U.S. News


4 Blue States Sue Federal Government Over Tax Deduction Cap

New York's governor says the tax caps are meant to harm Democratic states, and some analysts agree.
Posted at 11:41 AM, Jul 18, 2018

Four blue states are suing the federal government over a new cap on state and local tax deductions.

The states — New York, New Jersey, Connecticut and Maryland — claim the cap is unconstitutional because it interferes with the states' rights to make their own financial decisions. They also claim it will disproportionately affect high-tax states. 

The cap was part of last year's tax overhaul and limits the amount of state and local taxes someone can deduct from their federal taxes to $10,000.

New York says the change will raise New Yorkers' federal taxes by $14.3 billion this year. The state's governor, Andrew Cuomo, told reporters he felt it was an attempt to hurt Democratic states.

One tax policy expert told CNN he thinks the lawsuit is unlikely to succeed, saying its not at "the level of unconstitutionality."

Additional reporting by Newsy affiliate CNN.