AG in Kentucky, Tennessee sues stimulus tax

Frankfort, Kentucky (AP) — Republican Attorney Generals in Kentucky and Tennessee oppose the $ 1.9 trillion pandemic aid program that bans states from using bailouts to offset tax cuts. Added voices to people in several states. ..

Kentucky Attorney General Daniel Cameron and Tennessee Attorney General Herbert H. Slatery III filed a proceeding in the Federal District Court in Bluegrass Tuesday, accusing the federal government of “unprecedented seizure of power.” It was.

They demanded an injunction to prevent the enforcement of tax-related provisions and demanded that the restrictions be finally withdrawn.

The proceedings last week in Alabama, where the Attorney General of 13 states aimed at a clause banning states from using $ 195 billion in federal aid “to offset direct or indirect reductions” in net tax revenues. It reflects a similar proceeding filed in federal court.

The proceedings by Cameron and Slateley allege that the provision unconstitutionally deprives the legislatures of each state of sovereignty in determining tax policy.

Their proceedings called it a federal overkill case, saying the state had been told that “they cannot reduce the tax burden on citizens without punishment.”

“The tax obligation is the unprecedented seizure of power by the federal government,” the proceedings said. “When the focus is on helping the state overcome the catastrophic effects of a pandemic, Congress chooses to use the pandemic to extend control over the state’s sovereignty in an unprecedented way. did.”

Defendants in a joint proceeding in Kentucky and Tennessee include the US Treasury Department, which did not immediately return an email requesting comment on Tuesday.

Last month, a larger group of 21 Republican Attorney Generals wrote a letter asking Treasury Secretary Janet Yellen to explain the provisions. The ministry at the time said the provision was not intended to ban tax cuts altogether. The state can still offset tax cuts through other means.

“There is nothing in this law that prevents the state from implementing a wide variety of tax cuts,” Yellen wrote in a reply. “It simply stipulates that funds received under the law may not be used to offset the decline in net tax revenues resulting from certain changes in state law.”

The large-scale aid program was signed by President Joe Biden, supported by parliamentary Democrats in close voting on the party line. The share of aid to the state of Kentucky is expected to be approximately $ 2.4 billion. Tennessee’s allocation is expected to be approximately $ 3.7 billion.

Cameron said in a news release that relief money is “essential” to help Kentucky recover from the financial damage caused by the COVID-19 pandemic. That’s in contrast to what his fellow Republican and mentor Senate Republican leader Mitch McConnell said, and he doesn’t think he needs a new bailout sent to the Kentucky state government on Monday. Said.

“If you don’t agree with Washington’s priority tax system, it’s unconstitutional to hold money hostage,” Cameron said.

Mr Slateley said the state has “a constitutional right to implement its own tax system.”

Prior to the end of this year’s session, a Republican-led parliament in Kentucky allocated a new injection of over $ 1 billion in federal funding to some high-value commodities. These items included school construction, water and sewage projects, broadband expansion, and repayment of federal loans to maintain the state’s unemployment insurance program.

These spending decisions reflect some of the priorities shared between Congressmen and Democratic Governor Andy Beshear. The governor said it was a good start to create thousands of jobs and put Kentucky in a better position for the post-pandemic economy.