New York, New Jersey, Connecticut and Maryland said part of the 2017 federal tax overhaul was unconstitutional because it was aimed at blue states
By Jimmy Vielkind Sept. 30, 2019 6:33 pm ET A federal judge on Monday dismissed a lawsuit filed by four East Coast states that said part of the 2017 federal tax overhaul was unconstitutional because it was politically motivated.
Lawyers for the federal government said Congress has broad taxation powers and was within its rights to make adjustments to the federal code. The plaintiff states—New York, New Jersey, Connecticut and Maryland—sued in July of 2018. The federal government moved for dismissal in November of that year, arguing the states lacked jurisdiction and hadn’t stated a valid claim.
“The cap, like any federal tax provision, will affect some taxpayers more than others and, by extension, will affect some states more than others,” Mr. Oetken wrote. “But the cap, again like every other feature of the federal Tax Code, is a part of the landscape of federal law within which states make their decisions as to how they will exercise their own sovereign tax powers.”
The vast majority of New York and New Jersey residents received federal tax cuts because of the changes. Many who have state and local taxes above $10,000 are benefiting from lower federal tax rates, bigger child tax credits, the larger standard deduction and the narrowing of the alternative minimum tax.
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