Judge Rejects State Challenge to SALT Deduction Limit

Judge Rejects State Challenge to SALT Deduction Limit

© Enrique de la Osa / Reuters

A lawsuit by four states challenging the cap on state and local tax deductions was dismissed Monday by a federal judge.

The states – New York, New Jersey, Connecticut and Maryland – claimed that the $10,000 limit on the so-called SALT deduction was unconstitutional and designed to force them to change their own tax policies.

“There is no doubt in my mind that President Trump's unfair tax policy targets New York and other blue states by funding tax cuts for corporations and the rich on the backs of New Yorkers," New York Gov. Andrew Cuomo said. “New York is already the largest 'donor state' in the nation — paying the federal government $36 billion more than we get back every year. The SALT cap takes this gross imbalance and supercharges it, costing New Yorkers another $15 billion each year.”

But U.S. District Judge J. Paul Oetken disagreed with the legal claim. “The court recognizes that the SALT cap is in many ways a novelty,” he wrote in his decision. “But the states have failed to persuade the court that this novelty alone establishes that the SALT cap exceeds Congress’s broad tax power under Article I, section 8 and the Sixteenth Amendment.”