• June 22, 2024

The Supreme Court Just Told Blue States To Pound Sand!

On Monday, The U.S. Supreme Court rejected a bid by four Democratic-leaning states to lift a cap on federal deductions for state and local taxes put in place as part of a 2017 tax overhaul under Republican former President Donald Trump.

After a lower court dismissed their action, New York, Connecticut, Maryland, and New Jersey filed an appeal with the Supreme Court. According to the lower court, the U.S. Congress had broad taxing jurisdiction and did not break the law. By imposing a $10,000 limit on the amount of state and local taxes that individuals can deduct on their federal income tax returns, the Constitution was amended.

The states argued in their March court filing:

“Congress’s taxing authority (as set forth in Article I, Section 8, and the Sixteenth Amendment) is cabined by the structural requirements of federalism, which prevent the federal government from directly interfering with the States’ ability to generate revenue to sustain their operations,

“The long history of federal income taxation demonstrates that Congress and the States equally understood that a deduction for all or nearly all state and local property and income taxes was constitutionally required to preserve state sovereign taxing authority.”

The court’s decision, which came in an unsigned order with no dissent, effectively terminated a legal challenge made by a number of high-tax, Democratic-led states, including New York, according to The Hill.

The four states were opposed by Democratic President Joe Biden’s administration.

The SALT cap was part of a Republican-backed federal tax bill enacted by Trump that lowered the corporate tax rate and introduced an income tax cut for individuals, which tax policy experts say benefited the wealthiest Americans the most.

Democrats had fought the bill, which was expected to reduce federal revenues by $1.5 trillion over ten years. Capping the deduction has a disproportionate impact on high-tax, often Democratic-leaning states, with New York estimating that its taxpayers will pay an additional $121 billion in federal taxes from 2018 to 2025.

In 2018, the four states filed a lawsuit against Trump’s administration, claiming that the cap was an unconstitutional attempt to interfere with states’ taxing power and coerce Democratic-leaning states to cut taxes and the services they pay for.

The New York-based 2nd U.S. Last year, the Circuit Court of Appeals rejected the states’ arguments, ruling that they failed to demonstrate that their injuries were severe enough to warrant a constitutional violation.

The majority of the individual tax provisions in the 2017 law, including the SALT cap, are set to expire after 2025.

Sources: Conservativebrief, Nypost, Nytimes



The Daily Allegiant