“We’re worried and we’re wondering what are we going to tell our kids,” said Cynthia Metcalf, who lives with her husband and the youngest of their four children in Mount Kisco, an affluent commuter town. “I just feel like it’s an attack deliberately set against people from the Northeast or from other blue states.”

Relying More on SALT Deductions

Taxpayers in New York County (Manhattan) take the highest average deduction for state and local deductions, known as SALT, on their federal tax returns. And among the top 12 counties in the United States, half are in the greater New York metropolitan area.






Share who

take SALT

deductions

1.

2.

3.

4.

5.

6.

7.

8.

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11.

12.

New York

San Mateo

Marin

San Francisco

Westchester

Fairfield

Santa Clara

Pitkin

Teton

Nassau

Essex

Bergen

N.Y.

Calif.

Calif.

Calif.

N.Y.

Conn.

Calif.

Colo.

Wyo.

N.Y.

N.J.

N.J.

$60,400

39,300

38,200

35,000

34,300

33,400

32,200

27,000

26,100

23,900

23,700

23,700

45

44

51

39

47

45

43

35

30

50

35

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Ms. Metcalf, who teaches history at Westchester Community College, said she had tried to use TurboTax software to estimate how their tax returns would be affected. Currently, they can deduct the more than $20,000 a year they pay in school and town taxes, and the 7 percent of their income that goes to state taxes. Losing those deductions means the family could wind up paying considerably more, Ms. Metcalf said.

That prospect has the Metcalfs rethinking their financial future. Ms. Metcalf said she dreaded the prospect of telling her youngest child, Genevieve, a high school senior, that the college of her choice was beyond their means. And she said she and her husband might have to accelerate plans to relocate once all their children have left home. Then again, she added, selling their home could become more difficult.

“Now I’m starting to think, who’s going to want to buy our house here in New York?” Ms. Metcalf said. “The whole game has shifted.”

Indeed it has, and not just for homeowners. The tax plan would probably cut taxes for most New Yorkers, at least in the short term. But it has several provisions that local leaders said could pose long-term problems for New York and other urban areas. Mayor Bill de Blasio, in an interview on Monday, estimated that 700,000 New Yorkers would pay more in taxes in the near term.

“The human impact is huge,” Mr. de Blasio said, referring both to the higher taxes some residents would pay and to the services that could be cut as a result of the tax plan. He said his administration had tried for four years to make one of the world’s most expensive cities more affordable by providing public prekindergarten and paid sick leave. “And then along comes the federal government and makes the situation worse,” he said.

Gov. Andrew M. Cuomo of New York, who joined Gov. Jerry Brown of California and New Jersey’s governor-elect, Philip D. Murphy, on a call with reporters on Monday, called the bill “a targeted assault” on their states.

The versions of the bill passed by the House and the Senate have significant differences, which will have to be resolved in a conference committee before the bill can land on President Trump’s desk. The House bill has several provisions that could be especially bad for New York, including the elimination of a kind of tax-exempt bonds that many cities have used for affordable-housing projects. The Senate bill doesn’t include that change, but it does partly maintain the alternative minimum tax, which is aimed at limiting deductions for high earners and therefore disproportionately affects the New York area.

Photo

Cynthia Metcalf of Mount Kisco, in the northern suburbs of New York City, worried that the tax bill may damage her family’s finances and keep her youngest child, Genevieve, from the college of her choice.

Credit
Karsten Moran for The New York Times

Parts of the bills could be good for New York. Most significantly, the corporate tax cuts contained in both the House and Senate versions would most likely be a boon to New York’s financial sector. That could mean higher returns for investors and bigger bonuses for Wall Street traders — which, in turn, could mean more spending at shops and restaurants and more sales-tax revenue for the city and state.

Still, most experts said there was little doubt the bills would be bad for certain state and local budgets, and for the regional economy.

“It’s not going to be good, I think that’s clear,” said Michael P. Jacobson, who leads the Institute for State and Local Governance at the City University of New York. “And it might well be devastating.”

The most damaging elements could take years to play out. The bill would add more than $1 trillion to the deficit over a decade, according to Congress’s official scorekeeper. Under a 2010 law, the increased deficit would force automatic spending cuts to Medicare and other programs, many of which New York and other cities rely on to help their poorest residents.

The most immediate threat could be to the region’s housing market. The tax bill would eliminate or make less valuable the tax breaks that encourage homeownership. That would probably have a minor impact on home prices nationally, but potentially a big one in the New York area, with its expensive homes and high property taxes.

An analysis of the Senate bill by Moody’s Analytics concluded that home prices in Manhattan could fall nearly 10 percent in the coming years because of the bill. Some New York and New Jersey suburbs could be even more vulnerable because property-tax rates are higher there and prices are still recovering from the bursting of the housing bubble.

There could also be broader effects. Driving up New York’s already high tax burden could undermine the region’s competitiveness by making it harder for businesses to recruit and retain skilled workers, said Kathryn S. Wylde, president and chief executive of the Partnership for New York City, a leading business group.

Photo

Protesters on Monday outside the district office of Representative Leonard Lance in Westfield, N.J., urged the rejection of congressional tax legislation. Mr. Lance, a Republican, voted against the House bill.

Credit
Bryan Anselm for The New York Times

“It’s our scientists, our entertainers, our teachers, top professors, employees of cultural institutions — it’s a talent issue,” Ms. Wylde said. “It’s the entrepreneurs who decide not to locate their company here.”

For the wealthiest New Yorkers, meanwhile, the loss of the deduction for state and local taxes means they could face a combined tax rate above 50 percent on their income

Already, many wealthy New Yorkers try to spend enough time outside the city to avoid paying income taxes as state residents, and economists warn that the tax bill could accelerate that trend. Goldman Sachs recently estimated that the loss of the state and local tax deduction could eventually lower the number of high-earning New York City residents by 2 to 4 percent.

It wouldn’t take a mass exodus to have a significant impact on state and local budgets. According to the city’s Independent Budget Office, fewer than 40,000 New Yorkers accounted for 45 percent of taxable income in New York City in 2014.

Even if most rich New Yorkers stay put, local politicians could find it harder to raise taxes to pay for services. Mr. de Blasio, for example, has called for a tax on millionaires to help fix the city’s subway system. Mr. Murphy, the New Jersey governor-elect, wants a similar tax for public schools.

Without the state and local tax deduction, those plans could face more opposition. Already, top Democratic lawmakers in New Jersey have hinted they might back away from supporting Mr. Murphy’s millionaire tax if the deduction is repealed.

Three decades ago, New Yorkers defeated a similar effort to repeal the state and local tax deduction by rallying opposition from local officials across the country, said Jay Kriegel, who helped lead that lobbying effort on behalf of local business leaders. The breakneck pace of the latest tax bill left little time for a similar approach.

“Perhaps the biggest difference between ’85 and 2017 is the speed at which these people have worked,” Mr. Kriegel said. “There has not been time to have a serious discussion.”

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