States Fight Back Against ARP’s Tax Cut Ban

The “tax cut ban” introduced in the American Rescue Plan Act — which requires that states that accept federal funds through ARPA must not reduce their own taxes — has been challenged by a number of states in several jurisdictions. “This provision violates very basic principles of the Constitution,” said Peggy Little, senior litigator at the New Civil Liberties Alliance, which has filed an amicus brief in State of Texas, State of Louisiana, and State of Mississippi v. Yellen et al in the U.S. District Court for the Northern District of Texas. “Further, the ban’s conditions are ambiguous and the regulations issued by the Treasury cannot cure the nondelegation problem created by an ambiguous statute. Simply put, Congress cannot purchase states’ sovereign power of taxation.”

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