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Judge Blocks Tax Cut Rule in ARPA

SALT LAKE CITY – Today, Utah Attorney General Sean D. Reyes announced a major victory for Utah taxpayers. A federal district court judge in Alabama ruled on Monday in favor of 13 states suing the Biden Administration over an unclear provision of the American Rescue Plan Act (ARPA) that attempts to prohibit states from cutting taxes. 


The State of Utah joined the lawsuit in March, which challenges a provision of ARPA that prevents states from using ARPA funds to “directly or indirectly” offset tax cuts. The court found that Congress exceeded its authority by attaching vague and ambiguous conditions on receipt of the ARPA funds. 

The court wrote in part:  
“The language of the Tax Mandate makes it impossible for States to make an informed choice about the costs of receiving ARPA funds because it is impossible to know how to exercise taxing authority without putting ARPA funds at risk. Money is fungible, meaning ‘of such a nature that one part or quantity may be replaced by another equal part or quantity in paying a debt or settling an account’ or ‘capable of mutual substitution: interchangeable.’ Thus, any ARPA funds the Plaintiff States receive could be viewed as indirectly offsetting any reduction in net tax revenue from a change in state law or policy.” 


“This is a major victory for the state of Utah and Utah taxpayers,” said Attorney General Reyes. “The court’s order removes the threat against Utah’s recent tax cuts for families, veterans, and Utah’s seniors.  The Biden Administration is once again encroaching on state sovereignty, and we’re gratified the court stopped the federal overreach into the state’s taxing authority .”

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