While conservatives might frequently feel let down by the Supreme Court, it does occasionally hand us a few victories. Recently, the black-robed justices managed to do so, this time by whacking down a blue state attempt to get rid of a part of Trump’s tax cuts.
You see, as a way of paying for part of his tax cut plan, Trump limited the amount in State and Local Taxes that can be deducted. While that applies to blue and red states alike, it hits blue states particularly hard, as they tend to have the higher tax rates.
Thus, by limiting the deduction, Trump made life all the more difficult for blue states and encouraged many citizens of those states, particularly the high net worth individuals to whom the deduction limits tend to matter, to flee to red states, thus boosting the populations and fortunes of those states.
So, predictably, those blue and purple states (New York, Connecticut, New Jersey, and Maryland) challenged the rule change, arguing:
“Congress’s taxing authority (as set forth in Article I, Section 8, and the Sixteenth Amendment) is cabined by the structural requirements of federalism, which prevent the federal government from directly interfering with the States’ ability to generate revenue to sustain their operations.
“The long history of federal income taxation demonstrates that Congress and the States equally understood that a deduction for all or nearly all state and local property and income taxes was constitutionally required to preserve state sovereign taxing authority.”
Well, the Supreme Court didn’t even bother to hear the case or say why it wouldn’t do so, meaning that it’s over and the tax rule change will remain in place, with the blue states having to deal with the continued problem presented by the $10,000 SALT limit.
So, Democrats in Congress are struggling to find a different way to deal with the problem and are trying to pass a bill to deal with it, as Fox reports, saying:
The current Democrat-controlled House passed a bill in 2021 that would temporarily raise the cap to $80,000 until 2031, when it would go back to $10,000. The Senate has yet to take action on the bill, although a separate plan in the Senate led by Sen. Bernie Sanders, I-Vt., would cap the tax break by income, making it unlimited for individuals earning about $400,000 and phasing it down above that amount,. Republicans have criticized the bill, saying it would disproportionately benefit ultra-wealthy Americans in blue states.
Whether they’ll be able to get that passed, however, is a different matter. They likely only have until this Congress is over to do so, as a massive red wave is predicted, which limits their time.
Further, Democrats from red states, particularly Manchin and Sinema, would have a hard time explaining to their constituents why they passed a bill lifting a burden off Wall Street financiers living in New York, New Jersey, and Connecticut. Such a move likely wouldn’t be popular in West Virginia or Arizona.
So, assuming Manchin and/or Sinema wouldn’t go along with the tax cut for wealthy financiers and the GOP will swoop back into power come November, SCOTUS’ decision means the blue states are gonna have to keep bearing the burden Trump placed on their backs!