Attorney General Morrisey: Federal Appeals Court upholds January decision that Biden’s ARPA tax cut limit was unconstitutional

CHARLESTON, WV (WVDN) — West Virginia Attorney General Patrick Morrisey on Friday said the U.S. Court of Appeals for the 11th Circuit in Atlanta denied the U.S. Department of Treasury’s motion for a full panel review of the court’s January decision. That decision, which West Virginia argued in September 2022, stemmed from the Biden administration’s appeal of a November 2021 victory that had protected the well-established authority of states to lower taxes for their citizens.
 
The Attorney General co-led a 13-state coalition in April 2021 in suing the Biden administration to stop the “tax mandate” buried in the American Rescue Plan Act of 2021.
 
West Virginia’s victory in this case empowered states to pass tax cuts just like the major tax cut legislation passed in the state in March 2023.
 
“This case is about state’s sovereignty, and I’m pleased the court reiterated the January ruling,” Attorney General Morrisey said. “Our lawsuit was designed to protect West Virginia from federal overreach. We have fought back against that overreach with the November 2021 win in district court, but the Biden administration kept on insisting their interpretation of the law is correct.”
 
“It was not, and the court agreed.”
 
The coalition argued federal treasury officials cannot force states to relinquish control of their taxing authority in return for economic aid related to COVID-19. By broadly preventing all 50 states from exercising their tax powers effectively, the stimulus bill provision amounted to one of the most egregious power grabs by the federal government in the nation’s history.
 
The district court in November held the tax mandate violates the U.S. Constitution’s Spending Clause. The court ruled that Congress must be clear if it intends to impose a condition on the granting of federal monies — that is, it must do so unambiguously. The U.S. Department of the Treasury and the Secretary of the Treasury appealed that decision in January of last year.

West Virginia co-led the coalition with Alabama and Arkansas with support from Alaska, Florida, Iowa, Kansas, Montana, New Hampshire, Oklahoma, South Carolina, South Dakota and Utah.