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13 States Move On Joe Biden, File Lawsuit Demanding Ability To Cut Taxes With Rescue Plan

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Thirteen states just made their move to hold Joe Biden and his administration to account and filed a lawsuit over the tax section of the American Rescue Plan. They are objecting to the clause that prohibits states from cutting taxes after getting coronavirus relief funds.

The coalition is led by Republican West Virginia Attorney General Patrick Morrisey. The other states in the lawsuit are Alabama, Arkansas, Alaska, Florida, Iowa, Kansas, Montana, New Hampshire, Oklahoma, South Carolina, South Dakota, and Utah.”

Morrisey issued a statement that read: “West Virginia Attorney General Patrick Morrisey, Alabama Attorney General Steve Marshall and Arkansas Attorney General Leslie Rutledge led a 13-state, bipartisan coalition in filing suit Wednesday to protect the well-established authority of states to lower taxes for their citizens.

The lawsuit argues federal treasury officials cannot force states to relinquish control of their taxing authority in return for much-needed economic aid related to COVID-19. The states take specific issue with a stimulus bill provision that the coalition refers to as one of the most egregious power grabs by the federal government in the nation’s history.

 “Never before has the federal government attempted such a complete takeover of state finances,” Attorney General Morrisey said. “We cannot stand for such overreach. The Constitution envisions co-sovereign states, not a federal government that forces state legislatures to forfeit one of their core constitutional functions in exchange for a large check equal to approximately 25 percent of their annual respective general budgets.”

 The matter directly impacts whether the federal tax mandate will infringe upon the West Virginia Legislature’s consideration of a proposal to eliminate the state’s income tax, specifically with regards to how U.S. Treasury officials interpret the word “indirectly” as contained in the provision.

 “Our lawsuit is designed to protect West Virginia from federal overreach,” Attorney General Morrisey said. “This ensures our citizens aren’t stuck with an unforeseen bill from the feds years from now.”

 The attorneys general argue that the mandate could be used to claw back a share of a state’s stimulus allotment. This creates an impermissible chilling effect on state lawmakers’ willingness to reduce the tax burdens on their citizens.

Members of the coalition sought to avoid litigation by asking U.S. Treasury Secretary Janet Yellen to confirm the legislation would not strip states of their taxing authority. However, the lawsuit argues her response did not place limits on the vague provision – uncertainty that she admits exists in referring to the ambiguity as a “thorny” issue in testimony to Congress.

 For instance, the lawsuit points out that uncertainty remains in West Virginia as to whether potential changes to a sales tax exemption on aircraft repair and maintenance or an extension of the state’s Neighborhood Investment Tax Credit would violate the federal tax mandate.

 The attorneys general filed the lawsuit against the U.S. Department of Treasury, Secretary Yellen and the department’s Acting Inspector General Richard K. Delmar, who would be responsible for seeking any potential claw back of federal funds.

 The lawsuit sets forth charges of unconstitutional exercise of federal power, specifically violations of the 10th Amendment, the conditional spending doctrine and the anti-commandeering doctrine.

 The attorneys general seek a court order that prohibits enforcement of the federal tax mandate and declares it unconstitutional.

 West Virginia co-led the coalition with Alabama and Arkansas with support from attorneys general in Alaska, Florida, Iowa, Kansas, Montana, New Hampshire, Oklahoma, South Carolina, South Dakota and Utah.”