That's what the numbers look like to me. This is the money that could be at stake if the state switches from its state income tax, much of which can no longer be deducted under the Republican tax plan, to an employer-side payroll tax, which would be fully deductible.

The idea is that the state pick a number, say 5 percent, which would make the payroll tax roughly equal to the state income tax for most workers. To protect low-end workers, it should have a zero bracket below which employers would not owe the tax. A reasonable figure would be $15,000 so that employers only start deducting the tax on annualized pay in excess of $15,000. (The state would still have its earned income tax credit in place to ensure that workers with families are not hurt.) To preserve progressivity the state should supplement the payroll tax with an income tax on the most highly paid workers (e.g. 3.0 percent on wages in excess of $250,000). It also leaves in place its income tax on capital income in the form of dividends, interest, rent, etc.

Here's what the numbers look like. According to the Commerce Department's data, wages in NY will be around $910 billion in 2017. If we raise this by 3.5 percent for 2018 to account for wage and employment growth, then we get a total wage bill of $941.9 billion, as shown in the first row of the table. If we deduct $15,000 for each of New York's 9.5 million workers, that comes to $142.9 billion as shown in the second row. This leaves $798.9 billion subject to the payroll tax as shown in row 3. Using the 5.0 percent rate, that translates into total payroll tax revenue of $39.9 billion, as shown in row 4.

New York state wage bill (2018)  $941.9
Minus $15,000 per worker exemption $142.9
Amount Subject to Payroll Tax  $798.9
Revenue from 5% Payroll Tax  $39.9
Saving on Federal Income Tax  $8.0
Savings on FICA  $4.0
Total Savings  $12.0

Source: Bureau of Economic Analysis, Bureau of Labor Statistics and author's calculations.

This is the reduction in the amount of wage income that is subject to federal taxes, assuming that this tax is passed on dollar-for-dollar to all workers. In this case, if we assume an average federal income tax of 20 percent, the savings on federal income taxes would be $8 billion a year, as shown in the fifth row. There would also be savings on Social Security and Medicare taxes since the wages subject to these taxes will also be reduced by $39.9 billion. I have assumed the average savings is 10 percent. While the 2.95 percent Medicare tax applies to all wage income, the 12.4 percent Social Security tax is capped at $128,400. This gives the savings of $4 billion shown in row 6. (One downside, is that by lowering wages subject to the Social Security tax, this is likely to lead to somewhat lower Social Security income when workers retire.)

The total savings come to $12 billion a year, or a bit more than $1,200 per worker. That seems like a pretty good payback for a little bit of tax planning. And, of course, it completely undermines the Republican effort to screw blue states.