Opinion: Ga. AG: State will remain vigilant against congressional overreach

May 10, 2021

As published in: The Atlanta Journal-Constitution

President Biden and the Democratic Congress could have brought forward an American Rescue Plan Act with bipartisan consensus – one tightly focused on distributing vaccines, opening schools, helping the unemployed and stabilizing small businesses.

What we got instead is a budget-busting spending spree that rewards blue states and Democratic interest groups and that hijacks a crisis to fulfill a liberal wish list.

As Georgia leaders have rightly pointed out, the law penalizes states like Georgia that safely reopened their economies. It favors the Democratic-controlled states that didn’t.

As Georgia attorney general, I can’t do anything about Congress passing a law that’s unfair. But I won’t sit idly by when it passes one that’s unconstitutional.

The new law could strip our states of their core authority to implement basic state tax policy. This is unacceptable and would represent the greatest invasion of state sovereignty by Congress ever attempted.

That’s why I co-led a coalition of 21 attorneys general in urging the U.S. Department of Treasury to take immediate action to ensure the law cannot be used to deny Georgia the ability to cut taxes in any manner for years to come.

In this unprecedented attempt at federal takeover of state tax policy, certain provisions of the act forbid states from using COVID-19 relief funds to “directly or indirectly offset a reduction in … net tax revenues” resulting from state laws or regulations that reduce tax burdens, whether by cutting rates or by giving rebates, deductions, credits, “or otherwise.”

Our coalition demanded that Treasury adopt a narrow interpretation of the language. A broad interpretation of the law could prohibit two separate tax-relief measures that Gov. Brian Kemp signed into law last month: an extension of a tax credit for Georgia families who adopt a child out of foster care, and an increase to the standard deduction, which would provide Georgians with an estimated $140 million in state income tax relief that largely benefits those of lower to middle incomes.

Additionally, as written, the act declares that a governor could accept stimulus funds and thereby bind both the state legislature and a future successor from cutting any tax or tax assessments in the near future. This would also be a clear intrusion by Congress upon state sovereignty.

Our coalition requested the U.S. Treasury Department to confirm by March 23 that the law does not prohibit states from generally providing tax relief. Treasury responded on the deadline.

The response signals that our coalition was right to fight this unprecedented attempt at federal takeover of state policy. In the letter, Treasury provides some assurance and promises to more-specifically address the issues we raised. But we are not ready to let our guard down. We will be closely monitoring how they do this so that our ability to enact good tax policies that benefit Georgians is not compromised in any way.

Chris Carr is Georgia Attorney General.