Congress members Claudia Tenney and John Katko both voted in favor of the tax reform measure.  Katko says he decided to back the plan confident that low- and middle-class  earners will get a break on their income taxes.  Tenney also believes most families will get a tax break, and adds wealthy earners will actually pay more, despite common criticisms of the plan.