(2 of 2)
Cuomo's formal address at the Press Club was a summary of his arguments against Reagan-style tax reform, particularly the Administration's proposal to eliminate the deductibility of state and local taxes (which Cuomo says would cost New York $4 billion in revenues a year) while decreasing the capital gains rate. The Administration plan, Cuomo argued, "is a rip-off dressed up as reform." In the five years since the 1981 tax cut, Cuomo said, "the President will have (reduced) the tax rate on our richest Americans by 50%."
Answering Administration claims that only a handful of high-tax states favor his position, the Governor said it was true that only 15 states would be directly harmed by the repeal of the state and local deductions. But, he said, "those states have more than 40% of the nation's population," and he added that the state and local tax deductions are "used by more people than any other in the federal code." Moreover, Cuomo pointed out that in April 1983, Reagan said that eliminating the deduction would create "a tax on a tax."
Cuomo's pilgrimage to Washington included a 20-minute call on House Speaker Tip O'Neill, who avoided committing himself to Cuomo's position on the deduction issue. He also huddled with several New York Congressmen over his scheduled appearance before the House Ways and Means Committee in July. Not all Democrats on Capitol Hill are eager to line up behind the Governor; many feel that New York's high tax deductions serve as powerful grist for Reagan's speeches around the country. "This is a war between Cuomo and the other Democrats," said Buchanan, pointing to Democratic tax reformers such as New Jersey Senator Bill Bradley and Missouri Congressman Richard Gephardt. "Despite what he says, Cuomo will be perceived as being willing to kill tax reform to retain a deduction that benefits primarily the well-to-do."
One aide to a Democratic Senator agreed with that assessment. "If I were advising Mario, I'd tell him to cool it," he said. "As the Governor of New York, he has to oppose the elimination, but he doesn't have to make this much noise." Pollster Pat Caddell, who advises Cuomo, feels the Governor's high profile against the tax plan is worth the gamble. Said Caddell: "Sometimes you lead when nobody else is there. There is still a long way to go on this tax issue, and other voices may soon follow."