Democratic officials in those states have said that Republicans, who passed the tax overhaul without a single Democratic vote, imposed the cap as a way to punish blue states that have generous public services, which are funded by comparatively high income and property taxes. Before Congress imposed the cap, taxpayers could write off an unlimited amount of those taxes on their federal returns.

The federal government had asked the Oetken to dismiss the suit, arguing that the court lacked jurisdiction and that the states had failed to make a valid legal claim.

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New York Gov. Andrew Cuomo, in a statement, said his state is "evaluating all options including appeal."

"There is no doubt in my mind that President Trump's unfair tax policy targets New York and other blue states by funding tax cuts for corporations and the rich on the backs of New Yorkers," Cuomo said. "New York is already the largest 'donor state' in the nation — paying the federal government $36 billion more than we get back every year. The SALT cap takes this gross imbalance and supercharges it, costing New Yorkers another $15 billion each year."

Oetken acknowledged the states’ argument that their residents would face higher federal tax bills as a result of the cap, that property values could decline and that the states may have to take steps to lessen those problems.

But he said they “have failed to show that the financial burden their taxpayers will experience as a result of the SALT cap is any more severe than the sort of burden that might accompany any other statewide economic disappointment.”

Oetken also agreed that the cap will affect some taxpayers and some states more than others. But he said the cap doesn’t prevent the states from making their own decisions about their taxes, so he had “no basis for concluding that the SALT cap is unconstitutionally coercive.”

Democrats in Congress have been working on legislation to undo the cap, at least temporarily. But it is unlikely to make it through the Republican-controlled Senate.