State Of New York et al v. Mnuchin et al

Filing 47

DECLARATION of Owen T. Conroy in Support re: 44 CROSS MOTION for Summary Judgment .. Document filed by State Of Connecticut, State Of New York, State of Maryland, State of New Jersey. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15, # 16 Exhibit 16, # 17 Exhibit 17, # 18 Exhibit 18, # 19 Exhibit 19, # 20 Exhibit 20, # 21 Exhibit 21, # 22 Exhibit 22, # 23 Exhibit 23, # 24 Exhibit 24, # 25 Exhibit 25, # 26 Exhibit 26, # 27 Exhibit 27, # 28 Exhibit 28, # 29 Exhibit 29, # 30 Exhibit 30, # 31 Exhibit 31, # 32 Exhibit 32, # 33 Exhibit 33, # 34 Exhibit 34, # 35 Exhibit 35, # 36 Exhibit 36, # 37 Exhibit 37, # 38 Exhibit 38, # 39 Exhibit 39, # 40 Exhibit 40, # 41 Exhibit 41, # 42 Exhibit 42, # 43 Exhibit 43, # 44 Exhibit 44, # 45 Exhibit 45, # 46 Exhibit 46, # 47 Exhibit 47, # 48 Exhibit 48, # 49 Exhibit 49, # 50 Exhibit 50, # 51 Exhibit 51, # 52 Exhibit 52, # 53 Exhibit 53, # 54 Exhibit 54, # 55 Exhibit 55, # 56 Exhibit 56, # 57 Exhibit 57, # 58 Exhibit 58, # 59 Exhibit 59, # 60 Exhibit 60, # 61 Exhibit 61, # 62 Exhibit 62, # 63 Exhibit 63, # 64 Exhibit 64, # 65 Exhibit 65, # 66 Exhibit 66, # 67 Exhibit 67, # 68 Exhibit 68, # 69 Exhibit 69, # 70 Exhibit 70, # 71 Exhibit 71, # 72 Exhibit 72, # 73 Exhibit 73, # 74 Exhibit 74, # 75 Exhibit 75, # 76 Exhibit 76, # 77 Exhibit 77, # 78 Exhibit 78, # 79 Exhibit 79, # 80 Exhibit 80, # 81 Exhibit 81, # 82 Exhibit 82, # 83 Exhibit 83, # 84 Exhibit 84, # 85 Exhibit 85, # 86 Exhibit 86, # 87 Exhibit 87, # 88 Exhibit 88, # 89 Exhibit 89, # 90 Exhibit 90, # 91 Exhibit 91, # 92 Exhibit 92, # 93 Exhibit 93, # 94 Exhibit 94, # 95 Exhibit 95, # 96 Exhibit 96, # 97 Exhibit 97, # 98 Exhibit 98, # 99 Exhibit 99, # 100 Exhibit 100, # 101 Exhibit 101, # 102 Exhibit 102, # 103 Exhibit 103, # 104 Exhibit 104, # 105 Exhibit 105, # 106 Exhibit 106)(Conroy, Owen)

Exhibit 27

S. HRG. 99-484

THE IMPACT OF REPEAL OF THE DEDUCTIONS FOR
STATE AND LOCAL TAXES

HEARINGS
BEFORE THE

SUBCOMMITTEE ON MONETARY AND FISCAL POLICY
OF THE

JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
NINETY-NINTH CONGRESS
FIRST SESSION
JUNE 10, JUNE 24, AND JULY 15, 1985
Printed for the use of the Joint Economic Committee

U.S. GOVERNMENT PRINTING OFFICE

54-1020

WASHINGTON : 1986

7yEL4F1

W10

JOINT ECONOMIC COMMITTEE
(Created pursuant to sec. 5(a) of Public Law 304, 79th Congress]
HOUSE OF REPRESENTATIVES
DAVID R. OBEY, Wisconsin, Chairman
LEE H. HAMILTON, Indiana
PARREN J. MITCHELL, Maryland
AUGUSTUS F. HAWKINS, California
JAMES H. SCHEUER, New York
FORTNEY H. (PETE) STARK, California
CHALMERS P. WYLIE, Ohio
DANIEL E. LUNGREN, California
OLYMPIA J. SNOWE, Maine
BOBBI FIEDLER, California
-

SENATE
JAMES ABDNOR, South Dakota,
Vice Chairman
WILLIAM V. ROTH, JR., Delaware
STEVEN D. SYMMS, Idaho
MACK MATTINGLY, Georgia
ALFONSE MD"AMATO, New York
PETE WILSON, California
LLOYD BENTSEN, Texas
WILLIAM PROXMIRE, Wisconsin
EDWARD M. KENNEDY, Massachusetts
PAUL S. SARBANES, Maryland
Executive Director

Scor LILLY,
ROBERT J. TosrziUD, Deputy Director

SUBCOMMITTEE ON MONETARY AND FISCAL POLICY

SENATE
-4
STEVEN D. SYMMS, Idaho, Chairman
ALFONSE M. D'AMATO, New York
EDWARD M. KENNEDY, Massachusetts
PAUL S. SARBANES, Maryland

HOUSE
-

CHALMERS P. WYLIE, Ohio

Vice Chairman
.BOBBI FIEDLER, California
LEE H. HAMILTON, Indiana
DAVID R. OBEY, Wisconsin
(II)

CONTENTS
WITNESSES AND STATEMENTS
MONDAY, JUNE 10, 1985

D'Amato, Hon. Alfonse M., member of the Subcommittee on Monetary and
- Fiscal Policy, presiding: Opening statement .........................
Moynihan, Hon. Daniel Patrick: Opening statement ........................
Koch, Hon. Edward I., mayor, city of New York, accompanied by Clair Townsend, deputy mayor of finance .................................
March, Hon. John J., New York State senator, accompanied by Abe Blackm an, director of fiscal studies ..................................................................................
Caruso, Phil, president, Patrolmen's Benevolent Association of the City of
N ew Y ork, Inc .............................................................................................................
Barell, Martin C., chancellor, New York State Board of Regents, University of
the State of N ew York ................................................................................................
Feldman, Sandra, executive director, United Federation of Teachers, and vice
president, American Federation of Teachers, AFL-CIO ......................................
'Mahoney Hugh, special assistant to county executive, Nassau County, NY ......
Cuomo, Hon. Mario, Governor, State of New York ..................................................
Rousseau, Jean J., 9r., vice president, Merrill Lynch Capital Markets .........
24, 1985
D'Amato Hon. Alfonse M., member of the Subcommittee on Monetary and
..
Fiscal Policy, presiding: Opening statement ........................................................
LaFalce Hon. John J.: Opening statement .................................................................
Regan, hon. Ned, comptroller, State of New York ...................................................
Morin, Lucien A., county executive, Monroe County, NY .......................................
Ryan, Hon. Thomas P., Jr., mayor, Rochester, NY ....................
Riley, Donald J., supervisor, town of Greece, NY, on behalf of the National
Association of Towns and Townships .......................................................................
Riedman, John, vice chairman, Rochester Area Chamber of Commerce ..............
Johnson, Gordon, executive director, Citizens Tax League of Rochester and
Monroe County ........................................................................................................

Page

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13
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64
75
79
90

MONDAY, JuNE

15, 1985
D'Amato, Hor. Alfonse M., member of the Subcommittee on Monetary and

103
104
108
112
115
118
122
123

MONDAY, JULY

Fiscal Policy, presiding: Opening statement ...........................................................
Anderson, Hon. Warren, majority leader, New York State Senate .......................
.............
Whalen, Hon. Thomas M., mayor, Albany, NY ......................
McGowan William L., president, New York State Civil Service Employees
Association, Inc., AFSCME Local No. 1000 ............................................................
Bennett, Howard, president, Teamsters Local Nq. 294 .............................................
Apkarian, Harry, chairman, Mechanical Technology, Inc ................
Staro, Charles M., executive vice president, New York State Association of
R ealtors, Inc ..................................................................................................................
Hankin, Robert, president, New York State Builders Association, accompanied by Robert Wieboldt, executive vice president ..............................................
Rappleyea, Clarence D., Jr., minority leader, New York State Assembly ...........
(i)

131
132
137
140
142
145
151
153
155

IV
SUBMISSIONS FOR THE RECORD
MONDAY, JUNE 10,

1985

Barell, M artin C.: Prepared statem ent .......................................................................
Caruso, Ph,*l: Prepared statement ...............
............
........
D'Amato, Hon. Alfonse M.: Written opening statement .... ........................
Feldman, Sandra: Prepared statement ...............................
Koch, Hon. Edward I., et al.: Prepared statement .....................................................
Marchi, Hon. John J., et al.: Prepared statement .....................................................
Moynihan, Hon. Daniel Patrick: Written opening statement ................................
-Rousseau, Jean J., Sr.: Prepared statement ..............................................................
MONDAY, JULY 15,

Page

55
43
3
67
16
35
9
93

1985

Elisha, Paul H., executive director, New York State Common Cause: Statem en t of ...........................................................................................................................

159

87

----

And members of both political parties have joined the fight. In this
State the Republicans have been at least as clear in their opposition. So profound is that opposition that a person who can fairly be
described as the head of the Republicans politically in this State,
Senator Warren Anderson, and our good friend John Marchi,
joined together to say this calls for a constitutional amendment.
That's how profound an attack it is on the idea of the Republic.
That's how far from a purely parochial concern this issue is.
We want true tax reform. This plan, I am sorry to say, is a ripoff,
in my opinion, dressed up as reform. It would, I think, divide this
country. It would certainly intrude on States rights. It would single
out certainly people for relief and other people for pain, and that's
not reform. That's retreat.
Thank you very much for listening.
Senator D'AMATO. Thank you very much, Governor. Let me
thank you for your cogent argument. I have heard none better. Let
me also say to you on the brighter side, I think that some of our
colleagues in Government in the so-called low-tax States that
might appear initially to be winners, have joined with Senator
Moynihan and myself in cosponsoring our resolution that dalls for
the preservation of this deduction. I think as more begin to see how
decisive and disruptive that particular provision can be, they will
become more outspoken.
Although it may appear that this provision is for the overspending, overindulging, high-tax States,-in time it will become evident
that this is a devastating move. The only possibility of a compromise occurring would be if the Government agreed to support all
social services for States.
Governor CUOMO. I would like to respond, if I may. I have been
assiduous in my refusal to deal with any possibility of compromise.
Let me tell you why. That's not a tactical position because I think
any politician now who would count votes who say that we are
behind. I think as you do that this is going to change as the American people focus on the discrete portions of this plan.
I can't bring myself to discuss compromise, even one that sounds
as attractive as that one, because it denies me all the logic of my
position. My position is that this is a fundamental constitutional
.
$&-bilgod
p-dpil ynp mse for the $40 billion
today, you change the nature of this Republic when you say you
can tax a tax. That's what Lincoln had in mind. That s what they
had in mind when they wrote the amendment. That's what they
had in mind when they ratified it. That's what they had in mind
for 70 years. That's why ao one thought to do it because it violates
the essential predicate, which is at this time not a matter of tit for
tat. It is not a matter of getting back everything. It is a matter of
mutuality. It is a matter of family. It is a matter of sublimating
yourself to the whole.
Otherwise the States ought not have created a Republic. If what
the States wanted was a system where they got back everything
they give, why make the trip to Washington? Why put it in an envelope, send it to Washington, only to get it back?
And so when people come to me and say Governor, you are
taking a risk, I have had some commentators say this, that you
i--&hp

88
may wind up with nothing here. It won't be I and the State; it will
be the Nation that gets its Republic notion distorted.
So if you said we will give you $50 billion for the $40 billion, Governor, we will make a deal with you. What's deductibility worth to
you? $2 billion? We will give you two and a half. I would have to
say no to it because that s not the basic objection. So I can't compromise. It seems to me that you can't take the position I have
taken and then say but we can compromise for a little relief or we
can phase it in.
Senator D'AMATO. Let me put it another way. I am suggesting
the absurdity of the position of forcing States and counties and
local jurisdictions to undertake obligations from the Federal legislative perspective, with respect to social services and Medicaid and
others, and then by the same token deny that State and local government the ability to raise those reypenues unimpeded.
Governor CuoMo. There is so much here that needs saying and I

hesitate to take your time. A couple of things that come to mind
that weren't in the text that we wrote. The President is able to
suggest to the American people, as he did over the weekend, perhaps those Governors ought to take a poll. Now he knows full well
if you go to the people of this country and say how would you like
your taxes reduced, of course they are going to vote yes. My
mother would vote yes twice.
But if you said to them did you like the tax cut that the Federal
Government gave you? They would say of course we like the tax
cuts that the Federal Government gave us. Did you know it cost
you a $200 billion mortgage, or at least contributed to that and
they are asking your grandsons 'to take care of by not going to college or now they are threatening you with a cost of living increase
and did you know that was part of the-price for a tax cut? It is
easy for the President to suggest a tax cut is something that easy
to manage. He fails to point out that we weren't able nationally to
manage a really big tax cut without putting ourselves in a terrible
deficit situation. And at the State level I can't do it. I can't run a

$200 billion deficit. I can't cut taxes and borrow all the money I
need to make up for it.
Also it is very easy in the public's mind to make a high tax pejorative. Of course that stigmatizes us and that is the political strateov of those who would sell this plan against so-called high tax
states. But when you ask them to tell Senator D'Amato and tell
Senator Moynihan and tell the Republican and Democratic Congress people;, Mr. President, what part of the services that New
York is delivering would you cut back on? Because we have to go to
our people Qnd exrlsain, Mr. President. Would you cut back education, would you cut back money for the homeless, which we still
have more of than at any time since the depression? We are at the
poverty rate with our welfare. It is barely above it with States
ahead of us. Would you ask them to cut back on welfare for women
and children? Mr. President, what do you suggest? What do you
say to them?
Wen we ask the *newspaper editors, who are so fond of talking
about taxing, and when we ask even the different political parties
in this State to come forward with suggestions for tax cuts and I
made that invitation this year, what suggestions did we get for cuts