A federal judge in Missouri threw out a lawsuit filed by Attorney General Eric Schmitt over a provision in the Democrats’ American Rescue Plan, which several Republican-led states have argued could restrict their abilities to cut taxes.
Judge Henry Edward Autrey of the Eastern District of Missouri ruled on Tuesday that the matter is “not ripe for adjudication” and that Missouri lacked standing in asking his court to enjoin the Treasury Department from recouping pandemic relief funds sent to states in the event that state government’s pass tax relief measures.
“The alleged harm to Missouri is too speculative, abstract, and remote to establish justiciability,” Autrey ruled.
GOP ATTORNEYS GENERAL CHARGE AHEAD WITH TAX-CUT LEGAL BATTLE DESPITE NEW BIDEN GUIDANCE
Schmitt, who is running for the seat that will be vacated by Missouri Sen. Roy Blunt in 2022, filed the suit on March 29. He argued that the American Rescue Plan’s tax mandate, which established that states cannot use aid funds “to either directly or indirectly offset a reduction in the net tax revenue” caused by a change in state tax law, could be interpreted in a way that would threaten his state’s authority to govern itself.
“By diminishing the Missouri’s power [sic] to adopt tax policies as it sees fit, the tax mandate necessarily and gravely injures its sovereign interests,” the lawsuit said.
However, Autrey ruled it would be premature “to interfere before Treasury can even promulgate regulations” and that the regulation does not tie Missouri’s hands.
“The offset restriction does not require Missouri to engage in, or refrain from, any conduct, including legislative conduct regarding tax policy,” Autrey wrote.
In a March 16 letter to Treasury Secretary Janet Yellen, 21 Republican state attorneys general threatened to take “appropriate additional action” unless the Biden administration made clear that the American Rescue Plan doesn’t prevent states from accepting federal pandemic aid and enacting tax relief.
Sixteen states have filed or joined suits against the Biden administration over the tax mandate.
New guidance from the Treasury Department on Monday said that states receiving aid money under the American Rescue Plan must prove that any tax cuts are paid for by spending cuts or other means. If states can’t offer proof, they must return the balance of funds to the Treasury Department.
“We’re currently considering all potential options, including a motion to reconsider,” Chris Nuelle, press secretary for Schmitt, told the Washington Examiner in response to the Tuesday dismissal. “Missouri is still in this fight.”
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
The Washington Examiner reached out to the Treasury Department for comment but did not immediately receive a response.
