# Plain Language Summary: Let States Cut Taxes Act

This bill would let states use federal pandemic relief money to cut their own taxes instead of being forced to spend it on public services. Back in 2021, Congress passed the American Rescue Plan, which sent billions of dollars to states to help them recover from the COVID-19 pandemic. That law included a rule saying states couldn't use this money to replace lost tax revenue—basically, if a state's tax collections dropped during the pandemic, they couldn't use the federal funds to make up for it by lowering taxes. This bill removes that restriction, allowing states to use the federal money however they want, including cutting taxes.

The practical effect is that states would have more flexibility with federal pandemic funds. A state could theoretically use this money to reduce income taxes, sales taxes, or property taxes for residents and businesses. However, there's a catch: the bill keeps one restriction in place—states still cannot use these funds to put money into pension funds (retirement accounts for government employees). So while states gain freedom to cut taxes, they lose the ability to shore up underfunded retirement systems with this money.

This is essentially a debate about what federal pandemic relief money should be used for. Supporters of the bill argue states should have the freedom to decide how to spend money sent to them. Critics worry that allowing tax cuts could mean less money for schools, roads, hospitals, and other public services that states might otherwise fund with this federal assistance. The bill would give states the choice between investing in services or returning money to taxpayers through tax reductions.

Let States Cut Taxes Act

Bishop, Dan

Let States Cut Taxes Act This bill removes a prohibition on states and territories using COVID-19 (i.e., coronavirus disease 2019) relief funding under the American Rescue Plan Act of 2021 to offset a reduction in revenue resulting from a reduction in taxes or a delay in the imposition of a tax or tax increase.