Tuesday, January 30, 2018

Democrat governors planning lawsuit to block GOP’s tax overhaul

Legal Insurrection readers will recall the California legislature’s attempt to create a special government fund as a “charity” for taxpayer donations to mitigate the loss of state and local tax (SALT) deductions in the recently passed GOP tax plans.

The politicians must have realized the approach was full of fail, so now leaders of several blue states are planning a lawsuit to block the entire overhaul package. California may join in....

Bloomberg offers a humorous and in-depth look at the Blue States’ desperation at the loss of the SALT deductions and all of their proposed solutions. The assessment of the legal experts consulted on this particular proposal is that the governors’ case is dead-on-arrival:
…[The lawsuit] is an intriguing strategy. But alas for the citizens of New York State, probably a doomed one.

I spoke to Michael Dorf, a law professor at Cornell who recently outlined the possible lines of attack that such a suit could take. For one thing, they could argue federalism, a tack that even conservative judges should find appealing. “There’s an argument that the Sixteenth Amendment does not empower the federal government to treat money that is owed to state and local governments as part of the tax base,” he said. “If you go back to the Sixteenth Amendment it’s clear that states were concerned about this at the time of the drafting.”

The problem? “The hard part there for the plaintiff states, while that was a concern for the people who adopted the Sixteenth Amendment, it’s not anywhere in the amendment.”

…Jonathan Adler, who teaches law at Case Western, was even more pungent, and succinct. While we don’t know what form the complaint will eventually take, since the states haven’t yet drafted it, “What we have seen [so far] would suggest that there is some sort of constitutional right to a SALT deduction. To state the claim is to refute it.”