The Supreme Court on Monday declined to hear an appeal out of New York that brought a challenge against the cap on taxpayer state and local deductions implemented by the Trump administration.
In the case, New York v. Yellen, Janet Yellen, in her official capacity as secretary of the Treasury, is being sued by New York, New Jersey, Connecticut, and Maryland. The states initially sued Yellen's predecessor, Treasury Secretary Steven Mnuchin, and the IRS when the Trump tax cut of 2017 – of which the SALT cap is a part – went into effect.
The states argued that the SALT cap was unconstitutional – though that argument gained no judicial traction. In 2019, a federal district court ruled against the states, as did the U.S. Court of Appeals for the 2nd Circuit in 2021.
Some economists have argued that capping the SALT deduction invigorates economic growth by leveling pressure against high-tax states (like Connecticut, Maryland, N.J., and N.Y.) to lower their tax rates and balance their budgets. It also prevents, to a certain extent, a subsidization of high-tax states by individual in lower tax-states.
The court as it frequently does, did not provide a reason as to why it will not take up the case.