“We are confident in the merits of our case.,” Connecticut Attorney General William Tong said in a statement to Bloomberg. “Connecticut won’t stand idly by while the Trump administration hands big breaks to the wealthiest while sticking it to middle-class taxpayers here in Connecticut.”

Declaring War

After the law passed at the end of 2017, state lawmakers declared war on the cap. New York Governor Andrew Cuomo said he would sue to stop it. Lawmakers in New York and other states attempted to come up with workarounds, like changes to payroll taxes or the treatment of certain charitable contributions, to lessen the impact of the cap. Cuomo and the three other governors didn’t actually sue Treasury Secretary Steven Mnuchin and his department until July 2018.

“This is their political attempt to hurt Democratic states. It is totally repugnant and hypocritical of the fundamental conservative ideology which they preach,” Cuomo said on a call with reporters in conjunction with the lawsuit.

Since then, the Internal Revenue Service has used regulations to shut down nearly all of the workarounds. That leaves the court case, for which oral arguments have been scheduled for June 18th on preliminary motions by the states to strike the law down and by the federal government to swat the case away.

Putting aside the recent boost in tax revenues, lawyers said states face a problem proving that limiting the SALT deduction abrogates their rights any more than other changes to SALT, which have happened many times over the years, according to Joseph Bishop-Henchman, executive vice president of the right-leaning Tax Foundation.

In the 1960s, for example, Congress changed the deduction from applying to all state taxes to applying to only certain ones, Bishop-Henchman said.

Much of the states’ lawsuit relies on transcripts of congressional hearings or quotes from lawmakers from the 19th and early 20th centuries, when Congress debated allowing a federal income tax. At the time, some lawmakers were concerned that the proposed constitutional amendment to allow the income tax would hurt states’ own taxation abilities.

For example, after Virginia rejected the income-tax amendment in the early 1900s, one local newspaper opined, “It will be a long time before Virginia will set her sister States the example of surrendering unnecessarily to the central government any important right now reserved to the States.”

The states also quoted an economist writing in an article for a law journal in 1914 that Congress “desired that the question of interference with state taxes should very carefully be safeguarded.”