Brnovich to sue feds over tax cut restriction in COVID relief act

By Jeremy Duda | Arizona Mirror

Attorney General Mark Brnovich plans to sue the U.S. Treasury Department over a provision in a federal COVID-19 relief package that limits states’ ability to cut taxes.

Treasury Secretary Janet Yellen informed Brnovich and 20 other Republican attorneys general in a letter on Tuesday that the American Rescue Plan Act, a $1.9 trillion COVID relief package doesn’t preclude states from “enacting a broad variety of tax cuts” — as long as they don’t use the federal money they receive to offset the revenue they’ll lose from doing so. 

“If States lower certain taxes but do not use funds under the Act to offset those cuts — for example, by replacing the lost revenue through other means — the limitation in the Act is not limited,” Yellen wrote.

States that do use money from the act to offset lost revenue from tax cuts, or are perceived as doing so by the Treasury Department, won’t sacrifice all of their funding from the American Rescue Plan Act, Yellen said. Rather, they’ll be forced to repay the federal government the amount of lost revenue they replace with federal dollars.

That was not the answer Brnovich wanted. He announced on Twitter that he plans to sue over the prohibition.

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