Ohio Lawsuit Alleges $1.9 Trillion Relief Bill Unconstitutionally Bars Tax Cuts

Written by Martin Walsh

OPINION: This article contains commentary which reflects the author's opinion




Ohio Republican Attorney General Dave Yost filed a lawsuit against the Treasury Department on Wednesday alleging that an amendment unlawfully limits states’ access to some of the $1.9 trillion aid package that recently passed in Congress.

Yost argued with Ohio’s lawyers that Congress “exceeded its constitutional authority” in adding the provision, referred to in the lawsuit as the “Tax Mandate,” because it is overly broad in prohibiting states from using the funding to offset tax cuts or credits “directly or indirectly.”

The Washington Examiner reported:

The provision targets $350 billion of the massive spending package, money which was allocated specifically for state and local governments to use to pay for expenses stemming from the COVID-19 pandemic, which Yost said has wreaked havoc on commerce across the country and resulted in “an immense” reduction in the revenues of many states, thus hurting state budgets.

Ohio itself has lost an estimated $1.1 billion in tax revenue because of the health crisis and subsequent restrictions on business and travel, the lawsuit said. The state was expected to receive some $5.5 billion from the $350 billion aid fund, although Ohio is arguing that the tax mandate provision exceeds the authority the federal government has over state tax policy and thus affects how it can spend that $5.5 billion in aid.

The lawyers who wrote the lawsuit, which also lists Treasury Secretary Janet Yellen as a defendant, wrote that the provision is a metaphorical “gun to the head” for the state.

“The Tax Mandate thus gives the States a choice: they can have either the badly needed federal funds or their sovereign authority to set state tax policy. But they cannot have both. In our current economic crisis, that is no choice at all,” the suit reads.

The lawsuit states that the partisan spending package — which was not supported by Republicans in the House or Senate — made a slew of last-minute changes.

In one instance, the lawsuit says the provision about not allowing funding to offset tax cuts directly or indirectly was added in the Senate after the bill had already passed the House of Representatives.

“Slipping last-minute conditions into a plan meant to help people that instead handcuffs Ohio is why people don’t trust the government,” Yost said in a news release. “And it almost always leads to constitutional mischief.”

The Ohio lawsuit comes a day after a whopping 21 Republican attorneys general threatened legal action against the Biden regime over a key element of the relief bill.

In particular, the AGs have warned that one provision of the law that prohibits states from lowering taxes is “the greatest attempted invasion of state sovereignty by Congress in the history of our Republic.”

Here’s the main issue: The restriction, which was added at the last-minute by Senate Democrats, is designed to ensure that states use the money to keep their local economies afloat, including avoiding massive budget cuts and job losses, rather than subsidize tax cuts.

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In other words, poorly run states can use the money to pay off their careless spending rather than actually use it to provide relief to those in need.

“This language could be read to deny states the ability to cut taxes in any manner whatsoever — even if they would have provided such tax relief with or without the prospect of Covid-19 relief funds,” the 21 state AGs wrote.