Second Circuit Rejects Blue States’ Challenge to Cap on SALT Deduction
Yesterday a unanimous panel of the U.S. Court of Appeals for the Second Circuit rejected a constitutional challenge to the cap on state and local tax (SALT) deductions on the federal income tax. The court’s decision in New York v. Yellen shows that Red States are not the only ones filing weak, politically motivated lawsuits against the federal government.
Congress capped the income tax deduction for state and local taxes as part of the 2017 Tax Cuts and Jobs Act. This limitation primarily effects wealthy taxpayers, which is why some have argued for eliminating it altogether. It also has a disproportionate impact on Blue states because they tend to have higher property taxes and income taxes.
Having lost the effort to keep the SALT deduction in Congress, several Blue States (New York, Connecticut, Maryland and New Jersey) did what states do these days: They filed suit in federal court.
The states’ claims did not fare well in district court. Although the court rejected the federal government’s effort to dismiss the suit on standin
Article from Latest – Reason.com