The deep southern states of Texas Mississippi and Louisiana have taken the Biden administration to court over their American Rescue Plan mandate that would stop states from offering tax cuts to their citizens, according to The Washington Examiner.
Texas led the charge, arguing that the federal government is overreaching and violating the constitution by telling states that they will not receive COVID-19 aid if they are using the money to “directly or indirectly” offset tax reductions.
“This is yet another attempt by the federal government to unlawfully exert control over how sovereign states operate,” said Texas Attorney General Ken Paxton.
“While hiding behind a deceptively friendly name, the Act effectively removes Texas’ ability to lower taxes while granting Secretary of the Treasury Janet Yellen power to take back federal aid funds if they disagree with state tax policies.”
According to Paxton, if Texas chooses not to enforce their unemployment or payroll taxes on small businesses suffering after the COVID-19 shutdowns and the state is stripped of its pandemic funding, that’s a big problem.
The three states came together to file an 18-page complaint in federal court where they asked the court to declare the tax law mandate being used as leverage by the Biden administration, unenforceable.
According to The Examiner, the White House did not immediately response to their request for comment. However, in March Yellen claimed that the provision didn’t impact the state’s tax policies indicating that they believe the administration was within its rights to enact it.
“Nothing in the Act prevents States from enacting a broad variety of tax cuts,” she said in a letter to Arizona Attorney General Mark Brnovich, who previously raised concerns over the mandate.
Just for frame of reference, Texas is slated to receive $16.45 billion from the American Rescue Plan which would put a serious dent in the state’s budget, should it be snatched away at the behest of the Biden administration.