Republican Leaders Request Clarification From Treasury On American Rescue Plan Restrictions On State Tax Cuts

WASHINGTON, D.C. โ€” Today, House Republican leaders sent a letter to Secretary of the Treasury Janet Yellen highlighting the urgent need for guidance and requesting clarification from the Treasury Department on questions pertaining to the Coronavirus State Fiscal Relief and Coronavirus Local Fiscal Relief Funds included in the American Rescue Plan (ARP). The letter was led by top Republican on the House Ways and Means Committee Kevin Brady (R-TX), Republican Whip and top Republican of the Select Subcommittee on the Coronavirus Crisis Steve Scalise (R-LA), and top Republican on the Committee on Oversight and Reform James Comer (R-KY), and signed by all Republican members of their committees.

Ambiguous provisions included in the ARP could restrict states receiving State and Local Fiscal Recovery funds from implementing new tax cuts. The federal government should not dictate state and local fiscal decisions, including stimulus checks to families, state-level earned income or child tax credits, state unemployment insurance trust funds, or sales tax holidays.
 
โ€œWe have heard from many stakeholders concerned about the apparent breadth of this provision, which was included in the ARP without the benefit of committee hearings, a legislative markup, or any input from affected stakeholders.โ€ said the Republican leaders.

Yesterday, The Washington Post reported that Republican attorneys general from 21 states also called on the Biden administration in a letter to Treasury Secretary Janet Yellen expressing similar concern that the relief โ€œwould represent the greatest invasion of state sovereignty by Congress in the history of our Republic.”

Congress of the United States House of Representatives

March 17, 2021

The Honorable Janet Yellen
Secretary of the Treasury
U.S. Department of the Treasury
 
Dear Secretary Yellen:
 
We are writing with serious concerns about Public Law No. 117-2 (the โ€œAmerican Rescue Plan Act of 2021โ€ or ARP), and specifically the Coronavirus State Fiscal Relief and Coronavirus Local Fiscal Relief Funds.  We are especially concerned about a provision inserted into the Coronavirus State Fiscal Relief Fund before it was signed by President Biden.  Specifically, the provision appears to impose coercive restrictions on states, prohibiting them from โ€œdirectly or indirectlyโ€ taking actions that would โ€œreduce net revenueโ€ if the states receive even a dime of federal State Fiscal Recovery Funds.  Furthermore, this prohibition may apply for a period that extends through December 31, 2024.  We have heard from many stakeholders concerned about the apparent breadth of this provision, which was included in ARP without the benefit of committee hearings, a legislative markup, or any input from affected stakeholders.  

We are also generally concerned about the ambiguity in the Coronavirus State Fiscal Relief and Coronavirus Local Fiscal Relief Funds.  
 
For these reasons, we believe clarification from the Treasury Department is urgently needed on the following questions:

  1. If a state provided its own economic impact payments to families in need through an advance refundable state tax income tax credit, would this violate the restriction in ARP?
  2. If a state followed federal tax law and exempted from gross income the first $10,200 of unemployment insurance, would it violate the restriction in ARP?
  3. If a state used funds to replenish its state unemployment insurance trust fund in order to prevent automatic tax increases on Main Street businesses, would it violate the restriction in ARP?
  4. If a state created a new state-level earned income or child tax credit, would it violate the restriction in ARP?
  5. If a state decided to align with the federal tax treatment of PPP loan forgiveness by excluding that amount from gross income, would it violate the restriction in ARP?
  6. If a state provided a state-level deduction for contributions to charitable organizations, would this violate the restriction in ARP?
  7. If a state or local government that received ARP funding opted to provide property tax abatements to low-income residents, would this violate the restriction in ARP?
  8. If a state legislature determined that now is the wrong time to raise gasoline prices consumers face at the pump, would a delay of a scheduled gas tax hike violate the restriction in ARP?
  9. If a state or locality provided a sales tax holiday in order to provide cash flow to help local small businesses, would this violate the restriction in ARP?
  10. Once a state economy rebounds from COVID-19, would enactment of temporary or permanent tax relief in a future year trigger a financial penalty under ARP as long as any ARP funding remains unspent?
  11. Are townships and boroughs treated the same cities and/or counties for the purposes of determining whether a locality is eligible for and the amount of the allocation under the State Fiscal Relief Fund?
  12. If a state declines payment from the State Fiscal Relief Fund, what will the Treasury Department do with the unclaimed funds?

We respectfully request that you please respond in writing no later than March 26, 2021. 
 
Because many state legislatures are now in session and have relatively short periods in which to make important fiscal decisions, we also request that Treasury promptly issue guidance on the Coronavirus State and Local Fiscal Relief Funds.
 
Thank you for your attention to this request.

Sincerely,
 
Kevin Brady                                                                        
Republican Leader                                                         
Committee on Ways and Means 
 
James Comer
Republican Leader
Committee on Oversight and Reform 
 
Steve Scalise
Republican Whip
Ranking Member
Select Subcommittee on the Coronavirus Crisis

A copy of the letter can be found below and here.

Letter to Secretary Yellen on State and Local Fiscal Recovery Funds PDF

Letter-to-Secretary-Yellen-on-State-and-Local-Fiscal-Recovery-Funds

The Thinking Conservative
The Thinking Conservativehttps://www.thethinkingconservative.com/
The goal of THE THINKING CONSERVATIVE is to help us educate ourselves on conservative topics of importance to our freedom and our pursuit of happiness. We do this by sharing conservative opinions on all kinds of subjects, from all types of people, and all kinds of media, in a way that will challenge our perceptions and help us to make educated choices.

Columns

Viewers like you

There is no constitutional authority for any spending on public broadcasting โ€“ period. Any questions: See Article 1, Section 8 of the U.S. Constitution.

Trans-wormal

No worm ever said "I am anthropomorphizing, I am a butterfly" to a toad or flock of geese and expected acknowledgement and support.

In Greenlandโ€™s Icy Capital, Past Troubles Haunt Hopes for the Future

As geopolitical realities and ongoing economic growth raise the stakes, U.S. interest in Greenland and the dream of independence may change things in a big way.

How a Chinese Government Statistician Was Forced to Report Fake Data

Chinese local govt employee produced a non-authorized report on bees and was visited by police and threatened with being sent to a mental hospital.

โ€˜This One Time, at Groomer Campโ€™

All Camp Brave Trails programs focus on helping LGBTQ+ youth find what they need most to thrive: their people, their place, and their passion.

News

Kilmar Abrego Garcia Returns to US to Face Criminal Charges

Kilmar Abrego Garcia, a citizen of El Salvador, is on his way back to the US, where he will face criminal charges for allegedly smuggling illegal immigrants.

White House Adviser Gives Update on DOGEโ€™s Future Amid Muskโ€“Trump Spat

A top White House adviser said DOGEโ€™s work will likely continue amid a spat between its former chief, Elon Musk, and President Donald Trump.

Trump Administration Asks Supreme Court to Allow Dismantling of Education Department

Trump admin asked Supreme Court to allow it to resume dismantling U.S. Dept of Education, following a lower courtโ€™s previous order halting process.

FTC Warns of Rising Student Loan Scams, Says Fraudsters Took Millions From Borrowers

FTC is warning borrowers to steer clear of student loan debt-relief scams, after shutting down group of companies that allegedly charged millions in illegal fees and left customers worse off.

Walmartโ€™s Drone Delivery Coming to 5 More US Cities

Walmart is set to launch its drone delivery service in five more U.S. cities: Atlanta, Charlotte, Houston, Orlando, and Tampa, the company.

Court Orders Trump Administration to Restore AmeriCorps Funding to States

Federal court ordered Trump admin to restore AmeriCorps funding to states. The ruling comes as part of a lawsuit filed by 24 states and DC.

Tax Deductions You Can Take Without Itemizing

Itโ€™s not always beneficial to itemize. With IRSโ€™s current standard deduction for 2025 most Americans who canโ€™t itemize go with standard deduction.

US Economy Adds 139,000 New Jobs in May, Topping Market Forecasts

U.S. economy added 139,000 new jobs last month, surpassing economistsโ€™ expectations and indicating U.S. labor market remains in a robust position.
spot_img

Related Articles