West Virginia Attorney General issued the following announcement on Mar. 16.
West Virginia Attorney General Patrick Morrisey, Arizona Attorney General Mark Brnovich and Georgia Attorney General Chris Carr led a 21-state coalition in seeking immediate confirmation that the most recent COVID-19 stimulus bill does not strip states of their well-established authority to tax or not tax their citizens.
The coalition’s letter to U.S. Treasury Secretary Janet Yellen argues that, absent an interpretation by her department, the legislation almost certainly is an unconstitutional intrusion on state sovereignty.
“Federal spending power has clear limitations,” Attorney General Morrisey said. “Congress may not micromanage a state’s fiscal policies in violation of anti-commandeering principles nor coerce a state into forfeiting one of its core constitutional functions in exchange for a large check from the federal government. Such ‘economic dragooning’ of the states cannot withstand constitutional scrutiny.”
The coalition’s letter takes specific issue with a provision of the American Rescue Plan Act of 2021 that prohibits states from using stimulus funds to directly or indirectly offset a reduction in net tax revenue.
This matter directly impacts whether the American Rescue Plan will infringe upon the West Virginia Legislature’s consideration of a proposal to eliminate the state’s income tax, specifically with regards to how U.S. Treasury officials interpret the word “indirectly” as contained in the provision.
The coalition’s letter notes the power to tax or not tax citizens and residents is a right that exclusively belongs to the states and territories. The attorneys general contend any conditions attached to the receipt and use of federal funds must be unambiguous, comply with other constitutional provisions and relate to the federal interest for which the spending program was established.
The coalition’s letter cites potential changes to West Virginia’s sales tax exemption on aircraft repair and maintenance as well as an extension of the state’s Neighborhood Investment Tax Credit as examples of the uncertainty that exists within the Rescue Plan’s federal tax mandate.
The attorneys general request an assurance from Secretary Yellen by no later than March 23. Otherwise, Attorney General Morrisey indicates he will seek a court ruling that the unprecedented and micromanaging provision violates the U.S. Constitution.
West Virginia co-led the coalition with Arizona and Georgia with support from attorneys general in Alabama, Arkansas, Florida, Idaho, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, South Carolina, South Dakota, Texas, Utah and Wyoming.
Original source can be found here.
