WASHINGTON, DC, Jan. 20, 2023 (GLOBE NEWSWIRE) — The Eleventh Judicial District issued a Verdict today in West Virginia vs. US Treasury Department, upholding the District Court’s decision to permanently bar the Treasury Secretary from enforcing a “tax cut ban” against the 13 states that have sued her: West Virginia, Alabama, Alaska, Arkansas, Florida, Iowa, Kansas, Montana, New Hampshire, Oklahoma , South Carolina, South Dakota and Utah. The ruling marks the NCLA’s second amicus win in the appeal process – afterwards Commonwealth of Kentucky and State of Tennessee vs. Janet Yellen, et al.– in lawsuits against Congress’ attempt to usurp the state tax agency.

On March 11, 2021, President Biden signed the American Rescue Plan Act (ARPA) into effect, providing states with nearly $200 billion to ostensibly mitigate the fiscal impact of the Covid-19 pandemic. But Congress has attached a historically unprecedented condition to receiving these funds: States must relinquish their central taxing authority. A provision in ARPA, the Prohibition on Tax Cuts, prohibits states from using funds “to offset, directly or indirectly, a reduction in net tax revenue…resulting from a change in law, regulation, or administrative interpretation…that lowers taxes.” ARPA authorizes the Treasury Department to reclaim any funds spent in violation of the ban on tax cuts.

In the panel’s unanimous decision, Judge Andrew L. Brasher first ruled that states have the right to challenge ARPA’s ban on direct or indirect reductions in state taxes. He then found that “the condition imposed by the offsetting provision is not sufficiently ascertainable” to pass the constitutional muster. Noting that “money is fungible,” the Eleventh Circuit Panel emphasized that the offset provision does not provide a base standard or benchmark, leaving state policymakers in the dark when determining whether their state will reduce net tax revenues and which would trigger a federal reclamation. NCLA’s amicus curiae meager argued that the ambiguous and …