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BREAKING: CT Sues Federal Government Over GOP Tax-Cut Bill

July 17, 2018 By Staff
BREAKING: CT Sues Federal Government Over GOP Tax-Cut Bill

The state is one of four high-tax, northeastern states suing the federal government over changes to the state and local tax (SALT) deduction.

According to Reuters, Connecticut and three high-tax, northeastern states sued the federal government on Tuesday over changes the GOP tax cuts made to the state and local tax (SALT) deduction.

Malloy said:

“President Trump’s repugnant tax cuts gave massive handouts to the wealthiest one percent and stuck middle class taxpayers with the bill … Perhaps most concerning, this law discriminates against Connecticut taxpayers, who stand to lose over 10 billion dollars in state and local tax deductions. Hundreds of thousands of residents could see a tax increase even as their property values decrease. I am proud to stand with my colleagues across the country in fighting against the discriminatory impacts of this shortsighted and damaging Republican law on our states.”

Reclaim Connecticut covered the topic of SALT in March, noting that an overwhelming majority of SALT-related tax hikes in the GOP bill will impact the top 20 percent of income-earners in the country. We noted the Tax Policy Center said:

High-income households will be the biggest losers from the SALT deduction cap. More than 96 percent of the tax increases would be paid by those in the top 20 percent of the income distribution (those making $150,000 or more in 2018), and more than half would hit those in the top one percent, who make more than $730,000.

And CNBC argued in May that Gov. Dan Malloy’s (D-Conn.) opposition to SALT changes is ironically “helping millionaires” avoid a higher tax bill.

The state’s lawsuit comes despite the fact that the tax cuts helped contribute to Connecticut’s revenue windfall this year.

What’s more, Malloy has, on several occasions, tried to take credit for business moves in Connecticut that came as a result of the GOP tax cuts.

  • Malloy took credit for CVS wage hikes in February, even though they came as a result of the federal tax cuts
  • Malloy took a victory lap on the nomination of 72 “opportunity zones” in the state, without mentioning that they came as a result of the GOP tax cuts
  • Malloy took credit for UTC‘s new investments, announced in May, even though UTC credited the impact of tax cuts

Given the SALT limits bring revenue to the government under the new tax bill, a lawsuit threatening those limits could threaten the whole bill, and some of the gains cited above.