Congressional Democrats block tax relief

Congressional Democrats block tax relief

In the 1978 movie Animal House, an exasperated Dean Wormer threatened members of Delta House that they could have “no more fun of any kind.” Congressional Democrats just issued their own version of that comical mandate in a “tax cut prohibition” on $350 billion in stimulus funds provided to states as part of the newly enacted $1.9 trillion American Rescue Plan. According to 21 state attorneys general, that prohibition effectively bars states in the coming years “from providing tax relief of any kind.”

For states, the tax cut prohibition means accepting that federal stimulus cash is a budgetary one-way street: They can use the money to increase spending but never to cut taxes. As Ohio’s attorney general, who sued the federal government to block the prohibition, recently argued, “The tax mandate in the American Rescue Plan Act uses the federal spending power to compel state tax policy, effectively enacting a tax floor though 2024.” A bipartisan group

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