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Not surprisingly, opposition to the Administration proposal runs strongest in states where taxes are highest, starting with New York. By the estimate of one congressional study, loss of deductibility would add some $1,600 to the average 1987 bill of New Yorkers who itemize their returns, about half of the state's taxpayers. Calling the proposal "a crushing blow" that would "cripple" the state, Democratic Governor Mario Cuomo vowed to fight the disallowance provision with every means at his disposal. Those include a plea to New York City's generous political contributors, who help bankroll every national campaign and many important state races, to boycott fund-raising activities on behalf of candidates who support the measure. "This is one- issue politics," said Cuomo. "The issue is called survival." Many prominent Republicans in the state were also alarmed. To protest the proposed change, G.O.P. Senator Alfonse D'Amato staged a mock re-enactment of the Boston Tea Party from a 62-foot sloop in New York City's East River. Even ardent Tax Reformer Jack Kemp, a Congressman from upstate, favors adjustments that would ease the tax burden on New York residents.
Elsewhere, the proposal was assailed less forcefully. Though Californians would also be hit hard by loss of the deduction, Republican Governor George Deukmejian had a muted response on the matter. While Deukmejian said he would look "askance" at any reform that resulted in a net tax increase for residents of the state, he was clearly not anxious to provide early offense to his fellow Californian in the White House. In San Francisco, which has no income tax but exacts hefty real estate levies, Mayor Dianne Feinstein, a Democrat, endorsed the overall Reagan plan as "a major step forward." Only in a few high-tax states in the Midwest did officials echo Cuomo's strong opposition to the loss of deductibility. Said Wisconsin Governor Anthony Earl, a Democrat: "If the federal government wants states to take on more responsibilities in education, in human services, in the environment, then they shouldn't penalize us for raising taxes to pay for them."
In fact, the Reagan Administration not only wants states to assume new responsibilities, in some cases it is forcing them to do so by reducing federal programs. Says Brookings Institution Tax Specialist Henry Aaron: "In an atmosphere where specific expenditure programs are getting cut, it is a little hard on the states to say we are also going to go cold turkey next year on denying deductibility." Norman Beckman, director of the Council of State Governments, referring to the 1978 California tax-cutting measure that hit many city and county governments hard, warned that loss of deductibility would have "a Proposition 13 type effect nationally."