Tax Mandate In Biden $1.9 Trillion Covid Relief Bill Strikes Down

Republicans and state governments won a significant legal battle with the Biden administration on July 1. The issuance of a permanent injunction blocking a tax mandate in the Democrats’ $1.9 trillion Covid relief bill.

As reported by the Washington Examiner, the injunction was issued by U.S. District Judge Douglas R. Cole in a complaint brought in federal district court for the Southern District of Ohio by the Attorney General of the State of Ohio. Judge Cole, a Federalist Society member, was appointed to the federal bench by President Donald Trump in May 2019.

Ohio Attorney General Dave Yost filed the lawsuit against the Treasury Department through its secretary, Janet Yellen. In the complaint, Ohio alleges that a section of the Covid spending package that restricts individual states from using federal relief funds to offset tax credits or cuts is unconstitutional.

The ruling means that the Biden administration prevents Ohio or other states from using money received from the Covid relief bill to pay for tax cuts for citizens.

Judge Cole found that the mandate against using received funds for tax cuts is ambiguous and exceeds Congress’s legislative authority over the states under the Constitution’s Spending Clause. The judge found that the Treasury Department’s attempt to clarify the tax mandate with an amended rule was insufficient to “cure that constitutional violation.”

Attorney General Yost was enthusiastic about the ruling, telling the Washington Examiner, “the federal government has to stay in their lane, and if they don’t, we’re prepared to bump them up against the guardrail and keep them where they belong.”

Yet also touted the longer-term implications of the ruling, stating that “the progressives are going to be howling right now because they don’t like the idea that the federal government can’t tell Ohio what to do with its tax policy, but they’ll be quoting this decision soon enough to a Republican president who might want to tell a blue state how to run their state.”

The conservative think tank Buckeye Institute filed a friend of the court brief in the matter and issued a statement regarding the ruling:

Today’s decision is a victory for federalism and democratic accountability. The idea that the federal government could block states from cutting taxes was always a stretch. The tax mandate is even more problematic, because of its fundamental vagueness on what exactly states are prohibited from doing, which leaves questions of core state power to the whim of federal officials,” said Robert Alt, president and chief executive officer of The Buckeye Institute. “The Buckeye Institute has argued as much from day one, and Judge Cole’s scholarly decision vindicates Buckeye’s approach, Ohio’s wisdom in bringing this challenge, and the right of Ohioans to set their own tax policy free of federal interference.

The federal government is likely to appeal the verdict, even though other comparable cases are already ongoing to use the injunction as the authority. Other states are alleging similar claims that the Covid relief bill mandate violates the 10th Amendment and the Spending Clause.