New York, New Jersey, Connecticut and Maryland faced skeptical questioning from a panel of federal judges considering whether to revive a lawsuit that challenges a U.S. cap on individual deductions for state and local taxes.
At the behest of the Trump administration, a tax overhaul passed by Congress in 2017 set the maximum deduction for so-called SALT payments at $10,000 on individual returns, imposing the first limit on deductions allowed in full for more than 150 years. Opponents claimed the change illegally targeted Democratic-leaning states that tend to have higher taxes. New York Governor
In September 2019, U.S. District Judge
“When it comes to taxes, the Supreme Court tells us unless there is something explicit in the Constitution that stops Congress and the executive from passing a law in the tax area, we’re going to step out of the way,” U.S. Circuit Judge
Jean-David Barnea, a U.S. Justice Department lawyer, said the lawsuit “concerns a policy disagreement masquerading as a Constitutional dispute.” He said there is nothing in the Constitution about SALT deductions, and that Congress’s right to create and eliminate tax deductions is entirely a matter of legislative policy.
The judges didn’t say when they will rule on the appeal.
The case is State of New York v. Mnuchin, 19-3962, Second U.S. Circuit Court (Manhattan).
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