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Listened this morning to appeals-court oral arguments in NY v Mnuchin, the case where NY and other states are arguing that the 2017 SALT cap is unconstitutional.
One can never tell for sure, but the judges on the panel seemed disinclined to curb federal taxing power. 1/
One can never tell for sure, but the judges on the panel seemed disinclined to curb federal taxing power. 1/
The state, which lost in district court, has two basic arguments. One is historical practice of the income tax always having a SALT deduction.
That's tough because there still is a deduction -- is this legislated change really constitutionally different from prior changes? 2/
That's tough because there still is a deduction -- is this legislated change really constitutionally different from prior changes? 2/
The second argument is that the SALT cap is unduly coercive -- that the federal government is doing too much to force states into certain state tax policies. Is it as coercive as the Medicaid expansion struck down by SCOTUS? 3/
NY lawyer argued that "the SALT deduction is special" and different from other tax code features, because it's so closely linked to states' sovereign power to raise revenue.
The US lawyer says sure, Congress has had a deduction for a long time but it can change its mind. 4/
The US lawyer says sure, Congress has had a deduction for a long time but it can change its mind. 4/
Color me quite skeptical that courts -- normally very, very reluctant to constrain congressional taxing authority -- will go along and say that a $10k SALT cap is unconstitutional. But we'll see. /End
