Can Congress Forbid A State from Cutting its Taxes?

On March 11, 2021, President Biden signed into law the American Rescue Plan Act (the Act).  Purportedly intended to help the U.S. economy recover from the COVID virus and the steps taken to prevent its spread, it calls for the Federal Treasury to provide approximately $350 billion in aid to state governments.  The Act imposes on states that accept the aid a four-year prohibition against lowering taxes. By April 2, sixteen states – including OhioKentucky, Tennessee, Arizona - filed suit to challenge the prohibition, claiming that the Constitution does not permit Congress to dictate how states handle their budgets.  

The U.S. District Court for the Southern District of Ohio permanently enjoined application of the Act’s tax-cut prohibition to Ohio, concluding that it exceeded Congress’ authority.  Other courts have dismissed the suits as premature or dismissed them for lack of standing.

The authority of Congress to dictate terms to the states is a perennial issue.  It has been addressed before in numerous contexts, and the outcome of the current conflict could have far reaching implications.

Brett Nolan, Deputy Solicitor General of Kentucky and Professor Steven Schwinn of the University of Illinois Chicago Law School join for a webinar discussion moderated by Hon. Eileen J. O’Connor.

Featuring:

Brett Nolan, Deputy Solicitor General of Kentucky

Steven Schwinn, Professor of Law, University of Illinois Chicago Law School

Moderator: Hon. Eileen J. O'Connor, Law Office of Eileen J. O'Connor PLLC

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