The attorneys general of 21 states are questioning a provision in the new $1.9 trillion dollar pandemic recovery plan that bars states from using its funds to offset tax cuts.
The package, known as the American Rescue Plan, includes $350-billion dollars set aside to help cash-strapped cities, counties and states pay for the costs related to the pandemic, but a provision bars them from using that money to cut taxes.
The attorneys general, all Republicans, told Treasury Secretary Janet Yellen in a letter that the prohibition is “unclear, but potentially breathtaking” if it’s interpreted to ban all tax cuts, even ones already under discussion when the Rescue Plan was introduced.
They called on Yellen and the Biden administration to make it clear tax cuts can proceed, otherwise the package “would represent the greatest invasion of state sovereignty by Congress in the history of our Republic.”
The letter threatens that if tax cuts aren’t allowed, the states would take “appropriate additional action” in response. The attorneys general signing the letter include Doug Peterson of Nebraska, South Dakota’s Jason Ravnsborg, and Bridget Hill of Wyoming.