AP NEWS

4 states appeal rejection of tax overhaul lawsuit

November 26, 2019 GMT

NEW YORK (AP) — Four states want a federal appeals court to revive their lawsuit challenging the federal tax overhaul that limited how much can be deducted in state and local taxes.

New York, New Jersey, Connecticut and Maryland filed a notice of appeal Tuesday to ask the 2nd U.S. Circuit of Appeals to look at a judge’s rejection of their claims.

The four states sued the U.S. Treasury secretary and the Internal Revenue Service in July 2018, saying the cap was unconstitutional because it interferes with states’ sovereign choices and was a politically motivated effort to raise property taxes in predominantly Democratic states.

A judge dismissed the lawsuit in September, saying the states failed to show that a $10,000 cap on the deduction was unconstitutionally coercive.

“The Trump administration’s SALT policy is retribution politics — plain and simple,” New York Gov. Andrew Cuomo said in a release. The Democrat noted that New York leads the nation in sending more tax dollars to Washington than it gets back.

New York Attorney General Letitia James said the cap will cost New York’s taxpayers over $100 billion in the future.

State officials say the $10,000 cap may lead some of the 1% of New York taxpayers who pay 46% of the state’s income taxes to go to states where they face fewer taxes.

A spokesman for federal lawyers who will respond to any appeal declined comment.