Montana Attorney General Austin Knudsen

Attorney General Knudsen Joins 13-State Coalition Suing Biden Treasury Dept. to Protect State Tax Cuts
HELENA — Montana Attorney General Austin Knudsen joined a bipartisan 13-state coalition in filing suit Wednesday to protect the well-established authority of states to lower taxes for their citizens from being violated by the “American Rescue Plan Act of 2021” (ARPA).

U.S. Treasury officials cannot force states to relinquish control of their taxing authority in return for the federal dollars that Congress appropriated in ARPA. The Federal Tax Mandate, housed in §9901 of ARPA, is “one of the most egregious power grabs by the federal government in the nation’s history,” the lawsuit states.

“While Joe Biden is proposing trillions in wasteful spending, it’s a slap in the face to Montana – where we balance our budget each year – to tell our legislature they can’t provide tax relief or additional education tax credits,” Attorney General Austin Knudsen said. “Similarly, Senator Tester can’t sit in Washington, DC and use federal legislation to block tax cuts for Montana families.”

Senator Jon Tester voted for ARPA. Montana’s Senator Steve Daines and House Representative Matt Rosendale opposed it.

The bipartisan coalition of attorneys general argue that ARPA’s federal tax mandate could be used to claw back a share of a state’s stimulus allotment. This creates an impermissible chilling effect on state lawmakers’ willingness to reduce the tax burdens on their citizens.