Tennessee, Kentucky file lawsuit against Biden administration state tax policy

The American Rescue Plan Act was passed by Congress and signed into law on March 11, 2021.
Published: Apr. 6, 2021 at 4:49 PM EDT|Updated: Apr. 6, 2021 at 5:52 PM EDT
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NASHVILLE, Tenn. (WVLT) - Tennessee General Herbert Slatery III partnered with Kentucky Attorney General Daniel Cameron to file a lawsuit that challenged a mandate from the Biden Administration in the American Rescue Plan Act.

The lawsuit was filed against Treasury Secretary Janet Yellen in the United States District Court for the Eastern District of Kentucky. The suit argued the tax mandate “unconstitutionally usurps the authority of each State’s legislature to enact beneficial tax policies.”

The American Rescue Plan Act was passed by Congress and signed into law on March 11, 2021.

Nearly $200 billion of the nearly $2 trillion included in the Act, was given to assist state governments with COVID relief. The Act required states to comply with the tax mandate that will prevent the state from lowering taxes for its citizens for four years, according to the Tennessee Attorney General’s Office.

“The states have a constitutional right to implement their own tax policy,” said General Slatery. “We should not have to choose between accepting COVID-19 relief funds or surrendering to Washington’s attempt to override what only our elected officials in Tennessee are authorized to do.”

In the lawsuit, Cameron and Slatery alleged the suit “is an unprecedented power grab by the federal government at a time when elected officials should be singularly focused on helping their constituents overcome the devastating effects of the pandemic. It usurps the States’ sovereign authority by coercing them into making the policy choices that a bare majority of Congress prefers, and a strictly partisan majority at that, without regard for the citizens of the States or the leaders they elect.”

“Kentuckians expect state tax policies to be set by the men and women they elect to represent them in the General Assembly, and not as a result of an edict from the Federal Government,” said Attorney General Cameron. “These COVID relief funds are essential to helping the Commonwealth and hardworking Kentuckians recover from the effects of the pandemic, and it is unconstitutional for the Biden Administration to hold the funds hostage if we don’t agree to Washington’s preferred tax policies. I’m proud to join with Attorney General Slatery to push back against federal overreach in its worst form.”

Tennessee expects to receive more than one-fifth of the state’s annual general revenue ($3.7 billion) under the Act.

Attorneys General Cameron and Slatery argued “the broad and ambiguous scope of the Tax Mandate has the likely and foreseeable effect of chilling almost any legislative action by the States that affect tax revenue.”

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