Sovereignty Is Not for Sale: NCLA Challenges Congress’ Seizure of States’ Taxing Authority | Your Money

Washington, DC, October 5, 2021 (GLOBE NEWSWIRE) – The tax cut ban provision in the American Rescue Plan Act of 2021 (ARPA) turns the structure of American constitutionalism as we know it on its head. Today, the New Civil Liberties Alliance, a non-partisan, nonprofit civil rights group, established in Texas, Louisiana, and Mississippi v. Yellen et al. in the US District Court for the Northern District of Texas. NCLA argues that the terms of the tax cut ban violate several aspects of the Constitution, command state officials, eviscerate federalism, and deny Americans a republican form of state government. In addition, the terms of the ban are ambiguous and the regulations issued by the Ministry of Finance cannot solve the problem of non-delegation created by an ambiguous law. Put simply: Congress cannot acquire tax sovereignty from states.

The ARPA, which went into effect on March 11, 2021, resulted in US Treasury Department guidelines prohibiting tax cuts, which unacceptably restrict states receiving aid from using the funds “either directly or indirectly to offset a decrease in net tax revenue.” The stimulus package offers states around $ 200 billion to help recover from the economic damage caused by the COVID-19 pandemic. In most states, ARPA funds account for 20-30% of a state’s total budget. The unprecedented need for assistance from the COVID-19 pandemic, coupled with the dramatic financial incentive ARPA funds provide, makes it impractical for plaintiff states to refuse to be entitled to funds owed by their own taxpayers.

In New York v. United States, 505 US 144 (1992), the Supreme Court recognized that “where Congress transgresses its authority over states … the deviation from the Constitutional Plan cannot be ratified by the” consent “of state officials. “Looking at it through the lens of the enumerated powers, the Court concluded:”[s]State officials … cannot consent to the extension of the powers of Congress beyond those provided for in the Constitution. ”The Supreme Court also ruled in NFIB v. Sebelius claims the clear danger to federalism through the unrestricted use of the tax and spending powers of the federal government.

Two federal court rulings have already permanently prevented the Treasury Secretary from enforcing the ARPA tax cut ban in Ohio, Tennessee and Kentucky. The NCLA filed an amicus briefing in the lawsuit.[d]Despite this legal wording, the Court cannot fathom what it would mean to “reduce the net tax revenue” of a state through a “change in the law… Tax cut ban on regulatory ambiguity. Congress would have to set clear legal limits. US District Court judge Gregory Van Tatenhove ruled in a separate lawsuit from Kentucky and Tennessee that the tax cut ban was unconstitutional.

The US District Court for the Northern District of Texas should declare the tax cut ban unconstitutional and prohibit its enforcement in the plaintiff states.

The NCLA published the following statements:

“In the boldest takeover of power in recent history, Congress tries to wrest the state’s tax sovereignty from the states and force them not to lower taxes. This totally unconstitutional usurpation of power to prevent Texas, Louisiana and Mississippi from giving their residents state tax breaks is lawless, let alone politically deaf in times of pandemic. – Peggy Little, Senior Litigation Counsel, NCLA

“This law empowers unelected bureaucrats in the Treasury to oversee the tax and budgetary policies of each state and to disregard federalism and the structure of the separation of powers that underlies the constitution. The potential for arbitrary and abusive enforcement against politically disadvantaged states is immense. ”- Sheng Li, Trial Attorney, NCLA

Please see the case page here for more information.

ABOUT NCLA

NCLA is a non-partisan, non-profit civil rights group founded by the well-known legal scholar Philip Hamburger to protect constitutional freedoms from violations by the administrative state. NCLA’s public interest litigation and other pro bono advocates aim to tame the illicit power of state and federal agencies and promote a new civil liberties movement that will help restore Americans’ fundamental rights.

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Judy Pino New Civil Liberties Alliance 202-869-5218 judy.pino@ncla.legal

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