Tag Archives: United States government

States sue U.S. to void state and local tax deduction cap

FILE PHOTO: New York Governor Andrew Cuomo speaks during an announcement in New York City, U.S., August 17, 2017. REUTERS/Brendan McDermid

By Jonathan Stempel

NEW YORK (Reuters) – Four U.S. states sued the federal government on Tuesday to void the new $10,000 cap on federal deductions for state and local taxes included in President Donald Trump’s 2017 tax overhaul.

The lawsuit by New York, Connecticut, Maryland and New Jersey came seven months after Trump signed the $1.5 trillion overhaul passed by the Republican-led Congress, which cut taxes for wealthy Americans and slashed the corporate tax rate.

Critics have said the cap would disproportionately harm “blue” states that tilt Democratic.

Tuesday’s lawsuit adds to the many legal battles between such states, including several with high taxes, and the Trump administration, which was accused of unconstitutionally intruding on state sovereignty by imposing the cap.

“The federal government is hell-bent on using New York as a piggy bank to pay for corporate tax cuts and I will not stand for it,” said Andrew Cuomo, New York’s Democratic governor.

The Department of the Treasury, which along with Treasury Secretary Steven Mnuchin is among the defendants, did not immediately respond to requests for comment.

Taxpayers have long typically enjoyed unlimited federal deductions for state and local taxes, known as SALT deductions.

Under the cap, individuals and married taxpayers filing jointly who itemize deductions may deduct only up to $10,000 annually for state and local income, property and sales taxes.

The four states said the cap will depress home prices, spending, job creation and economic growth and impede their ability to pay for essential services such as schools, hospitals, police, and road and bridge construction and maintenance.

According to the Tax Foundation, the four states and California, which all favored Democrat Hillary Clinton in the 2016 presidential election, may be particularly hard hit, based on SALT deductions as a percentage of adjusted gross income.

New Yorkers claimed an average $22,169 SALT deduction in 2015, the Tax Policy Center said.

UPHILL BATTLE

David Gamage, an Indiana University tax law professor, said the lawsuit faces an uphill battle, despite suggesting that keeping the SALT deduction was a factor when states in 1913 gave Congress power to levy income taxes through the 16th Amendment.

“I think it’s very unlikely that it succeeds,” he said. “The Supreme Court has generally given Congress wide latitude in carrying out its taxing power, especially in setting deductions. It would be a pretty dramatic change of direction to allow this lawsuit.”

In the complaint filed with the U.S. District Court in Manhattan, the states said the $10,000 cap “effectively eviscerates” a deduction that has been on the books since 1861.

They also said it will force New York taxpayers alone to pay $14.3 billion more in federal taxes this year, and another $121 billion through 2025, when the cap is scheduled to expire.

By imposing the cap, Congress was able to “exert a power akin to undue influence” over states by interfering with their authority to decide taxes and fiscal policy, the lawsuit said, quoting Supreme Court Chief Justice John Roberts.

In May, the Treasury Department said it would propose regulations to stop states from circumventing the cap.

New York, Connecticut and New Jersey had already adopted “workarounds” letting taxpayers fund municipal services by paying into specified funds and claiming deductible charitable deductions.

The case is New York et al v Mnuchin et al, U.S. District Court, Southern District of New York, No. 18-06427.

(Reporting by Jonathan Stempel in New York; Editing by Chizu Nomiyama and Susan Thomas)

U.S. expects I.S. to wield chemical weapons in Monsol

A fighter of the Islamic State of Iraq and the Levant (ISIL) holds an ISIL flag and a weapon on a street in the city of Mosul

By Phil Stewart and Idrees Ali

WASHINGTON (Reuters) – The United States expects Islamic State to use crude chemical weapons as it tries to repel an Iraqi-led offensive on the city of Mosul, U.S. officials say, although adding that the group’s technical ability to develop such weapons is highly limited.

U.S. forces have begun to regularly collect shell fragments to test for possible chemical agents, given Islamic State’s use of mustard agent in the months before Monday’s launch of the Mosul offensive, one official said.

In a previously undisclosed incident, U.S. forces confirmed the presence of a sulfur mustard agent on Islamic State munition fragments on Oct. 5, a second official said. The Islamic State had targeted local forces, not U.S. or coalition troops.

“Given ISIL’s reprehensible behavior and flagrant disregard for international standards and norms, this event is not surprising,” the second official told Reuters, speaking on condition of anonymity, and using an acronym for Islamic State.

U.S. officials do not believe Islamic State has been successful so far at developing chemical weapons with particularly lethal effects, meaning that conventional weapons are still the most dangerous threat for advancing Iraqi and Kurdish forces – and any foreign advisers who get close enough.

Sulfur mustard agents can cause blistering on exposed skin and lungs. At low doses, however, that would not be deadly.

Roughly 5,000 U.S. forces are in Iraq. More than 100 of them are embedded with Iraqi and Kurdish Peshmerga forces involved with the Mosul offensive, advising commanders and helping them ensure coalition air power hits the right targets, officials said. Still, those forces are not at the front lines, they added.

Iraqi security forces advance in Qayara, south of Mosul, to attack Islamic State militants in Mosul, Iraq

Iraqi security forces advance in Qayara, south of Mosul, to attack Islamic State militants in Mosul, Iraq, October 18, 2016. REUTERS/Stringer

HUMAN SHIELDS

The fall of Mosul would signal the defeat of the ultra-hardline Sunni jihadists in Iraq but could also lead to land grabs and sectarian bloodletting between groups that fought one another after the 2003 overthrow of Saddam Hussein.

U.S. President Barack Obama estimated on Thursday that perhaps 1 million civilians were still in Mosul, creating a challenge for Iraq and its Western backers trying to expel the group through force.

“If we aren’t successful in helping ordinary people as they’re fleeing from ISIL, then that makes us vulnerable to seeing ISIL return,” Obama told reporters in Washington.

The International Organization for Migration’s Iraq chief, Thomas Weiss, said on Tuesday he expected Islamic State militants to use Mosul residents as human shields and lent his voice to concerns about the dangers of chemical agents.

The IOM had not managed to procure many gas masks yet, despite those risks, Weiss said from Baghdad.

“We also fear, and there has been some evidence that ISIL might be using chemical weapons. Children, the elderly, disabled, will be particularly vulnerable,” Weiss said.

Attacking Iraqi forces are still 12 to 30 miles (20 to 50 km) from the city itself and U.S. officials believe that Islamic State is most likely to use chemical weapons later in the campaign, in what could be a difficult, protracted battle.

The leader of Islamic State was reported to be among thousands of hardline militants still in the city, suggesting the group would go to great lengths to repel the coalition.

American officials believe some of Islamic State’s best fighters are in Mosul.

(Reporting by Phil Stewart and Idrees Ali; Editing by Peter Cooney)

Russia has ‘playbook’ for covert influence in Eastern Europe: study

Russian President Vladimir Putin (R) and Hungarian Prime Minister Viktor Orban shake hands during a joint news conference following their talks at the Novo-Ogaryovo state residence outside Moscow, Russia,

By John Walcott and Warren Strobel

WASHINGTON (Reuters) – Russia has mounted a campaign of covert economic and political measures to manipulate five countries in central and eastern Europe, discredit the West’s liberal democratic model, and undermine trans-Atlantic ties, a report by a private U.S. research group said.

The report released on Thursday said Moscow had co-opted sympathetic politicians, strived to dominate energy markets and other economic sectors, and undermined anti-corruption measures in an attempt to gain sway over governments in Bulgaria, Hungary, Latvia, Serbia, and Slovakia.

“In certain countries, Russian influence has become so pervasive and endemic that it has challenged national stability as well as a country’s Western orientation and Euro-Atlantic stability,” said the report of a 16-month study by the Center for Strategic and International Studies in Washington and the Sofia, Bulgaria-based Center for the Study of Democracy.

The publication of “The Kremlin Playbook: Understanding Russian Influence in Eastern and Central Europe” coincides with an unprecedented debate in the United States over whether Russia is attempting to interfere in the Nov. 8 presidential election with cyber attacks and the release of emails from the campaign of Democratic Party candidate Hillary Clinton.

The former U.S. Secretary of State’s campaign has said the Kremlin is trying to help Republican Donald Trump win the White House.

On Friday, the U.S. government for the first time formally accused Russia of hacking Democratic Party organizations. Russian President Vladimir Putin on Wednesday rejected allegations of meddling in the election.

The Russian Embassy in Washington did not immediately respond to an email seeking comment on the report. On Sunday, however, Russian Foreign Minister Sergei Lavrov told Russian state TV the United States was increasing its hostility toward Moscow.

Lavrov complained that NATO had been steadily moving military infrastructure closer to Russia’s borders with Eastern European countries and criticized  sanctions imposed over Moscow’s role in the Ukraine crisis.

A former U.S. State Department official is the report’s lead author and U.S. officials said they concur with the findings on Russia’s involvement in Eastern Europe.

“The Russians have been engaged in a sustained campaign to recapture what Putin considers their rightful buffer in Eastern Europe, and to undermine not just NATO and the EU, but the entire democratic foundation of both institutions,” said a U.S. official who has studied Russian behavior since before the Soviet Union’s collapse in 1991.

The official requested anonymity because, he said, the White House has ordered officials not to publicly discuss hostile Russian activities.

Those activities, he said, include bribery, propaganda, disinformation, “the occasional” assassination of Kremlin critics at home or abroad, and now using the internet to undermine opponents and weaken Western institutions.

“The Kremlin Playbook” cites a series of Russian efforts to expand its writ in central and eastern Europe.

They range from “megadeal” projects such as the 12.2 billion euro contract to build two new nuclear reactors in Hungary, awarded to Russia under opaque terms, to the cultivation of pro-Russian businessmen who gain political office and then shield Moscow’s interests, it said.

In Bulgaria, Russia’s economic presence is so strong, averaging 22 percent of GDP between 2005 and 2014, “that the country is at high risk of Russian-influenced state capture,” the report said.

Heather Conley, the former U.S. official and lead author of the report, said in an interview that the study was intended to highlight a challenge that has received insufficient attention from American and European policymakers.

“The first step is to acknowledge that which is happening,” said Conley. “What is at stake here is how we view ourselves and the functioning of our democracy.”

The report proposes measures to curb what it calls an “unvirtuous cycle” of covert Russian influence. They include more focus on illicit financial flows and revamping U.S. assistance programs to stress strengthening governance and combating Russian influence.

It is not the only study this year to highlight Russia’s measures in the region.

“Russia has opened a new political front within Europe by supporting the far right against the liberal European Union,” the Centre for Historical Analysis and Conflict Research, a British Army research group, said in February.

Governments such as those in Hungary and Greece “openly sympathize” with Putin, it said. “The result is that there is a substantial ‘fifth column’ in western and central Europe which weakens our response to Russian aggression.”

(Editing by Grant McCool)

United States government condemns new Israeli plan on settlements

A general view shows houses in Shvut Rachel, a West Bank Jewish settlement located close to the Jewish settlement of Shilo, near Ramallah

By Doina Chiacu and Ori Lewis

WASHINGTON/JERUSALEM (Reuters) – The United States sharply criticized Israel on Wednesday over  plans to build a new Jewish settlement in the West Bank that it said would damage prospects for peace with the Palestinians and contradicted assurances made to Washington.

The White House and State Department “strongly condemned” Israel’s decision to advance a plan that they said would create a new settlement “deep in the West Bank” and undermine a two-state solution.

In unusually harsh words for its Middle Eastern ally, Washington also accused Israel of going back on its word.

“We did receive public assurances from the Israeli government that contradict this announcement,” White House spokesman Josh Earnest said at a news briefing. “I guess when we’re talking about how good friends treat one another, that’s a source of serious concern as well.”

U.S. President Barack Obama raised concerns about West Bank settlements when he met Israeli Prime Minister Benjamin Netanyahu in New York last month.

A senior U.S. official told reporters afterwards those concerns included the “corrosive effect” settlement activity had during 50 years of occupation on prospects for negotiating a peace deal based on a two-state solution.

The United States contends that the project constitutes the establishment of a new settlement in the West Bank, contrary to assurances by Netanyahu that no new settlements would be built.

Israel regards the planned housing units as part of an existing settlement called Shilo, which is about halfway between the Palestinian seat of government in Ramallah and Nablus farther north.

The Israeli Foreign Ministry said in a statement the new housing units do not constitute a new settlement.

“This housing will be built on state land in the existing settlement of Shilo and will not change its municipal boundary or geographical footprint,” the statement said.

It added that Israel remains committed to a two-state solution.

The municipal boundaries of many settlements in the West Bank are extensive, enabling Israel to argue that housing units built near the fringes of those boundaries are not new settlements, but only neighborhoods of exiting ones.

In its tough words on Wednesday, the Obama administration is effectively challenging that practise.

The State Department statement cited Israeli authorities’  retroactive authorization of nearby settlements and the redrawing of local settlement boundaries.

The new settlement would be closer to Jordan than Israel  and link a string of Jewish outposts, dividing the Palestinian region, the statement said.

A labourer walks near a construction vehicle in the West Bank Jewish settlement of Shilo, near Ramallah

A labourer walks near a construction vehicle in the West Bank Jewish settlement of Shilo, near Ramallah October 6, 2016. REUTERS/Baz Ratner

“It is deeply troubling” that Israel would make this decision shortly after it reached an agreement with Washington on U.S. military aid designed to bolster Israel’s security,  State Department spokesman Mark Toner said in the statement.

The United States will give Israel $38 billion in military assistance over the next decade, the largest such aid package in U.S. history, under a landmark agreement signed on Sept. 15.

Toner also noted it was “disheartening” for the decision to come as the world mourned former President Shimon Peres, a passionate proponent of an independent Palestinian state alongside Israel.

Earnest attributed the strong U.S. reaction as being driven by the location of the proposed settlement and the timing of the announcement.

“All of that combined would explain why the United States is so disappointed and even sharply critical of this decision announced by the Israeli government,” Earnest said.

Israelis have to choose between expanding settlements and a peaceful two-state solution with the Palestinians, Toner said.

“Proceeding with this new settlement is another step toward cementing a one-state reality of perpetual occupation that is fundamentally inconsistent with Israel’s future as a Jewish and democratic state,” Toner said.

Israel said on Wednesday that new houses it was building in the occupied West Bank did not constitute a new settlement, dismissing a strong U.S. condemnation of project.

“The 98 housing units approved in Shilo (settlement) do not constitute a ‘new settlement’. This housing will be built…in the existing settlement of Shilo and will not change its municipal boundary or geographical footprint,” a Foreign Ministry statement said.

 

(Additional reporting by Arshad Mohammad and Roberta Rampton in Washington, Ori Lewis in Jerusalem; editing by Grant McCool)

Turkey widens post-coup purge, demands Washington hand over cleric

Supporters of Turkish President Tayyip Erdogan hold an effigy of U.S.-based cleric Fethullah Gulen during a pro-government demonstration in Ankara ,Turkey

By Orhan Coskun and Ercan Gurses

ISTANBUL/ANKARA (Reuters) – Turkey purged its police on Monday after rounding up thousands of soldiers in the wake of a failed military coup, and said it could reconsider its friendship with the United States unless Washington hands over a cleric Ankara blames for the putsch.

Turkish authorities moved swiftly to retaliate for Friday night’s coup, in which more than 200 people were killed when a faction of the armed forces tried to seize power.

But the swift justice, including calls to reinstate the death penalty for plotters, drew concern from Western allies who said Ankara must uphold the rule of law in the country, a NATO member that is Washington’s most powerful Muslim ally.

Thousands of members of the armed forces, from foot soldiers to commanders, were rounded up on Sunday, some shown in photographs stripped to their underpants and handcuffed on the floors of police buses and a sports hall. Several thousand prosecutors and judges have also been removed.

A senior security official told Reuters that 8,000 police officers, including in the capital Ankara and the biggest city Istanbul, had also been removed from their posts on suspicion of links to Friday’s coup bid.

Thirty regional governors and more than 50 high-ranking civil servants have also been dismissed, CNN Turk said.

Prime Minister Binali Yildirim said 7,543 people had so far been detained, including 6,038 soldiers. Work was under way to purge the civil service.

Turkey blames the failed coup on Fethullah Gulen, a cleric based in the United States who has a wide following in Turkey and denies any involvement.

Ankara has demanded Washington hand him over. Washington says it is prepared to extradite him but only if Turkey provides evidence linking him to crime. Yildirim rejected that demand.

“We would be disappointed if our (American) friends told us to present proof even though members of the assassin organization are trying to destroy an elected government under the directions of that person,” Yildirim said.

“At this stage there could even be a questioning of our friendship,” Yildirim added.

Yildirim said 232 people were killed in Friday night’s violence, 208 of them civilians, police and loyalist soldiers, and a further 24 coup plotters. Officials previously said the overall death toll was more than 290.

ERDOGAN’S PLANE IN REBEL SIGHTS

Around 1,400 others were wounded as soldiers commandeered tanks, attack helicopters and fighter jets in their bid to seize power, strafing parliament and the intelligence headquarters and trying to seize the main airport and bridges in Istanbul.

The coup crumbled after President Tayyip Erdogan, on holiday at the coast, phoned in to a television news program and called for his followers to take to the streets. He was able to fly into Istanbul in the early hours of Saturday, after rebel pilots had his plane in their sights but did not shoot it down.

On Sunday he told crowds of supporters, called to the streets by the government and by mosques across the country, that parliament must consider their demands to apply the death penalty for the plotters.

“We cannot ignore this demand,” he told a chanting crowd outside his house in Istanbul late on Sunday. “In democracies, whatever the people say has to happen.”

He called on Turks to stay on the streets until Friday, and late into Sunday night his supporters thronged squares and streets, honking horns and waving flags.

Turkey gave up the death penalty in 2004 as part of a program of reforms required to become a candidate to join the EU. Germany said on Monday that Turkey would lose its EU status if it reinstates the death penalty.

Yildirim said Turkey should not act hastily over the death penalty but could not ignore the demands of its people.

The bloodshed shocked the nation of almost 80 million, where the army last used force to stage a successful coup more than 30 years ago, and shattered fragile confidence in the stability of a NATO member state already rocked by Islamic State suicide bombings and an insurgency by Kurdish militants.

Western countries said they supported Erdogan’s government but Ankara should abide by the rule of law.

“We stand squarely on the side of the elected leadership in Turkey. But we also firmly urge the government of Turkey to maintain calm and stability throughout the country,” U.S. Secretary of State Kerry told a news briefing in Brussels where he attended a gathering of European counterparts.

“We also urge the government of Turkey to uphold the highest standards of respect for the nation’s democratic institutions and the rule of law. We will certainly support bringing the perpetrators of the coup to justice but we also caution against a reach that goes well beyond that.”

Referring to Gulen, Kerry called on Turkey to furnish evidence “that withstands scrutiny”, rather than allegations.

EU foreign policy chief Federica Mogherini also called on Ankara to avoid steps that would damage the constitutional order.

“We were the first … during that tragic night to say that the legitimate institutions needed to be protected,” she told reporters on arrival at the EU foreign ministers meeting.

“We are the ones saying today rule of law has to be protected in the country,” she said. “There is no excuse for any steps that take the country away from that.”

Turkey’s pro-Kurdish HDP opposition, parliament’s third largest party, said it would not support any government proposal to reintroduce the death penalty. The main CHP opposition said the response to the coup attempt must be conducted within the rule of law and that the plotters should face trial.

“HEAVY BLOW” TO MILITARY

Turkish security forces are still searching for some of the soldiers involved in the coup bid in various cities and rural areas but there is no risk of a renewed bid to seize power, a senior security official told Reuters.

The official said Turkey’s military command had been dealt “a heavy blow in terms of organization” but was still functioning in coordination with the intelligence agency, police and the government. Some high-ranking military officials involved in the plot have fled abroad, he said.

Erdogan has long accused Gulen of trying to create a “parallel state” within the courts, police, armed forces and media. Gulen, in turn, has said the coup attempt may have been staged, casting it as an excuse for Erdogan to forge ahead with his purge of the cleric’s supporters from state institutions.

The swift rounding up of judges and others indicated the government had prepared a list beforehand, the EU commissioner dealing with Turkey’s membership bid, Johannes Hahn, said.

“I’m very concerned. It is exactly what we feared,” he said in Brussels.

A Turkish official acknowledged that Gulen’s followers in the armed forces had been under investigation for some time, but denied that an arrest list had been prepared in advance.

“In our assessment, this group acted out of a sense of emergency when they realized that they were under investigation. There was a list of people who were suspected of conspiring to stage a coup,” the official said.

“There was no arrest list. There was a list of people suspected of planning a coup.”

(Additional reporting by Alastair Macdonald and Robert-Jan Bartunek in Brussels, Francois Murphy in Vienna, Ece Toksabay, Gulsen Solaker and Dasha Afanasieva in Ankara, Can Sezer, David Dolan, Ayla Jean Yackley and Asli Kandemir in Istanbul; Writing by Nick Tattersall and Peter Graff, editing by Peter Millership)