President Donald Trump, in creating his tax plan that we now as Americans must live under is very dangerous to high tax states. Now, as an example, the State and Local Tax (SALT) deductibility has been capped at $10,000.

You would think one counter to that, from the state point of view, would be to lower their tax base so they can allow their residents to maximize their tax liability, lowering their liability under the current law. But Governor Andrew Cuomo, who is thinking of running for President has another idea.

Lets play “end around” tax reform!

According to newly enacted New York law, the government will set up two different ways for residents to capture the full state and local tax deduction in the form it existed before the recently implemented GOP tax law. Capping SALT at $10,000, in short, cheats middle and upper state US taxpayers of tax-deductible relief.How much? In reality, state-wise, about 10 percent. But on the federal side, it could be as high as 40 percent.

And high state tax governors like Cuomo, and New Yorkers, have a right to be upset.

I had hoped since this change the states would find the “wukoha” to take the bull by the horns and find ways in their state tax laws to try to at least offset the 10 percent loss.

The 2018 New York State budget plan is a good start. The New York state budget would do several things to blunt the impact:

First, it creates two new state “charitable contribution funds” for health care and education. In a workaround to lessen the impact of the federal tax law changes, taxpayers could divert some of what they owe to these state funds and claim a credit on their tax returns. Local governments and school districts will be authorized to take the same steps.

The plan will let New Yorkers “donate” funds to a state-run charitable trust that will then finance regular state services, like education.

The payments would be deducted from federal income taxes as charitable donations, and would count toward all state and local taxes owed in New York.

Thus, New Yorkers would be donating taxes as if it was “charity.”  And they would do it by setting up a charitable trust. The trust would transfer funds to tax-supported programs, allowing residents to use the charitable donation deduction to make up for the loss of the SALT deduction. According to the proposed changes, one can use this to deduct local property taxes. This would also apply to health care and education.

In exchange for their donations to the fund, taxpayers get a sizable tax credit to offset their state tax burdens. In theory, classifying the payments as charitable contributions rather than local taxes would help New Yorkers avoid hitting the cap. In the new law, New York also gave local governments and school districts the right to create their own similar funds.

Additionally, the budget authorizes an “alternative employer compensation expense program” to take advantage of the fact that businesses were not affected by the state and local tax deduction changes. It allows employers to implement a payroll tax for employees that would be offset by a state tax credit for workers.

One piece would allow companies to voluntarily opt into a payroll tax system where employers would be subjected to a five percent tax on all annual payroll expenses in excess of $40,000 per employee.

The employer would be reimbursed through a tax credit by the state while employees would see less take-home pay, but get reimbursed on their income taxes.

Overall, the proposal would let employers reduce employees’ federal taxes to make up for the cap on SALT deductions.

Employers could opt in by Oct. 1 to participate, under Cuomo’s initial proposal. Thus, allowing companies to shift some taxes from income taxes to payroll taxes. Gross pay would be lower but made up through a tax refund – for a higher total pay.

Allowing employers to opt into a new voluntary payroll tax, many believe is achievable,  since payroll taxes remain fully deductible under the GOP tax law. The companies can then deduct those payments from their federal taxes. The provision would enable employers to reduce their workers’ federal taxes to offset the loss of their deductions under the new $10,000 cap.

Many doubt that the Internal Revenue Service will allow taxpayers to classify these gifts to the state as “donations” that can be deducted.  The legal tax question will be: If you get something of value in return, are you really being charitable?.

Now, the new payroll tax rests on sturdier legal ground, it’s not clear how many businesses would avail themselves of the complicated conversion necessary.

New Yorkers better look out. They could be setting themselves up for a fall.  Their residents might be exposed to tax penalties; and their tax liability could actually go up.

Cuomo and the State Legislature deserve a lot of credit. Recognizing that the federal tax code hurts New Yorkers by limiting deductibilities, they wanted to find ways to “sidestep” that tragedy

But we just have a simple idea: How about a 10 percent tax cut instead! That would significantly offset any potential kiss of death, from The Federal Tax Bill .

Anthony Rivieccio is the founder and CEO of The Financial Advisors Group, celebrating its 20th year as a fee-only financial planning firm specializing in solving ones financial problems. Mr. Rivieccio, a recognized financial expert since 1986, has been featured by many national and local media including: Klipingers Personal Finance, The New York Post, News 12 The Bronx, Bloomberg News Radio, BronxNet, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Bronx News, and The Bronx Chronicle. Mr Rivieccio is also currently an Adjunct Professor of Business , Finance & Accounting for both,  City University of New York & Monroe College, a Private University.