The NFIB Small Business Legal Center has filed a brief with the United States Court of Appeals for the Eighth Circuit, supporting the State of Missouri’s appeal of its challenge to a provision of the American Rescue Plan Act of 2021 (ARPA), which prohibits states from using ARPA’s funds for providing tax relief to small businesses.
A provision in ARPA made funds available to states if and only if states agreed to not pass any laws or take any administrative actions that decrease their net revenue, whether that decrease comes through tax credits, rebates, reductions in tax credits, or new or expanded deductions.
In April, state Attorney General Eric Schmitt filed a lawsuit against Treasury Secretary Janet Yellen over this provision. The federal district court for the Eastern District of Missouri ordered the dismissal of the case, based on its conclusion that Missouri was not harmed by the ARPA provision and therefore lacked standing. NFIB believes the court of appeals should reverse the district court and block this unprecedented tax mandate.
“Missouri’s small businesses need as much financial relief as possible to rebound from the COVID-19 pandemic,” said Karen Harned, executive director of the Small Business Legal Center. “Congress passed the American Rescue Plan to relieve some of the financial pressure created by the pandemic, but blocking Missouri and other states that receive the funds from cutting taxes undermines the states’ legal authority and hurts local businesses.”
“COVID-19 has taken a huge financial toll on small businesses all across Missouri, and it will be months, maybe even years, before until the state’s economy gets back to normal,” NFIB State Director Brad Jones said. “We believe states that receive money from the American Rescue Plan should be allowed to help local businesses get back on their feet by cutting or eliminating state taxes.”
The NFIB Small Business Legal Center protects the rights of small business owners in the nation’s courts. NFIB is currently active in over 40 cases in federal and state courts across the country and in the U.S. Supreme Court.
