Judges block tax cuts in US rescue program

Montgomery, Alabama. – A federal judge has prevented the US Treasury from enforcing the provisions of the US Rescue Planning Act, which prohibits the state from using the Pandemic Relief Fund to offset new tax cuts.

Judge L. Scott Coogler of the US District Court ruled in Alabama on Monday that Congress was beyond the power to impose so-called tax obligations on the state. He issued a final decision in favor of the 13 states that filed the proceedings and instructed the Treasury not to enforce the provisions. The judge left the rest of the law intact.

The American Rescue Plan has directed a $ 195 billion flexible bailout fund to the state, but the state has designated it as a means of tax cuts by using federal bailout dollars to offset revenue declines. Did.

The judge described the tax cut restrictions as “constitutionally ambiguous” and “invasion of federal sovereignty.” The state speculated whether tax cuts would trigger the repayment of federal funds.


“Restrictions on tax delegation on direct or indirect state taxes put pressure on states to adopt specific and federal-favored tax policies,” Cougler wrote.

The lawsuit was filed by Alabama, Arkansas, Alaska, Florida, Iowa, Kansas, Montana, New Hampshire, Oklahoma, South Carolina, South Dakota, Utah, and West Virginia.

Steve Marshall, Attorney General of Alabama, called the tax cuts “an unprecedented unconstitutional attack on national sovereignty by the federal government.”

Officials from other states also praised the ruling on Tuesday.

West Virginia Attorney General Patrick Morrisey said the decision “makes citizens free from unexpected bills from the federal government years later.”


Kansas Attorney General Derek Schmidt said the state’s pursuit of a grocery sales tax cut “without fear of federal retaliation” “paves the way.”

A Justice Department lawyer representing the Treasury argued that the money should be used for its intended purpose, the recovery of the pandemic.

“Parliament did not provide the state with bailout plan funding to replace the deliberate reduction in net tax revenues, which would help the nation recover economically from the pandemic in ways that would otherwise not be possible. We provided funding for this, “a federal lawyer wrote in a court filing in August.

“The state is free to cut all the taxes it needs, unless it uses federal aid to’offset’revenue declines,” a federal lawyer added.


David A, the Associated Press writer. Lieb contributed from Jefferson City, Missouri.

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Judges block tax cuts in US rescue program

Source link Judges block tax cuts in US rescue program

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