Steve Marshall declares victory over ban on state tax cuts

Alabama Attorney General Steve Marshall announced Monday that the State had won its lawsuit against the U.S. Department of Treasury over a provision of the American Rescue Plan Act (ARPA) that punishes states for making changes to any laws that would reduce taxes.

The U.S. District Court for the Northern District of Alabama granted the States’ motion for a final judgment and permanent injunction, instructing the Treasury Secretary not to seek enforcement of the Tax Mandate against the plaintiff states.

In its opinion, the court noted, “The Tax Mandate’s restriction on direct or indirect state tax cuts pressures States into adopting a particular—and federally preferred—tax policy. The inherent ambiguity in the text of the mandate may disincentive the Plaintiff States from considering any tax reductions for fear of forfeiting ARPA funds. This is a federal invasion of State sovereignty…”

Marshall stated, “This federal tax mandate is an unprecedented and unconstitutional assault on state sovereignty by the federal government, which attempts to commandeer the State of Alabama’s sovereign power to tax and spend and determine her own fiscal policies. I am pleased that the court agreed. My Office is now fighting this pattern of behavior by the federal government on a weekly basis in court and we have no intention of stopping.”

Alabama co-led the lawsuit with West Virginia and Arkansas, was joined by Alaska, Florida, Iowa, Kansas, Montana, New Hampshire, Oklahoma, South Carolina, South Dakota, and Utah.