Biden faces deadline to avert tax war with GOP states

The Biden administration must decide this week whether to escalate a conflict with Republican state officials over a provision in the $1.9 trillion Democratic spending package that could handicap states’ ability to cut taxes.

Last week, 21 Republican attorneys general signed an open letter to Treasury Secretary Janet Yellen calling for clarification about the provision, which targets $350 billion of the massive spending package that was allocated to help state and local governments pay for costs associated with the yearlong pandemic. The amendment prohibits states from using the funding to offset tax cuts or credits “directly or indirectly.”