The Buckeye Institute Files Third Legal Brief to Protect Taxpayers Against Biden’s Tax Mandate

Apr 30, 2021

Columbus, OH – On Friday, The Buckeye Institute filed its third amicus brief calling on the courts to protect taxpayers from the federal tax mandate included in the American Rescue Plan Act (ARPA). The most recent ARPA-related brief was filed in West Virginia v. Yellen with the United States District Court for the Northern District of Alabama Western Division. In addition to West Virginia and Alabama, other plaintiffs in the case are the states of Alaska, Arkansas, Florida, Iowa, Kansas, Montana, New Hampshire, Oklahoma, South Carolina, South Dakota, and Utah.

“Following Ohio’s lead, 13 more states are rightly challenging the Biden administration’s attempts to run roughshod over their authority to manage their own affairs,” said Robert Alt, president and chief executive officer of The Buckeye Institute. “The vague and open-ended requirement included in the American Rescue Plan Act that states must give up unprecedented authority to determine their own tax policy is unenforceable and constitutes a sweeping disregard for the foundational principle of federalism upon which this country is built.”

As it did with two previous briefs filed in Ohio v. Yellen and Arizona v. Yellen respectively, The Buckeye Institute agreed that Congress lacks the authority to usurp state taxing authority and also noted that the court does not have to rule on that question given the vagueness of the text in the ARPA. “Whatever the extent of Congress’s power in this area in the abstract, this enactment falls far short of the clarity required for Congress to intrude on States’ traditional sovereign authorities.”

Buckeye’s brief highlights serious questions raised by the federal tax mandate including Alabama’s annual Sales Tax Holiday; West Virginia’s recently-enacted Senate Bill 693, which conforms the state’s tax code to federal tax law; and New Hampshire’s proposed corporate tax cut and proposed tax cut on rooms and meals. “Any tax cut or changes to fiscal policy—or almost any policy—could impact state revenues and could thus violate the tax mandate, or they may not. No one knows, which is precisely why the court must overturn the ARPA tax mandate,” said Alt.

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UPDATE: July 14, 2021, the United States District Court for the Northern District of Alabama Western Division denied the states’ request for an immediate injunction, but confirmed that the states do have standing to sue and that the court will “address the significant constitutional issues on the merits in an expedited manner.”

UPDATE: On November 15, 2021, the United States District Court for the Northern District of Alabama Western Division held that the American Rescue Plan Act’s tax mandate was impermissibly ambiguous and thus exceeded Congress’s constitutional authority to place restrictions on how states spend federal grant money. The court granted a permanent injunction preventing the Department of the Treasury from seeking to enforce the tax mandate restrictions on states.