Judge blocks tax cut rule in American Rescue Plan

The Associated Press ^ | November 16, 2021 | By KIM CHANDLER

[Oldeconomybuyer]

MONTGOMERY, Ala. (AP) — A federal judge has blocked the U.S. Treasury from enforcing a provision of the American Rescue Plan Act that prohibited states from using the pandemic relief funds to offset new tax cuts.

U.S. District Judge L. Scott Coogler ruled Monday in Alabama that Congress exceeded its power in putting the so-called tax mandate on states. He entered a final judgement in favor of 13 states that had filed a lawsuit and instructed the Treasury Department not to enforce the provision. The judge left the rest of the law in place.

The American Rescue Plan steered $195 billion in flexible relief funds to states but specified that states could not use it as a means to cut taxes by using the federal relief dollars to offset the revenue reduction.

The judge described the tax-cut restrictions as “a federal invasion of State sovereignty” that was “unconstitutionally ambiguous” — leaving states guessing as to whether their tax cuts would trigger a repayment of federal funds.

“The Tax Mandate’s restriction on direct or indirect state tax cuts pressures States into adopting a particular — and federally preferred — tax policy,” Coogler wrote. That “may disincentive” states “from considering any tax reductions for fear of forfeiting ARPA funds,”

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

Alabama Attorney General Steve Marshal called that tax-cut restrictions “an unprecedented and unconstitutional assault on state sovereignty by the federal government.”

[rarestia]

What a mess.

[be-baw]

A G W Bush appointee.

[AFreeBird]

A fedJudge recognized State Sovereignty?

COOL!

[kiryandil]

A non-squish Dubya judge?

[AFreeBird]

Stranger than fiction, I know.

[Nifster]

As if the IRS will ever follow a court order