Wall Street Journal, Democratic States Sue Trump Administration Over Tax Overhaul:
A coalition of states led by New York sued the federal government Tuesday, alleging that last year’s tax overhaul was politically motivated and designed to interfere with the rights of states to manage their finances. New Jersey, Connecticut and Maryland joined New York in the federal lawsuit filed in U.S. District Court in New York. The lawsuit takes aim at a part of the new tax law limiting federal tax deductions for state and local taxes to $10,000.
The plaintiffs said the new law raises the federal tax liability of millions of taxpayers in those states, making it more difficult for the states to maintain their taxation policies. The tax law also seeks to force the states to slash public spending, the plaintiffs said.
Wall Street Journal editorial, Albany’s Millionaire Tax Revolt:
The Republican tax bill is the law for 2018, but some progressives are mounting an insurrection against taxation without . . . loopholes for rich people. As a slogan it’s not the Boston Tea Party, but check out the revealing legal challenge from four states. ...
This is a sure legal loser, not least because tax reform merely rewrote the federal tax code. Congress didn’t touch a single state statute. The plaintiff AGs claim their states were somehow politically targeted, but the federal law applies to all 50 states uniformly.
States are always free to change their own state laws in response to the federal law, and several have. Michigan adjusted its law to make sure the state wouldn’t collect more money simply because of the change in federal deductions. New York has chosen to concoct a convoluted payroll tax-deduction scheme that the IRS is suggesting won’t pass legal muster. ...
For all the talk about how progressive states need high taxes for roads and free college, note that they are dumping taxpayer cash into lawsuits that are essentially campaign documents. These states apparently have money to burn.