“Simply put, the federal government violated the constitution when it imposed new, arbitrary limits on the amount of state and local taxes that residents could deduct on their federal tax returns," Grewal said.
Connecticut Governor Dannel Malloy said his state’s residents stand to lose $10 billion in SALT deductions. He said the new tax law gave "massive" handouts to the wealthiest one percent at the expense of middle-class taxpayers.
"Despite massive economic promises from Republicans, real wages have actually decreased since the passage of the tax cut," Malloy said in a statement. "At the same time the deficit has exploded by $1.5 trillion, providing a convenient excuse for GOP lawmakers to pursue their longtime goal of gutting Medicare, Medicaid and Social Security."
Conservative economist Stephen Moore, who advised President Donald Trump’s campaign on tax policy, is quoted in the complaint as saying the change in the SALT deduction is “death to Democrats.” Another conservative commentator, Ramesh Ponnuru said in a November 2017 article in the National Review the “fact that these tax increases will fall most heavily on ‘blue’ parts of the country is obviously not an accident,” according to the complaint. Ponnuru is a senior editor at the National Review and a Bloomberg Opinion columnist.
Republicans targeted the states to force them to reduce public funding for safety, schools, infrastructure, transportation and other services, the four states claim.
The suit highlights the history of the Sixteenth Amendment, which confirms that the federal government’s tax power has limits, Underwood said.
"At the time of the amendment’s ratification, it was widely understood that, to the extent the federal government taxed income, it would provide a deduction for all or a significant portion of state and local taxes," the suit says.
The case is State of New York, 1:18-cv-06427, U.S. District Court for the Southern District of New York (Manhattan).
This article was provided by Bloomberg News.