WASHINGTON – Twenty-one Republican attorneys general urged the Biden administration Tuesday to clarify a provision of the $ 1.9 trillion economic aid package the president signed last week, warning that its restrictions on state tax cut efforts were “the biggest Attempt could be invasion of state sovereignty by Congress in the history of our republic. “
The seven-page letter was signed by a number of Republican officials, including the Attorney General of Texas, Arizona, Georgia, and Utah. They challenge a restriction lawmakers put in a $ 350 billion relief effort to state, local, and tribal governments that prevents them from using federal funds to “either directly or indirectly reduce net tax revenues to offset as a result of taxes ”cuts. These governments have lost revenue and laid off more than a million public employees during the coronavirus pandemic.
The law requires repayment to the federal government of funds that violate these terms.
In her letter, Republican officials asked Treasury Secretary Janet L. Yellen to clarify how broadly her department would interpret this part of the law. Will states simply forbid states to use the federal dollar to offset new tax cuts, or instead prohibit them from lowering taxes for any reason, even if those cuts were in the works before the law was passed? The officials said the broader restriction was harmful and most likely unconstitutional.
“That language could be read to deny states the ability to reduce taxes in any way – even if they had granted such tax relief with or without the prospect of Covid-19 relief funds,” the attorney general wrote. “Without a more sensible interpretation by your department, this provision would mean an unprecedented and unconstitutional encroachment on the separate sovereignty of states by usurping essentially half of the state’s tax books” – their ability to generate revenue.
Oklahoma, for example, has already passed an income tax cut through its House of Representatives, including an increase in the state’s tax credit to help low-income workers, Mike Hunter, the state’s attorney general, said in a statement Tuesday. “But,” he warned, “the federal incentive law could prohibit Oklahoma from providing this economic relief without losing its share of federal funding.”
A White House spokesman declined to comment on the letter Tuesday evening. A finance spokesman did not immediately return a request for comment.
Republican lawmakers in Washington and across the country previously raised concerns about the provision.
“We wanted to give – to cut sales tax on used cars, that is, low and middle income,” said Governor Asa Hutchinson of Arkansas on CBS’s “Face the Nation” program on Sunday. “And now we’re worried whether this will be banned under this bill. The language seems to suggest that it is so. “