New York Times, Tax Law’s Cap on State and Local Deductions Is Upheld by Court:
Congress didn’t unconstitutionally penalize Democratic-leaning states when it imposed a cap on federal deductions for state and local taxes, a federal judge ruled Monday.
The 2017 federal tax law, which President Trump signed after a party-line vote in Congress, limited to $10,000 the state and local tax payments that families can write off on their federal income taxes if they itemize deductions. The provision, known as the SALT cap, disproportionately affected residents of wealthy, high-tax states, where residents are more likely to have state tax bills that exceed the $10,000 limit.
Four states, including New York, sued the federal government last year, arguing that the cap is an “unconstitutional assault” on their sovereignty.
But on Monday, a Federal District Court judge in Manhattan rejected that argument. “The court recognizes that the SALT cap is in many ways a novelty,” the judge, J. Paul Oetken, wrote in his decision. “But the states have failed to persuade the court that this novelty alone establishes that the SALT cap exceeds Congress’s broad tax power.”
The other states joining in the suit were New Jersey, Connecticut and Maryland. ...
Daniel Hemel, a professor of tax law at the University of Chicago, said he wasn’t surprised that the court had rejected the states’ argument. He noted that Congress had limited the state and local tax deduction in the past, albeit indirectly, through policies such as the alternative minimum tax.
Wall Street Journal, Judge Dismisses States’ Challenge to Trump Tax Overhaul