Blue-state governors gear up for possible legal fight over GOP tax law

Key Points
  • New York Gov. Andrew Cuomo says the state will consider challenging the limits on state and local tax deductions.
  • New Jersey Gov.-elect Phil Murphy previously said his state would mull legal options.
  • Many Republicans argue that the deductions prop up high-tax, high-spending states.
NY Gov. Cuomo: Tax bill takes from blue states and gives to red, violates due process

New York Gov. Andrew Cuomo said Thursday that his state will consider a legal challenge to the Republican tax law — the latest blue-state leader to discuss pushing back against the massive tax overhaul.

"There are serious legal questions" about the law set to take effect in the coming days, the Democrat told CNBC's "Power Lunch." He targeted the planned limits on state and local tax deductions, which primarily benefit the residents of states like New York, New Jersey and California.

Cuomo contended that congressional Republicans are "raiding the blue states" to offset the tax code changes, which include a permanent tax cut for corporations and a temporary tax decrease for most individuals.

"I think there's potential legal questions on that — equal protection under the law, due process under the law," the governor said.

It is unclear how strong of a legal case Democrats would have if they challenge the law on the grounds that it violates states' rights.

Last week, New Jersey Gov.-elect Phil Murphy told CNBC that "everything is on the table" to curb the effects of the bill. The state could fight the "legality and constitutionality" of the law, the Democrat said. A fellow Democrat, California Gov. Jerry Brown, earlier this month called the tax plan a "monstrosity."

Gov. Andrew Cuomo
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The tax overhaul, signed into law by President Donald Trump last week, caps the popular state and local tax deductions. It allows the deduction of up to $10,000 in state and local sales, income or property taxes.

Twelve GOP House members from New York, New Jersey and California voted against the bill because they feared some constituents would see higher taxes.

GOP House Speaker Paul Ryan has argued that the deductions benefit states that have not controlled their taxing and spending. In October, he argued that other states are "propping up profligate, big-government states."

"States that got their act together are paying for states that didn't," he said at an event hosted by the conservative Heritage Foundation.