East coast states to sue over GOP tax plan
New York Governor Andrew Cuomo announced that a coalition of east coast states will sue the federal government over the recently passed GOP tax bill.
At issue is the $10,000 limit on deductions for state and local taxes. The states claim the measure will cost them billions in lost revenue.
Cuomo says that tax reform is an "economic missile" aimed at blue states.
"The elimination of full state and local deductibility is a blatantly partisan and unlawful attack on New York that uses our hardworking families and tax dollars as a piggy bank to pay for tax cuts for corporations and other states,” Cuomo said in a statement. “This coalition will take the federal government to court to protect our residents from this assault."
A press release from Cuomo’s office claimed that the elimination of full SALT deductibility will cost New York $14.3 billion.
The move has picked up support from Connecticut Gov. Dannel Malloy and New Jersey Gov. Phil Murphy, who just replaced Chris Christie.
"Capping the State and Local Tax deduction had nothing to do with sound policy," Murphy said. "It is a clear and politically motivated punishment of blue states — like New Jersey and our neighbors —who already pay far more to the federal government than we receive.”
The lawsuit is just the latest attempt by Democratic governors and other high-profile lawmakers to thwart the tax bill. While a number of major companies have announced bonuses tied to the bill, and firms across America are preparing to revise their income tax withholding for workers, Democrats also have downplayed gains for average Americans as "crumbs."
What is the legal theory behind this suit? The bill does not single out blue states. There are taxpayers in every state who will be affected by the limit. Whose fault is it that some blue states' taxes are so high that they have more taxpayers affected than others?
The Democrats are trying to make this into a class warfare issue. But that's difficult to do when almost all those individual taxpayers affected by the limit make more than $100,000 a year. Besides, even with the limit on deductions for state taxes, the increase will be offset by much lower rates.
Cuomo and his fellow governors are going to have a hard time convincing a judge that Republicans have "targeted" blue states with this legislation. That sort of conspiracy mongering usually doesn't hold water in federal court and even a friendly liberal judge would have a hard time justifying throwing the law out.