- 21 Republican Attorneys General have asked for clarity on a provision in the stimulus bill.
- The bill allocated $350 billion to help localities pay for the costs of the pandemic.
- The officials claim the current provisions prevents them from cutting taxes.
- See more stories on Insider’s business page.
Twenty-one Republican Attorneys General are warning President Joe Biden’s administration that a provision in the $1.9 trillion economic aid package could limit state efforts to cut taxes and warned that without clarity they would take action.
In a letter to Treasury Secretary Janet Yellen, the attorneys general of Arizona, Georgia, and West Virginia said the $350 billion allocated in the bill to help cities, counties, and states pay for the costs of the pandemic could be “the greatest attempted invasion of state sovereignty by Congress in the history of our Republic.”
The Washington Post reported that some states are already planning a lawsuit.
The attorneys general take issue with how broadly and vague the provision is and they’re asking Yellen to clarify how she’s going to interpert it.
They argued that the way the provision is written prevents them from using the federal funds “to either directly or indirectly offset a reduction in the net tax revenue,” specifically when it comes to tax cuts and that it threatens states in good financial standing that wanted to provide “such tax relief with or without the prospect of COVID-19 relief funds.”
On Monday, White House press secretary Jen Psaki said “the original purpose of the state and local funding was to keep cops, firefighters, other essential employees at work and employed, and it wasn’t intended to cut taxes.”
Richard Auxier, a state and local budget analyst at the Tax Policy Center, told the Washington Post the policy impedes plans in about a dozen states where Republicans have considered plans to enact tax cuts.
The Treasury Department did not reply to Insider’s request for comment at the time of publication.