Republican Ohio Attorney General Dave Yost filed a lawsuit Wednesday in an attempt to block part of the recently passed $1.9 trillion coronavirus relief package.
The lawsuit, which was filed in the U.S. District Court for the Southern District of Ohio, argues the “Tax Mandate” portion of the American Rescue Plan is unconstitutional and seeks a preliminary injunction that would prevent the mandate from being enforced.
President Joe Biden’s American Rescue Plan includes $5.5 billion in federal funding for the state of Ohio, but states the funds cannot be used to “‘directly or indirectly’ offset revenue loss from tax reductions.” All funds that a state takes from the American Rescue Plan would either directly or indirectly offset any tax deduction a state may implement. This essentially prevents states from implementing any tax deductions at all, the lawsuit argues.
AG Yost has filed a motion for preliminary injunction against a part of the American Rescue Plan Act that threatens to withhold needed federal funds from the state in an effort to make changes to Ohio’s tax structure & economic policy.
Details: https://t.co/z5UccFkLLE pic.twitter.com/63Pn1y3pXn
— Ohio Attorney General Dave Yost (@OhioAG) March 17, 2021
“The Tax Mandate thus gives the States a choice: they can have either the badly needed federal funds or their sovereign authority to set state tax policy,” the lawsuit reads. “But they cannot have both. In our current economic crisis, that is no choice at all. It is a metaphorical ‘gun to the head.'” (RELATED: US Coronavirus Spending Is About To Soar Past What America Spent To Defeat The Nazis In World War II)
In an interview with NBC News, Yost said the stipulation is “a blatant violation of federalism.”
“Congress is without authority to enact this kind of law,” he added.
“Let’s say we’re talking about an Amazon or an auto parts manufacturer — something that’s got a lot of other players that are similarly situated,” Yost continued, referring to a hypothetical tax dispute that’s being evaluated by the state’s tax commissioner. “Under this provision in the COVID bill, he would not be free to decide that question in a way that reduced Ohio’s tax revenue.”
The American Rescue Plan included $1,400 direct payments to citizens in addition to state funding. It was passed by the Democrat-controlled House and Senate before Biden signed it into law on March 11.