It’s no secret that New York governor Andrew Cuomo shared the feeling of other political leaders in high-tax, high-income states that the recent GOP tax bill’s limitations on the deductibility of state and local taxes was discriminatory. After all, a goodly number of congressional Republicans reinforced that impression by chortling over the damage they were doing to godless liberal jurisdictions.
Still, Cuomo made news today during his eighth State of the State address by vowing to sue the federal government to stop its discriminatory treatment of New York and other states, as reported by Politico:
“They’re now robbing the blue states to pay for the red states … it is an economic civil war, and make no mistake, they are aiming to hurt us,” Cuomo said. “We believe it is illegal and we will challenge it in court as unconstitutional … the first federal double-taxation in history, violative of states’ rights and the principle of equal protection.”
Is there a plausible constitutional argument against the SALT limitations? Maybe, according to Cornell law professor Michael Dorf:
A New York or California taxpayer who loses some of the benefit of the SALT deduction might invoke the First Amendment. If Congress enacted a law that explicitly taxed Democrats at higher rates than it taxed Republicans or vice-versa, that would be a clear violation of the First Amendment right to expressive association. That would also be true if, instead of expressly providing for different tax treatment of Democrats and Republicans, a statute used some proxy for political identification. Given the well-known phenomenon of “geographical sorting”—whereby people tend to live among like-minded people—geography is a fair proxy for political identification.
There is also, says Dorf, an alternative line of attack based on Chief Justice John Roberts’s theory of “equal sovereignty among the states” which he advanced in striking down key elements of the Voting Rights Act of 1965 as discriminatory toward southern states.
The trouble would be establishing that partisan or geographical malice, rather than some ostensibly legitimate general principle like not wanting to subsidize high state and local taxes, was behind the provision being challenged. But it makes sense for Cuomo politically to take up the fight in the courts. And if he loses, perhaps his strategy for coping with the new federal tax system will shift to the new state taxation methods — such as a substitution of deductible payroll taxes for less deductible income taxes — which he also hinted at today.