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Washington DC

Bishop Introduces Bill to Repeal Democrats’ Misguided Ban on State Tax Cuts

March 18, 2021

WASHINGTON, D.C.—Today, Congressman Dan Bishop (NC-09) introduced the Let States Cut Taxes Act, which will repeal Democrats' last-minute addition to the Pelosi Payoff that prohibits States from enacting new tax relief for their residents.

"Democrats crafted a partisan giveaway to liberal special interests that failed to adequately address the needs of struggling Americans. It is no surprise that the Pelosi Payoff included a breathtaking overreach, with no input from Republicans, that bars states from lowering taxes and relieving the burden on families across the country. It's clear their priority is not to help Americans, but to force their radical agenda at every level of government," said Rep. Dan Bishop.

"De­moc­rats are try­ing to ban states from cut­ting taxes with a sneaky amend­ment to the $1.9 tril­lion so-called COVID re­lief pack­age. Not only did this blue state bailout bill pe­nal­ize states for re­open­ing by cal­cu­lat­ing state funds based on un­em­ploy­ment, now they are try­ing to use it as a back door to ban states from cut­ting taxes. This bill would make sure they don't get away with it," said Senator Mike Braun.

The Let States Cut Taxes Act is co-sponsored by 33 Members of the House of Representatives with identical legislation introduced in the Senate by Senator Mike Braun (R-IN). The legislation is supported by the Americans for Tax Reform, FreedomWorks, ALEC Action, Heritage Action, and the National Taxpayers Union.

The bill removes the sections of the American Rescue Plan that:

  • Prohibit states from "directly or indirectly" offsetting a reduction in net tax revenue, broad language that would effectively ban any tax cut for any state that accepts COVID relief dollars through the American Rescue Plan;
  • Require states to submit a report to the federal government on any modifications to tax revenue; and
  • Allow the federal government to "recoup" any reduced tax revenues that result from a tax cut.

"Congressman Bishop Should be applauded for introducing the ‘Let States Cut Taxes Act.' This legislation repeals a provision Democrats snuck into the Biden $1.9 trillion spending plan that coerces states against providing tax relief. Tax-hiking Democrats in blue states are struggling to compete against low-tax states. Now, in an attempt to prevent state tax competition, Democrats are trying to kneecap growing, competitive tax cutting states." said Grover Norquist, President of Americans for Tax Reform.

"Lawmakers who passed the latest COVID bill made a major mistake in preventing states from cutting taxes through 2024. This provision will not only halt pro-growth changes to state tax codes, but could prevent more urgent relief for Americans struggling the most, such as states forgiving taxes on unemployment benefits from the past year. National Taxpayers Union applauds Congressman Bishop for working to repeal this onerous requirement from the latest COVID bill, and we strongly support the Let States Cut Taxes Act." - Andrew Lautz, Director of Federal Policy, National Taxpayers Union.

"Just when you think Democrats can stoop no lower, they find a way. Congressman Bishop is right to call out their midnight move to tie a ban on state tax cuts into their hyperpartisan 'COVID' relief bill. This provision is coercive and directly targeted at states that have smartly managed themselves during this pandemic. Federal policy should not impede on basic state tax policy — Especially not to prevent the very pro-growth governance actually needed for states to recover from COVID-19." - Adam Brandon, President, FreedomWorks.

"ALEC Action commends Congressman Dan Bishop for leading the essential effort in the U.S. House to follow the Constitution and allow states to maintain control over their own tax policies. Congressman Bishop's "Let States Cut Taxes Act" corrects one of the most egregious assaults on the American idea of federalism that we have ever seen. The federal government cannot be allowed to micromanage the tax policy of states through the coercive nature of federal funds. As a leader in the North Carolina Senate, Congressman Bishop and his colleagues helped to make North Carolina one of the fastest growing states in America because of pro-growth tax reform. North Carolina's spectacular rise in economic competitiveness and job creation would not have been possible if federal regulations from the recently adopted spending package were in place over the past decade. The "Let States Cut Taxes Act" is great for states, the idea of federalism, and most importantly, hardworking taxpayers across our nation." - ALEC Action.

"The so-called "American Rescue Plan" did nothing to rescue Americans from overwhelming tax burdens. In fact, the bill made it illegal for any state or locality accepting COVID relief funds to lower their citizens' tax burden. I applaud Rep. Bishop for authoring this common-sense bill to repeal this absurd provision and allow local leaders to make the right choice for taxpayers." - Garrett Bess, Vice President of Government Relations and Communications, Heritage Action.

To see the legislation, click here.