SALT tax cap appeal rejected by SCOTUS

The lawsuit claimed that lawmakers crafted the provision to target Democratic states, interfering with the states’ constitutionally granted taxing authority.

WASHINGTON — The Supreme Court on Monday rejected a challenge from New York, New Jersey, Connecticut and Maryland to the 2017 tax law that capped federal tax deductions for state and local taxes.

The lawsuit had previously been dismissed by lower courts. It argued that the Republican-led tax law, signed by then-President Donald Trump, unfairly singled out high-tax states in which Democrats predominate.

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The law caps a deduction for state and local taxes, known as SALT, at $10,000. The lawsuit claimed that lawmakers crafted the provision to target Democratic states, interfering with the states’ constitutionally granted taxing authority.

Former New York Governor Andrew Cuomo called the cap “unprecedented, unlawful, punitive, and politically motivated,” and New York Attorney General Letitia James said the cap was an “unprecedented attempt by the federal government to curtail our states’ constitutional rights.”

In a 2019 ruling, a federal judge in New York ruled that the states had not been able to prove that the cap was unconstitutionally coercive, underscoring that the cap does not inherently limit the states’ decision-making power on how to tax and that the “the states remain free to exercise their tax power however they wish.” 

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Legislation in 2019 to raise the cap has passed the House of Representatives but not the Senate. At the time, only Rand Paul (R-Ky.) joined Senate Democrats to vote in favor of repealing the cap. 

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