Tuesday, July 17, 2018

Blue States Sue Trump Over New Cap on Tax Deductions

The Attorneys General in New York, Connecticut, Maryland and New Jersey this morning have filed a lawsuit against the Trump administration challenging the constitutionality of the new cap on federal deductions for state and local taxes in the 2017 tax overhaul, reports The Hill.

The states are asking the U.S. District Court for the Southern District of New York to invalidate the $10,000 cap on the federal tax deduction for state and local taxes, known as “SALT.”

The states argued that prior to the 2017 federal tax overhaul, Congress consistently allowed federal taxpayers who itemized their tax deductions to deduct, subject to certain incidental limitations, all of their state and local real and personal property taxes, and either state and local income taxes or sales taxes from their federal income tax returns, which often adds up to more than the $10,000 cap.

“The new cap effectively eviscerates the SALT deduction, overturning more than 150 years of precedent by drastically curtailing the deduction’s scope,” the states said in the complaint.

The states argue in the complaint the new cap is unconstitutional because it goes beyond settled limits on the federal government’s power to impose an income tax and deliberately harms certain states and their residents.

Heroic, I am always in favor of fewer taxes!