CHARLESTON, WEST VIRGINIA (AP) — Republican attorneys general from 21 states are questioning a provision in the USD1.9 trillion pandemic rescue plan that bars states from using its funds to offset tax cuts.
In a letter to Treasury Secretary Janet Yellen on Monday, they said the prohibition is “unclear, but potentially breathtaking” — airing concerns that any tax cut could be construed as taking advantage of the pandemic relief funds.
The attorneys general list over a dozen instances of states currently considering new tax credits or cuts that they believe could be jeopardised simply because of the relief funds.
“We ask that you confirm that the American Rescue Plan Act does not prohibit States from generally providing tax relief,” wrote the coalition, led by Georgia, Arizona and West Virginia.
The aid plan, approved by Congress in close party-line votes and signed by United States (US) President Joe Biden last week, includes USD195 billion for states, plus separate funds for local governments and schools.
White House Press Secretary Jen Psaki said on Monday that Biden expects the relief funds to not go toward decreasing taxes.
“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,” she said at a briefing.
The Treasury Department did not immediately return an email requesting comment.