he U.S. Supreme Court rejected an appeal on Monday from a number of Democrat-run states that sought to challenge a 2017 tax law signed by then-President Donald Trump capping local taxes that can be deducted from federal taxable income.
The group of states led by New York, which includes Connecticut, New Jersey, and Maryland, had attempted to strike down a portion of the tax law known as the “SALT cap,” which limits residents in those states to deduct just $10,000 of their state and local property and income taxes.
The states argued that the cap unconstitutionally encroached on their taxing authority.
“Congress’s taxing authority (as set forth in Article I, Section 8, and the Sixteenth Amendment) is cabined by the structural requirements of federalism, which prevent the federal government from directly interfering with the States’ ability to generate revenue to sustain their operations,” the states argued in their March court filing.
“The long history of federal income taxation demonstrates that Congress and the States equally understood that a deduction for all or nearly all state and local property and income taxes was constitutionally required to preserve state sovereign taxing authority.”
The nation’s highest court did not give a reason for refusing to hear the case.
Fox News reports:
The SALT cap was passed by Congress during former President Donald Trump’s administration, and the Biden administration continued to defend it as this case went on.
The current Democrat-controlled House passed a bill in 2021 that would temporarily raise the cap to $80,000 until 2031, when it would go back to $10,000. The Senate has yet to take action on the bill, although a separate plan in the Senate led by Sen. Bernie Sanders, I-Vt., would cap the tax break by income, making it unlimited for individuals earning about $400,000 and phasing it down above that amount.
Republicans have criticized the bill, saying it would disproportionately benefit ultra-wealthy Americans in blue states.
The current SALT cap is set to expire after 2025.
An analysis from the Lyndon Baines Johnson School of Public Affairs at the University of Texas arg…