After President Biden enacted the American Rescue Plan Act in 2021, a number of states with a GOP-led government filed a lawsuit.
Despite receiving $195 billion in federal pandemic relief funds, the U.S. Supreme Court rejected a Missouri challenge that attempted to guarantee states can reduce taxes.
Without comment, the justices upheld a federal appeals court judge that concluded Missouri lacked legal standing to sue over the American Rescue Plan Act’s requirements.
Missouri is one of seven Republican-led states that have filed a lawsuit after President Joe Biden signed the $1.9 trillion bill into law in March 2021. The statute includes a stipulation that states cannot use the money “to either directly or indirectly offset a decline in such state’s net taxable income.”
Missouri claims that the law simply forbids the intentional use of relief monies to pay for a tax cut. The state contended that the Treasury Department’s reading of the legislation would be wider, preventing any new state tax policy that cuts revenue without an offset.
The 8th U.S. Circuit Court of Appeals in St. Louis criticized Missouri for failing to identify any specific state policy that would violate the federal requirement. Judge Jane Kelly ruled for the panel that the state was seeking “a quintessentially advisory opinion,” which federal courts do not grant.
The decision is a win for the Biden administration, which is defending the limitation in court across the country. A different federal appeals court, the 6th Circuit in Cincinnati, ruled in November that the language is too unclear to be applied.
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