U.S. Supreme Court snubs challenge to state and local tax deduction cap -Breaking
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© Reuters. FILE PHOTO : An elderly pedestrian strolls by Washington’s Supreme Court in Washington on March 15, 2022. REUTERS/Emily Elconin/File photoBy Andrew Chung
(Reuters] -A bid to lower the federal deductibility for state and local taxes was rejected by four Democratic-leaning countries on Monday by the U.S. Supreme Court. It had been made as part of a Trump-era tax overhaul.
New York City, Connecticut, Maryland, and New Jersey appeals were rejected by the justices after their suit was dismissed in a lower court. A lower court ruled that Congress has broad control over taxes. It did not infringe the U.S. Constitution when it placed a $10,000 cap on how much state and local taxes individuals can deduct from federal income tax returns.
The administration of Democratic President Joe Biden opposed four US states.
Trump’s Republican-backed federal tax legislation included the SALT limit. This law lowered the corporate tax rate, and provided an income tax cut to individuals. Expert tax experts stated that this tax policy benefit was most beneficial for wealthy Americans.
The law was opposed by Democrats, who were concerned that it would reduce federal revenue by $1.5 trillion in 10 years. Capping the deduction is not fair to states with high taxes, which are usually Democratic-leaning, and New York estimates that its taxpayers will pay $121 million more federal taxes in 2018-2025.
Trump’s 2018 tax cap lawsuit was filed by the four states. They called it an illegal attempt to limit states’ taxing authority and to coerce Democratic-leaning States to lower taxes and pay less for services.
Manhattan-based Second U.S. Circuit Court of Appeals in Manhattan rejected states’ argument last year, finding that the injuries they sustained were not severe enough to warrant a violation of the Constitution.
The majority of 2017’s individual tax provisions (including the SALT limit) expire after 2025.
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