Judge blocks tax cut rule in American Rescue Plan
States can use pandemic relief funds to offset new tax cuts thanks to a lawsuit filed in Alabama.
Thirteen states filed the suit in federal court challenging the provision of the American Rescue Plan. U.S. District Judge L. Scott Coogler ruled Monday that Congress exceeded its power under the Constitution by including the so-called tax mandate.
The American Rescue Plan gave $200 billion in relief funds to states, specifying that states could not use it as a means to cut taxes and then use the federal relief money to offset the revenue reduction.