State News

Court Agrees With AG Wilson And Blocks “Tax Mandate” That Didn’t Allow States To Cut Taxes

A federal judge has agreed with Attorney General Alan Wilson and 12 other states that part of the stimulus plan that prohibits states from cutting taxes is unconstitutional. The judge has granted a permanent injunction against that part of the stimulus plan because it is unconstitutionally ambiguous and Congress exceeded its power.

The case is focused on part of the federal stimulus plan designed to help states recover from the pandemic. The part in question said states could not use any of the stimulus money to cut taxes or revenues, either directly or indirectly. Twenty-one state attorneys general argued that meant states could not cut taxes for any reason, even if those cuts were planned before the pandemic or used other funds, because the federal government could argue the tax cuts would be paid for using stimulus money.

“We knew this tax mandate on the states was clearly unconstitutional and we’re grateful a federal court agrees,” Attorney General Wilson said. “This is a win for taxpayers, the states, the Constitution and the rule of law.”

U.S. District Judge L. Scott Coogler, in the Northern District of Alabama, ruled that, “…the Tax Mandate has and will continue to inflict irreparable injury to the Plaintiff States, who are all either faced with or bound by an unconstitutionally ambiguous ‘deal’ that is intruding on each State’s ability to exercise its ‘indispensable’ sovereign power to tax.” He ruled that the federal government is free to enforce the rest of the stimulus plan.

Joining South Carolina in filing this suit were the states of West Virginia, Alabama, Arkansas, Alaska, Florida, Iowa, Kansas, Montana, New Hampshire, Oklahoma, South Dakota, and Utah.

You can read the Court’s ruling here.

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