Supreme Court Denies Certiorari in Blue State Challenge to Cap on SALT Deduction

The Supreme Court has denied certiorari this morning New York v. Yellen Without comment, or not noted objection. It should come as no surprise that this puts an end one of the most absurd legal claims made by state attorneys general.

It involved challenging portions of 2017 Tax Cuts and Jobs Act that capped income tax deductions for both state and local taxes. The reform had adisproportionate effect on the wealthier taxpayers as well as taxpayers from Blue States, which tend to have lower income taxes and higher property taxes.

New York and other Blue states tried to make the case that SALT deducion caps were unconstitutional. They also argued against Supreme Court precedent. I have already mentioned this (and Ilya Smin has also discussed it here), that the defenses of this proposal were absurd. The decision to either offer or revoke federal income tax deductions in state and local taxes is not unconstitutional. The case was heard in a liberal district court judge and a liberal three-judge panel of U.S. Court of Appeals, Second Circuit. However, New York, et. al., presented legal theories. The vote was not received. As the opinions of the lower courts made clear, the judges did not consider the claims to be close-ended questions.

Taxpayers in the plaintiff states don’t have to worry anymore about their taxes being wasted on such a meritless lawsuit. Andy Grewal, a tax law professor, can also rest assured that he has no risk. He was required to upload a video showing him “eating each page of the Internal Revenue Code one by one.”