OKLAHOMA CITY - Attorney General John O’Connor announced today the State won its suit against the U.S. Department of Treasury over a provision in the American Rescue Plan Act (ARPA) that prohibits states accepting ARPA funds from cutting taxes.
“This is a great victory for the State and for our new State Reserved Powers Protection initiative started by the Legislature, which fights federal overreach,” said General O’Connor.
"States set state tax policy, not the federal government. Once again, a court stopped national Democrats from another attempted unconstitutional infringement on states' rights. Oklahoma could grant tax relief for businesses and all citizens this year while also making record education and savings investments because our state manages its own finances extremely well. Even though Oklahoma never would have been subject to the attempted restriction due to surplus state revenues, it was important to stand up and challenge this obvious federal overreach. We appreciate the attorney general's office for continuing to push back against unconstitutional federal policy by using the authority and funding authorized by the Legislature for that important purpose,” said House Speaker Charles McCall, R-Atoka.
In the opinion, the Court notes “The Tax Mandate’s restriction on direct or indirect state tax cuts pressures States into adopting a particular- and federally preferred- tax policy. The inherent ambiguity in the text of the mandate may disincentive the Plaintiff States from considering any tax reductions for fear of forfeiting ARPA funds. This is a federal invasion of State sovereignty…”
“The federal court rightfully rejected the Biden administration’s unconstitutional attempt to dictate state tax policy. This is a consequential victory for Oklahoma, federalism, and the effort to challenge federal overreach at every turn,” said Sen. Greg Treat, R-Oklahoma City.