Twenty-one Republican state attorney generals threatened to take legal action against the Biden government over the “unprecedented and unconstitutional” limits imposed in the coronavirus relief bill on states’ ability to reduce taxes.
Attorneys general made the threat in a letter to the government on Tuesday, just days after President Joe Biden signed the $ 1.9 trillion (£ 1.3 trillion) bill.
In the seven-page letter sent to Treasury Secretary Janet Yellen on Tuesday, the 21 Republican Party officials argued that part of the funding for the aid package that helps states offset the costs of the pandemic limits their ability to reduce taxes .
Republican officials referred to the American Rescue Plan, a $ 350 billion (£ 251 billion) pot that was set aside as part of the bill to help cash-strapped areas affected by the hospitality sector closure and mass unemployment caused by the pandemic.
As part of negotiations for the bill, Congressional lawmakers agreed to restrict states from using federal funds for local tax cuts, with press secretary Jen Psaki explaining on Monday that $ 350 billion marijuana is aimed at “policemen, firefighters and other essential workers at work and employees”, and “did not intend to cut taxes”.
However, in their letter to Ms. Yellen on Tuesday, officials condemned the restriction and asked “that you confirm that the American Rescue Plan Act does not prohibit states from providing tax breaks through the types of measures listed”.
Attorneys general for states like Arizona, Georgia and West Virginia said that if the Biden government did not confirm states’ ability to make tax cuts, the bill “would represent the largest Congressional invasion of state sovereignty in the history of our Republic” .
The officers then threatened to take “appropriate additional measures”, such as The Washington Post reported that several state officials are already discussing a possible lawsuit.
However, a White House official told the Post late on Tuesday that Congress acted appropriately by stipulating certain conditions for areas that receive funding as part of the rescue plan.
The official confirmed that the law “does not say that states cannot cut taxes in any way”, adding that “it only instructs them not to use this money to make up for lost net revenues if the state decides to cut taxes”.
Biden and Vice President Kamala Harris toured the United States last week, touting the benefits of the American Rescue Plan.
Speaking about the historic piece of legislation on Monday, Biden said, “It’s one thing to pass a piece of historic legislation like the American Rescue Plan, and quite another to implement it,” before adding, “The devil is in the details ”.