Attorney General Steve Marshall signed a letter today asking the U.S. Department of Treasury to take action to ensure that the American Rescue Plan Act doesn’t take away a state’s authority to implement state tax policy. Also signing the letter were attorneys general from Arizona, Arkansas, Florida, Idaho, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, South Carolina, South Dakota, Texas, Utah, and Wyoming.
Leaders warn that certain provisions of the Act forbid states from using COVID-19 relief funds to “directly or indirectly offset a reduction in…net tax revenues” resulting from state laws or regulations that reduce tax burdens, whether by cutting rates or by giving rebates, deductions, credits, “or otherwise.” This language could be used to deny the states the ability to cut taxes in any manner, even if they would have provided tax relief with or without the prospect of COVID-19 relief funds.
The attorneys general have requested that the Treasury use a more sensible interpretation of the language in the Act because if not, it could be seen as an intrusion on the sovereignty of the States. Attorney General Mark Brnovich stated, “A view of state tax policy this expansive by the federal government would not only be a giant overreach, but it would represent an unprecedented and unconstitutional infringement upon Arizona’s sovereignty,” said Attorney General Mark Brnovich. “The pandemic has wreaked havoc on the economy, and states like Arizona must be independent and free to determine their own tax policies without the threat of losing federal funds.”
Brnovich wants the Treasury to clarify their interpretation of this language by March 23. He wants to ensure that the Act doesn’t stop states from providing tax relief and will take further action if clarity isn’t provided.
A copy of the letter can be viewed here.
21 AG’s are urging the US Treasury to take immediate action to ensure the American Rescue Plan Act does not strip States of their core authority to implement basic state tax policy.
— Mark Brnovich (@GeneralBrnovich) March 16, 2021
View letter here: https://t.co/qUod6HeMOH
