The President won a big case this week against the liberal states that charge exorbitant taxes but expect large deductions from the federal government to camouflage and compensate for their extreme taxation.
The cap on state and local tax deductions didn’t unconstitutionally penalize Democratic-leaning states, a federal judge ruled Monday.
It’s not what liberal states wanted to hear, especially New York and New Jersey.
It’s been a form of welfare for these states.
THE STORY
A federal judge on Monday dismissed a lawsuit from four states over President Trump’s cap on deductions for state and local taxes in his tax reform law.
District Court J. Paul Oetken, an Obama appointee in the Southern District of New York, in his order ruled that the states had failed to show the provision went beyond Congress’s powers and he dismissed an argument from the states that the cap was intended to “coerce” them into changing their own tax rates. Oetken wrote in his decision that the states “failed to plausibly allege that the cap, more so than any other major federal initiative, meaningfully constrains this decision-making process.”
Oetken wrote: “The cap, like any federal tax provision, will affect some taxpayers more than others and, by extension, will affect some states more than others. But the cap, again like every other feature of the federal Tax Code, is a part of the landscape of federal law within which states make their decisions as to how they will exercise their own sovereign tax powers.”
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