Federal Tax Changes do not unconstitutionally impose on the states

A federal judge dismissed a lawsuit filed by four states against the IRS, thwarting four blue states’ challenge against a new $10,000 cap on the deduction for state and local taxes, also known as SALT.

Those states — New York, New Jersey, Connecticut and Maryland — sued the Treasury Department, Treasury Secretary Steven Mnuchin and the IRS, among others, in July 2018.

They alleged that the new limit on the SALT deduction, part of the Tax Cuts and Jobs Act of 2017, was “an unconstitutional assault on states’ sovereign choices.”

In the dismissal, U.S. District Judge J. Paul Oetken in Manhattan said the plaintiff states ultimately failed to show that the SALT cap was unconstitutionally coercive or that it imposed on their own sovereign rights.