News Release: Platte Institute Joins Coalition Writing Secretary Yellen on Federal Tax Regulations

NEWS RELEASE from the Platte Institute

Attachment: Letter to U.S. Department of Treasury

Contact: Adam Weinberg
(402) 500-0209
aweinberg@platteinstitute.org

Platte Institute signs letter to Treasury Secretary Janet Yellen
Interpretation of Biden plan may impact Nebraska policy for years

OMAHA, NE — Last year, the Platte Institute led a coalition calling on Congress to provide financial flexibility for states and local governments in providing federal COVID-19 relief aid.

While that proposal has largely been adopted in the Biden administration’s newly-signed American Rescue Plan Act (ARPA), ambiguous restrictions related to state tax policy outside of the new plan could create uncertainties for states like Nebraska, which are well-positioned to make tax reforms now and in the years ahead.

The new law says that ARPA funds for states cannot be used to “either directly or indirectly offset a reduction in the net tax revenue” either through a reduction of rates, rebates, deductions, or credits through the end of 2024. However, Nebraska has a variety of existing programs and legislative proposals that use all of these approaches in tax policy.

A group of state policy organizations, including the Platte Institute, are gathering signatures for a letter addressed to U.S. Treasury Secretary Janet Yellen calling for a flexible approach to the regulations associated with this statute. A draft of the letter is attached. Yellen’s agency is responsible for issuing guidance for how the provisions of ARPA will be interpreted. The rules are required to be published within 60 days of ARPA becoming law.

The letter, which is still being circulated, references the 2012 Supreme Court ruling in NFIB v. Sebelius, in which Chief Justice John Roberts wrote that federal spending legislation should be written as to “not undermine the status of the States as independent sovereigns in our federal system.”

“Nobody disputes that the federal government can tell states they can’t use this one-time federal money to fund a tax cut,” said Jim Vokal, Chief Executive Officer of the Platte Institute.

“But where the Treasury’s interpretation of ARPA could be a problem is if restricts states like Nebraska from making decisions about their own budgets with revenues they’ve already collected, or will collect from now through 2024. That would be something the federal government has simply never done before, and it would invite major legal scrutiny,” Vokal said.

Platte Institute Policy Director Sarah Curry says previous Supreme Court rulings have found that federal policies which impose too great of a limitation on states’ own internal decisions run afoul of a precedent known as the anti-commandeering doctrine.

“Nebraska should have the freedom to make its own tax policies in accordance with the needs of its residents,” Curry said.

“That’s why we have state legislatures under a federalist system, which is founded on the belief that state lawmakers are more accountable to the daily concerns of their residents than those in a far-off national capital,” Curry said.

To schedule an interview with Jim Vokal or Platte Institute Policy Director Sarah Curry on this subject, please contact Adam Weinberg at (402) 500-0209 or aweinberg@platteinstitute.org.

The Platte Institute advances policies that remove barriers to growth and opportunity in Nebraska. More media resources are available at PlatteInstitute.org/Media.