-Source-Outside The Beltway-
New York and four other states have filed what can only be described as a bizarre lawsuit against the tax reform law passed by Congress last December, alleging that the changes to the deductibility of state and local taxes somehow violates the Constitution:
ALBANY — Four states including New York and New Jersey sued the federal government on Tuesday over a sharp reduction in the deductibility of state and local income taxes, a central part of President Trump’s tax overhaul, saying that the change was an “unconstitutional assault” on their sovereignty.
The suit, filed in Federal District Court in Manhattan, had been promised for months, as Democratic leaders of several states denounced the president’s plans, including Gov. Andrew M. Cuomo, who had called the limits on such deductions an “economic missile” at the heart of New York, already a high-tax state, and its economy.
On Tuesday, Mr. Cuomo reiterated that criticism and rhetoric in a news conference, saying that the Republican-backed plan is an “attempt to hurt Democratic states.”
“It is totally repugnant and hypocritical of the fundamental conservative ideology which they preach — the limited federal government, respect state rights,” said the governor, a second-term Democrat seeking re-election in the fall. “This tramples on their own theory. And it is politically motivated.”
The legal argument leans on interpretations of the 10th amendment — states’ rights — and the 16th, which established federal powers of income taxation, arguing that the new law effectively overturns longstanding precedent that “the federal government’s income tax power was and would remain subject to federalism constraints,” according to the suit.
It also argues that the limits on the deduction, and the potential economic damage as a result of its implementation, “deliberately seeks to compel certain states to reduce their public spending.”
The suit is the most substantive salvo in Mr. Cuomo’s monthslong campaign against any change in the so-called “SALT deduction” on state and local income taxes, as well as property taxes. Such deductions had typically been revered in states with high property taxes — like New York, New Jersey and Connecticut, all plaintiffs in the suit, along with Maryland — because of the tax relief it provided as well the incentive for homeownership. Read more
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