Maryland’s Attorney General Brian E. Frosh announced plans Thursday to file a lawsuit challenging the legality of part the new federal tax law that disproportionately hurts high tax states like Maryland.
Frosh said he intends to join a New York-led lawsuit challenging the new $10,000 cap on deducting state and local taxes, which Frosh said “disrupts the longstanding balance of taxing power between the states and the federal government.”
That deduction, known as SALT, was previously uncapped and allowed Maryland residents to reduce their taxable bills by accounting for all the money paid in state and local income and property taxes.
With the cap in place, 554,000 Maryland residents will lose an average of $11,800 in deductions, according to a recent report from the Maryland comptroller.
New Jersey and Connecticut have also announced planes to join the lawsuit, which Frosh said he expects to be filed within weeks.
Frosh said the suit will make several arguments, but the primary one is the cap violates state sovereignty.
“Essentially what they’ve done is make it harder for states to support themselves,” Frosh said.
He quoted framer Alexander Hamilton, architect of the state’s financial system and the country’s first treasury secretary, from The Federalist Papers saying that “states should possess an independent and uncontrollable authority to raise their own revenues for the supply of their own wants. … an attempt on the part of the national government to abridge them in the exercise of it, would be a violent assumption of power.”
Frosh said that this state sovereignty idea “is something that the framers had in mind from the beginning.”
Frosh, a Democrat, has initiated or joined more than 20 lawsuits against the federal government since last year, when the General Assembly expanded his powers and allowed him to file suits without the governor’s approval.
Republican Gov. Larry Hogan told reporters Thursday Frosh has not discussed this latest suit with him.
“I have no idea what the legality of that is,” Hogan said. “I don’t think it has much of a chance.”