NCLA Site Search

Amicus Briefs

State of Ohio v. Yellen

Never before in the history of the United States had Congress conditioned the receipt of federal funds on state governments’ surrendering inherent and core sovereign taxing powers. As NCLA’s brief put it, “a Founder who suggested that Congress’ Spending Power meant it could purchase from states the authority to oversee state spending and budgets would have been laughed out of Philadelphia—if not tarred and feathered.”

The American Rescue Plan Act of 2021 (ARPA), enacted on March 11, 2021, included a constitutionally alarming provision—the “Tax Cut Ban”—which impermissibly seized taxing authority from every state. NCLA filed an amicus curiae brief in the U.S. District Court for the Southern District of Ohio, arguing that the ambiguity at the heart of ARPA could be cured by the Department of Treasury’s subsequent guidance seeking to clarify the parameters of the Tax Cut Ban. In its second amicus brief, in the U.S. Court of Appeals for the Sixth Circuit, NCLA argued that, whatever else the Constitution permits, state taxation must remain firmly in the unfettered hands of locally elected legislatures. It is not only unconstitutional but dangerous to centralize control over taxes with federal officials, whether members of Congress, the Executive Branch, or, as here, both branches.

ARPA offered state governments approximately $195 billion to assist with recovery from the economic damage inflicted by the Covid-19 pandemic. The much-needed funds, collected from taxpayers across the country, were only available under ARPA to those states that agreed not to use the funds “to either directly or indirectly offset a reduction in the net tax revenue.” The Department of Treasury could claw back every dollar used for such an offset. This provision, which was intended to deter states from reducing their taxes, flunked the Constitution’s requirement that Congress spell out clear conditions for state aid. The District Court had already declared that it had “no idea what an ‘indirect offset’ to net tax revenues may be.”

In response to the District Court ruling, Treasury issued an Interim Final Rule that purported to supply the missing clarity. Yet, the 150-page document actually sowed greater confusion by mandating an overly complicated and burdensome scheme whereby each state was required to calculate and report the tax and spending effects of every new law, regulation, or administrative interpretation, so Treasury could decide whether to penalize the state. In other words, Treasury conferred on itself power to second-guess every single state government fiscal decision, backed up with the threat of financial sanction. The Constitution does not allow Treasury to wield such boundless power, and the Interim Final Rule, issued in an effort to save the Tax Cut Ban’s constitutionality, was therefore itself unconstitutional.

NCLA argued, in this case and in amicus curiae briefs filed in State of West Virginia, et al. v. United States Department of the Treasury, et al. and State of Texas, et al. v. Janet Yellen, in her official capacity as Secretary of the Treasury, et al., that the conditions of the Tax Cut Ban were ambiguous and breathtakingly broad. Further, the power of the state governments to tax or not to tax is a core attribute of state sovereignty. Congress cannot coerce states into surrendering taxing powers, especially with a heavy-handed offer-a-state-can’t-refuse for federal pandemic relief funds.

Mark Chenoweth
President and Chief Legal Officer
Margaret A. Little
Senior Litigation Counsel
John J. Vecchione
Senior Litigation Counsel

Brief of Amicus Curiae New Civil Liberties Alliance in Support of Plaintiff-Appellee State of Ohio

October 19, 2021 | Read More

Opinion of the U.S. District Court Southern District of Ohio, Western Division

July 1, 2021 | Read More

Brief for Amicus Curiae the New Civil Liberties Alliance

May 26, 2021 | Read More


NCLA Amicus Brief Asks Sixth Circuit to Uphold Decision Setting Aside ARPA’s Ban on State Tax Cuts

October 20, 2021 | Read More

NCLA Commends Federal Court for Permanently Enjoining Enforcement of Tax Mandate in Ohio

July 2, 2021 | Read More

NCLA Amicus Brief Challenges Congress’ Brazen Gambit to Seize State Governments’ Taxing Authority

May 27, 2021 | Read More


States challenge American Rescue Plan’s tax cut ban

Accounting Today

February 8, 2023

Policy Groups, 20 States Back Ohios ARPA Fight In 6th Circ.

Law360 Tax Authority

February 8, 2023

Ohio AG Wins Injunction Against Pandemic-Aid Restrictions

Courthouse News Service

February 8, 2023

Civil Liberties Group Backs Ohios Bid To Ax Tax Cut Limit Law


February 8, 2023



Enter your email address above to be notified whenever we post a new document to this case.