New York v. Yellen, 15 F.4th 569

Background

Historically, federal income tax law has long included a state and local tax (SALT) deduction; Congress progressively limited it over decades (e.g., 1964 enumerations, 1986 AMT, 1990 Pease limitation).
The 2017 Tax Cuts and Jobs Act capped the SALT deduction at $10,000 for individuals (26 U.S.C. §164(b)(6)), a change that disproportionately affected high-tax states.
Four states (New York, Connecticut, New Jersey, Maryland) sued the federal government seeking to enjoin enforcement of the SALT cap, alleging violations of the Sixteenth Amendment/Article I and the Tenth Amendment (coercion of state fiscal policy).
The district court held the states had standing and the Anti‑Injunction Act did not bar the suit, but dismissed the complaint for failure to state a constitutional claim on the merits.
On appeal, the Second Circuit affirmed: it agreed the states had standing and the AIA did not bar review, but held the SALT cap is constitutional—neither a required deduction under the Sixteenth/Article I nor an unconstitutionally coercive exercise of federal power under the Tenth Amendment.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standing	States alleged concrete injury: measurable losses in property and real-estate transfer tax revenues caused by reduced housing demand and prices from the SALT cap.	The injury is a generalized grievance tied to independent taxpayer choices; insufficiently concrete.	States have standing: economic logic plus expert estimates plausibly show specific tax‑revenue losses (Wyoming v. Oklahoma analogy).
Anti‑Injunction Act (AIA)	AIA does not bar the suit because states cannot obtain adequate alternate relief (no effective refund suit by third‑party taxpayers) — Regan exception.	AIA bars injunctions challenging tax assessment/collection; taxpayers could challenge via refund suits.	AIA does not bar review: Regan exception applies where Congress provided no alternative forum and the injury is not merely derivative.
Constitutional requirement of SALT deduction (Sixteenth/Article I)	The Constitution (and historical practice) requires an SALT deduction or at least prohibits Congress from eliminating substantial SALT relief.	Constitution grants broad taxing power; no text or precedent mandates an SALT deduction; Congress has long amended/limited the deduction.	No constitutional entitlement to a SALT deduction; historical statutory changes show Congress can limit or cap the deduction (Baker controlling).
Tenth Amendment / coercion	The SALT cap coerces states to change fiscal policy (lower taxes/reduce spending) by imposing disproportionate burdens—violates anti‑coercion principles (NFIB).	The cap imposes incentives, not compulsion; effects are far smaller than the coercion struck down in NFIB.	No coercion: alleged fiscal impacts are not comparable to NFIB’s withheld Medicaid funds; harms are insufficiently extreme to be unconstitutional.

Key Cases Cited

Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing standard for injury in fact)
Spokeo, Inc. v. Robins, 578 U.S. 330 (standing requires concrete injury)
Wyoming v. Oklahoma, 502 U.S. 437 (state standing from loss of specific tax revenue)
South Carolina v. Regan, 465 U.S. 367 (AIA exception when no alternative remedy exists)
Enochs v. Williams Packing & Navigation Co., 370 U.S. 1 (AIA purpose to allow collection then refund suits)
Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519 (spending‑clause coercion analysis)
South Carolina v. Baker, 485 U.S. 505 (Congress may tax interest on state bonds; no constitutional entitlement to exemption)
Printz v. United States, 521 U.S. 898 (use of historical practice in federalism analysis)
Shelby County v. Holder, 570 U.S. 529 (equal‑sovereignty principle / when federal rules unconstitutionally single out states)
Clapper v. Amnesty International USA, 568 U.S. 398 (speculation vs. plausible chain of causation for standing)