AG Yost Prevails in Federal Tax Mandate Case Upholding Ohio’s Sovereignty

 

(COLUMBUS, Ohio) — The United States District Court for the Southern District Ohio granted Ohio Attorney General Dave Yost’s request to permanently enjoin a law that sought to unconstitutionally restrict Ohio’s power to cut taxes.

“The Biden administration reached too far, seized too much and got its hand slapped,” Yost said. “This is a monumental win for the preservation of the U.S. Constitution – the separation of powers is real, and it exists for a reason.”

Yost sued in March to bar enforcement of President Biden’s American Rescue Plan Act’s “Tax Mandate.” The American Rescue Plan Act offers Ohio $5.4 billion that it can use to help its economy recover from the effects of COVID-19. The Tax Mandate says that any State that accepts these funds accepts limits—limits the Tax Mandate never clarifies—on its power to cut taxes. The law put Ohio to a choice: it could have the badly needed funds, but only if it agreed to ambiguous limits on its taxing power.

The court’s ruling reaffirms state sovereignty as guaranteed in the Constitution.

“American Democracy once again defeats an attempt to take away states’ rights,” Yost said. “This case is about the separation of power and I am pleased that the court agreed with our position that the Tax Mandate is out of bounds.”

The District Court explained that the Tax Mandate is unconstitutional because it provides the States with no ability to understand what they can and cannot do:

“It is almost as though Congress had written the Tax Mandate as follows: ‘Each certifying State agrees that, if a State reduces any tax rate, on any tax, the Secretary may recoup ARPA funding to the extent that the Secretary determines, in her discretion, that the rate reduction resulted in the State losing tax revenues, and the Secretary further determines, in her discretion, that those losses were offset with ARPA funding.’ … That is the type of federal invasion of state sovereignty that [the Constitution] disfavors.”