Officials from 13 states join forces to sue Biden admin over tax-related stipulations in COVID relief plan

President Joe Biden has faced widespread criticism for the scope and cost of a COVID-19 relief package passed through Congress and signed into law without GOP support.

Now, a group representing 13 states is taking the Biden administration to court over a key portion of the expansive bill.

“Complete takeover”

Specifically, the complainants object to a provision that limits their ability to provide tax relief as a condition of receiving some of the $350 billion allocated to state and local governments. As the court document notes, the relief bill stipulates that funds may not be used to offset the cost of taxes either “directly or indirectly.”

According to the Washington Examiner, the suit was filed in the U.S. District Court for the Northern District of Alabama, with that state’s Attorney General Steve Marshall named as one of the plaintiffs.

Joining him are the attorneys general from West Virginia and Arkansas as well as various officials from 10 other states.

West Virginia Attorney General Patrick Morrisey issued a statement on the matter, asserting: “Never before has the federal government attempted such a complete takeover of state finances. We cannot stand for such overreach.”

He went on to argue that the nation’s founders set the stage for “co-sovereign states, not a federal government that forces state legislatures to forfeit one of their core constitutional functions in exchange for a large check equal to approximately 25 percent of their annual respective general budgets.”

“Last-minute conditions”

The attorneys general also sent a letter to Treasury Secretary Janet Yellen last month to send the message that the provisions of Biden’s relief bill “would amount to an unprecedented and unconstitutional intrusion on the separate sovereignty of the States through federal usurpation of essentially one half of the State’s fiscal ledgers (i.e., the revenue half).”

States named as plaintiffs in the case also complained in the letter that “such federal usurpation of state tax policy would represent the greatest attempted invasion of state sovereignty by Congress in the history of our Republic.”

For her part, Yellen reportedly told the Senate Banking Committee on March 24 that the matter was one of the “thorny questions that we have to work through.”

She said that lawmakers and officials “will have to define what it means to use money from this act as an offset for tax cuts, and given the fungibility of money, it’s a hard question to answer,” vowing that “we will do our best to offer guidance on it.”

State officials in Ohio and Arizona have filed their own lawsuit regarding the tax-related issue, with Ohio Attorney General Dave Yost proclaiming that “slipping last-minute conditions into a plan meant to help people” is one reason “why people don’t trust government.”

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