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Our authentic sources have confirmed that attorneys general from 13 US States sued the Biden administration over a key element of the recently enacted $1.9 trillion coronavirus relief law. Point to be noted that the law prevents states from using government aid to lower taxes. The lawsuit was filed in a US District Court in Alabama and asks judges to strike down a provision in the American Rescue Plan. The plan bars state governments from using the roughly $195 billion in federal funding to either directly or indirectly offset a reduction in the net tax revenue and the restriction could apply through 2024. Attorney General of West Virginia, Steve Morrisey said, “Never before has the federal government attempted such a complete takeover of state finances. We cannot stand for such overreach”.

The lawsuit came just 2 weeks after 21 attorneys general forwarded a letter to US Treasury Secretary Janet Yellen. They were inquiring how the administration planned to interpret the law. Yellen said the law is not designed to be a blanket moratorium on tax cuts and suggested states could lower rates without using the stimulus aid to fund the reduction. On 23^rd March, she wrote and said, “Nothing in the Act prevents States from enacting a broad variety of tax cuts. It simply provides that funding received under the Act may not be used to offset a reduction in net tax revenue resulting from certain changes in state law”. But, Morrisey argued the word indirectly in the law could be interpreted in a way that prevents states from implementing tax reductions.

Morrisey said, “This ensures our citizens aren’t stuck with an unforeseen bill from the feds years from now”. It is noteworthy that attorneys general from Alaska, Florida, Iowa, Montana, New Hampshire, Oklahoma, South Carolina, South Dakota, and Utah all signed the lawsuit. The $350 billion in aid included in the American Rescue Plan, which President Biden signed into law last month. It also includes $195 billion directed toward state governments and Washington and $130.2 billion allocated for local governments. An additional $20 billion will be given to federally recognized tribal governments however $4.5 billion will go to US territories. It is important that more money will be given to states that had a higher number of unemployed citizens at the end of 2020 instead of the overall population.