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The
justices turned away an appeal by New York, Connecticut,
Maryland and New Jersey after a lower court threw out their
lawsuit. The lower court held that the U.S. Congress had broad
authority over taxes and did not violate the U.S. Constitution
by placing a $10,000 limit on the amount of state and local
taxes that individuals may deduct on federal income tax returns.
Democratic President Joe Biden's administration opposed the four
states.
The deduction limit, known as the SALT cap, was part of a
Republican-backed federal tax law signed by Trump that slashed
the corporate tax rate and implemented an income tax cut for
individuals, which tax policy experts said benefited wealthy
Americans the most.
Democrats had opposed the law, which was expected to reduce
federal revenues by $1.5 trillion over 10 years. Capping the
deduction disproportionately affects high-tax, often
Democratic-leaning states, with New York estimating its
taxpayers would pay $121 billion of extra federal taxes from
2018 to 2025.
The four states sued Trump's administration in 2018, calling the
cap an unconstitutional attempt to interfere with states' taxing
power and coerce Democratic-leaning states to cut taxes and the
services they pay for.
The Manhattan-based 2nd U.S. Circuit Court of Appeals last year
rejected the states' arguments, ruling that they did not show
that their injuries were significant enough to give rise to a
constitutional violation.
Most of the 2017 law's individual tax provisions, including the
SALT cap, expire after 2025.
(Reporting by Andrew Chung in New York; Additional reporting by
Jonathan Stempel; Editing by Will Dunham)
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