Three weeks after a federal judge said Ohio could move ahead with a lawsuit against the Biden administration’s plan to tie federal funding to a state’s agreement to not cut taxes, the same court on Friday granted Ohio a permanent injunction to stop the practice.
The United States District Court for the Southern District of Ohio stopped the regulation that Ohio Attorney General Dave Yost said unconstitutionally restricted the state’s power to cut taxes.
“The Biden administration reached too far, seized too much and got its hand slapped,” Yost said. “This is a monumental win for the preservation of the U.S. Constitution – the separation of powers is real, and it exists for a reason.”
The court said the tax mandate is unconstitutional because it provides states with no ability to understand what they can and cannot do.
Yost filed a lawsuit in March, asking for a preliminary injunction to bar enforcement of the administration’s “tax mandate” in the American Rescue Plan, which would send Ohio $5.4 billion worth of federal funds if the state agreed not to use the money, directly or indirectly, to offset tax cuts or credits.
The court ruled a preliminary injunction was not needed because the U.S. Department of Treasury was unlikely to recoup funds lawfully before the case comes to an end, Yost said.
The court also said Ohio “has a substantial likelihood of establishing that, as written,” the provision is unconstitutionally ambiguous.
The court held the state is harmed by the provision’s ambiguous language and has standing because it needs to make decisions about its upcoming budget. Ohio passed a 3% across-the-board personal income tax cut in its budget signed Wednesday by Gov. Mike DeWine. Yost said the federal government did not respond to that point.
“American Democracy once again defeats an attempt to take away states’ rights,” Yost said. “This case is about the separation of power, and I am pleased that the court agreed with our position that the Tax Mandate is out of bounds.”