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States want to use federal stimulus payments to fund tax cuts
March 17, 2021 / 10:54 AM / CBS/AP Americans standing by for stimulus checks
Some U.S. states want to use the economic aid delivered under the federal government s recently passed coronavirus package in order to cut taxes. The problem: The $1.9 trillion American Rescue Plan Act, which provides states with hundreds of billions in assistance, bars using the emergency funding for tax relief.
More than a dozen states are considering new tax credits or cuts that could be jeopardized because of the relief funds. Some of these cuts have been planned for a while, and others are just starting to be pursued. West Virginia, for instance, has been looking to cut its state personal income tax following the successful rollout of the vaccine in that state and an improving economy.
Morrisey joins push to let states use federal relief to offset tax cuts if they choose By
March 16, 2021 - 8:49 pm
Attorney General Patrick Morrisey appears at a news conference in the Governor s Reception Room in April 2020.
West Virginia’s Attorney General and others want clarity on whether a provision in the most recent covid relief package really would restrict states from taking millions of federal dollars while also cutting taxes.
“Federal spending power has clear limitations,” stated West Virginia Attorney General Patrick Morrisey, whose office released an announcement Tuesday afternoon.
“Congress may not micromanage a state’s fiscal policies in violation of anti-commandeering principles nor coerce a state into forfeiting one of its core constitutional functions in exchange for a large check from the federal government. Such ‘economic dragooning’ of the states cannot withstand constitutional scrutiny.”
GOP attorneys general question stimulus provision barring tax cuts
Wednesday, March 17, 2021
Republican attorneys general from 21 states, including Louisiana Attorney General Jeff Landry, are questioning a provision in the $1.9 trillion pandemic rescue plan that bars states from using its funds to offset tax cuts.
In a letter to Treasury Secretary Janet Yellen on Monday, they said the prohibition is “unclear, but potentially breathtaking,” airing concerns that any tax cut could be construed as taking advantage of the pandemic relief funds.
The attorneys general list over a dozen instances of states currently considering new tax credits or cuts that they believe could be jeopardized simply because of the relief funds.
A treasury spokesperson told The Associated Press that the provision isn t meant as a blanket prohibition on tax cuts. States can still offset tax reductions through other means. In other words, states are free to make policy decisions to cut taxes – they just cannot use the pandemic relief funds to pay for those tax cuts,” the Treasury Department said.
The treasury s application of the law could provide clearance for some tax cuts, such as Missouri legislation that would expand online sales taxes to offset proposed income tax reductions in 2023. Republican Sen. Andrew Koenig said he thinks his legislation is OK but has asked the state attorney general for guidance on whether it could run afoul of the federal law.