Three blue-state governors in the Northeast announced Friday that they are banding together to sue the federal government over the Republican-passed tax law that limits the deductibility of state and local taxes.
"New Yorkers will not stand idly by as the federal government fires an economic missile at the fiscal health of our state," New York Gov. Andrew Cuomo said in announcing the coalition. New Jersey and Connecticut are the other two states.
New York, Connecticut, and New Jersey are the three states with the highest combined state and local tax burdens, according to the Tax Foundation.
At the federal level, taxpayers can deduct state and local taxes from their income. But the new tax law signed by President Trump limits such deductions to $10,000, a revenue-raiser that will hit high earners in blue states particularly hard.
High-tax states have begun exploring ways of working around the limitation.
But New York, New Jersey, and Connecticut's Democratic governors are also claiming they'll pursue legal remedies.
The three governors didn't say in Friday's joint statement that they had filed suit. Nor did they offer a basis for the claim that the change in federal tax law was illegal. Instead, the joint statement merely noted that the law "rolls back a basic foundation of federal tax law that has always allowed states to raise revenues that are not double taxed."
On Friday morning, Treasury Secretary Steven Mnuchin dismissed complaints about the change.
"The taxes are just too high there," he said in an interview on CNBC, referring to states such as New York and California.
"They should figure out how they can make their tax systems more competitive," he said.