3 Governors Say They Will Sue Feds Over New Tax Law

Cuomo, an Albany Law School graduate who is said to have presidential ambitions, added that discovery in the upcoming lawsuit will be critical.

"I would caution against making any legal conclusion on legal precedence until you know the facts here. The discovery here is going to be key. This is a bill that was passed in the dead of night. This is a bill that had the least transparency. In discovery, you're going to see emails between the White House and the Senate, and the White House and the Congress. How did they pick these 12 states? On what basis did they pick these 12 states? Did you really think it was a coincidence … that Trump lost all of these states? Do you really think it's a coincidence that they are blue states? … All you need is one email that says 'these are Democratic states and therefore we can get it passed.' Now you have a targeting for political reasons and now you're off to the races," Cuomo said.

During the conference call, David supplemented Cuomo's remarks noting that courts have "historically rejected government actions that inappropriately targets a class of people."

"In this case we're talking about these Democratically governed states—12 states that have unfortunately been targeted. We are exploring a variety of legal claims in response to this divisive federal SALT law. So I would not draw any conclusions about what our causes of action are going to be until our complaint is filed," Cuomo's top counsel said in the call.

In an effort to stave off some of the effects of the federal tax overhaul, the Cuomo administration issued preliminary plans for a state payroll tax. Last week New York Department of Tax and Finance issued a report offering a menu of options on ways to overhaul the state's tax structure.

One of the proposals in the report would keep the state's current income tax and levy a payroll tax on employers based on each employee's tax withholdings. The proposal to impose a payroll tax on employers, which is still legally deductible on federal taxes, would be an effort to offset some effects of the federal tax overhaul on New York residents, many of whom stand to lose some of their state and local tax deductions.

Republicans who control the state Senate in New York immediately scoffed at Cuomo's proposal to implement a payroll tax.

"I don't like the payroll tax at all. I haven't met any one of my colleagues who likes this—the payroll tax. People pay enough taxes already," Senate Majority Leader John Flanagan said earlier this month.