The Trump administration enjoyed a big win on Monday amidst Democrat efforts to impeach the president over a phone call with the Ukrainian president.
A federal judge dismissed a lawsuit brought against the Tax Cuts and Jobs Act’s limit on how much people can deduct in their state and local taxes.
New York, New Jersey, Connecticut, and Maryland tried to block the provision in July of 2018, arguing that it raises the tax burden on blue states. U.S. District Judge J. Paul Oetken in Manhattan ruled in favor of the provision on Monday.
The judge ruled that the provision does not violate the 10th Amendment, which differentiates between federal and state rights.
“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,” Oetken wrote about his decision.
“Because the States have failed to plausibly allege that the cap, more so than any other major federal initiative, meaningfully constrains this decision-making process, this Court has no basis for concluding that the SALT cap is unconstitutionally coercive,” he added.
The Tax Cuts and Jobs Act caps state and local tax deductions at $10,000, which is below the average of what people claim in states like New York and California where taxes are a massive burden on citizens.
Taxes being raised in blue states has led many to leave for no-income tax stops like Florida and Tennessee.
New York, for instance, has seen 452,580 leaving the state in the past year. Many experts chalk this up to people fleeing the tax rate and seeking places that put less of a burden on them. With deductions now capped, you can expect more and more people to flee blue states with high taxes they now have less of a chance of escaping.
New York reported that the average deduction claimed by 3.3 million citizens who itemized their taxes was $21,943 in 2015. California has a similar average for people itemizing their taxes.
“This is entirely unacceptable and, as I’ve said before, the IRS should not be used as a political weapon,” New York Governor Andrew Cuomo said about the deduction cap, according to NY Daily News. Cuomo claims the deduction cap is being used as a political weapon against blue states like his own.
Oetken said the motivation behind the deduction was not part of his ruling. He is merely ruling that the deduction cap is well within the rights of the federal government.
“This court declines to speculate on Congress’s motives in passing the SALT cap,” he wrote.
Trump’s deduction cap was part of his 2017 tax overhaul. The deduction was seen as a way to help pay for the lowering of taxes for individuals and corporations. Trump is expected to make plenty more overhauls to the tax code, as well.
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