Blue states vs. Washington: How the fight is growing across the U.S.

Joseph Spector | USA TODAY Network

Show Caption Hide Caption Video: Blue states uniting against Washington Governors of blue states are vowing to work more closely to fight policies out of Republican-controlled Washington.

ALBANY, N.Y. — New York Attorney General Eric Schneiderman has brought more than 100 actions against the Trump administration, starting just days after the Republican president was elected.

The Democratic prosecutor began with statewide alerts on immigration and education policies sought by the White House, and he quickly expanded to lawsuits on energy policies, deportation and reproductive rights.

Schneiderman's steps are illustrative of the fights being waged across the nation between Democratic-led states and the Republican-controlled Congress and White House, forging a new frontier in the battle over rights between states and the federal government.

"It’s been an incredible year for our federalist system and for really testing our constitutional fabrics, in a lot of respects," Schneiderman said.

More: Red states already pull ahead of blue states

More: New York, New Jersey and Connecticut to sue over federal tax law

California, New York, Connecticut and New Jersey are among the states that have taken hundreds of actions against the federal government on a slate of issues. The latest and most pronounced is the federal tax plan approved in December that hits wealthy residents in the high-tax states.

New York, Connecticut and New Jersey are vowing a joint lawsuit over the tax plan, saying it infringes on states' rights and discriminates against traditionally Democratic “blue states.”

The lawsuit, expected in the coming weeks, could be the start of what governors in those states say could be a multipronged approach on how to deal with what they view are conservative policies coming out of Washington.

"We believe that governors will have never mattered more," New Jersey Gov. Phil Murphy, a Democrat, said on a conference call Jan. 26.

"I suspect New Jersey, and my guess is Connecticut and New York and other like-minded states, will find themselves far more often than not joining actions together and pushing back on this hostile administration."

The leaders of the still-developing coalition, though, has already faced criticism of being merely partisan attackers — some with aspirations for the White House themselves.

And their complaints of discrimination by the White House have been met with doubts that they have strong legal arguments.

"When it comes to federal taxes, there are no states’ rights," charged Rep. Chris Collins, a New York Republican and staunch supporter of President Trump.

"The federal government and Congress set the tax laws for the United States, and they apply equally across every state."

Testing the constitution

A lawsuit against the federal government over the tax law would indeed test the powers of states versus Washington's ability to change its tax code.

The debate goes back to the start of the federal income tax in 1862, which the governors contend protects states' rights under the U.S. Constitution’s 10th Amendment.

Then again, the 16th Amendment gives Congress the power to impose taxes, and subsequent Supreme Court decisions have largely upheld the federal position.

States "are pushing back in ways that aren’t necessarily consistent with the ideological views of many making these efforts," said Jared Walczak, a senior analyst at the Tax Foundation, a fiscally conservative group in Washington.

"What New York and California are doing is trying to make the federal tax code less progressive than it is."

In addition to suing, Democratic states may set up charitable contribution programs so residents who exceed a $10,000 cap on state and local tax deductions can still get a higher tax benefit.

New York and other states are also considering a switch from an income-tax system to a payroll-tax system, again, to shield residents' tax breaks.

It's not just Democratic governors. Maryland Gov. Larry Hogan and Illinois Gov. Bruce Rauner, both Republicans, have talked about how they need to adjust state tax code to avoid a hit on their residents.

"I believe it is illegal," Connecticut Gov. Dannel Malloy said. "That’s why we are forming this coalition and standing up and saying this cannot happen. It’s why we are urging the other states to join us."

Critics, though, said the majority of residents in even the high-tax states will get a break under the federal plan. Only high-income earners — particularly the top 1% — could take a tax hit because of the limit on state and local tax deductions.

Some Republicans say it's a juxtaposition: Usually, Democrats are the ones looking to tax the rich; now in these blue states, wealthy residents could be socked and Democrats are crying foul.

But that is troubling to the Democratic governors. They fear their rich residents could flee to lower-tax states and take their tax revenue with them.

The wealthiest New Yorkers, for example, account for 40% of the state's tax revenue. The same is true in New Jersey.

"Businesses leave, wealthy people leave and that tax burden then falls on everybody else," said New York Gov. Andrew Cuomo, a potential presidential candidate in 2020. "It's not like the tax burden goes away."

Supporters, though, said high-tax blue states should look in the mirror and lower the cost of living before attacking Washington.

“I hope that the states are more focused on cutting their budgets and giving tax cuts to their people in their states than they are on trying to evade the law," Treasury Secretary Steven Mnuchin said Jan. 11.

Next fights

The feud over the federal tax policy may just be a precursor to a deeper divide between states and the federal government.

Federal budget cuts, as well as a decrease in reimbursement to the states for Medicaid and immigration, could be another turf war this year.

In New Jersey, Murphy took office last month and quickly signed an executive order to boost its health care exchange under the Affordable Care Act, commonly known as Obamacare, which has been curtailed by the federal government.

In another example, California is pushing back on the recent federal decision giving prosecutors leeway to crack down on legal recreational marijuana sales, saying it will defend the state's law.

On Feb. 1, meanwhile, 16 states signed onto an amicus brief to block federal funding cuts to "sanctuary cities" that flout federal immigration enforcement measures.

"This is pure intimidation intended to force our law enforcement into changing the policies and practices that they have determined promote public safety," California Attorney General Xavier Becerra said in a statement Aug. 14 amid one of the initial sanctuary city disputes.

Despite the stacks of cases being brought by states against the federal government, though, it's unclear how many will be successful.

There was initial success in beating back deportation efforts against immigrants from some countries, and recently New York was able to beat back the Environmental Protection Agency’s efforts to end dredging of contaminants in the Hudson River.

But most of the legal cases could play out for years, including a recent lawsuit by 22 attorneys general to block the Federal Communications Commission’s rollback of net neutrality.

Critics say the backlash to the tax plan, as well as other policy divides between states and Washington, are largely politically driven.

Schneiderman, a liberal Democrat from Trump's home borough of Manhattan, for example, has long been a Trump foe, initially sparing with him over his failed Trump University program.

"We really are at step one with the taxes, and because of the SALT cap, it has really driven home this 'blue-state versus red-state divide’ on the tax policy — even though every state is affected by this," said Richard Auxier, a researcher at the Urban-Brookings Tax Policy Center in Washington.

Schneiderman said the battles are steeped in the Bill of Rights, which centers, in part, on states' rights.

And with a Republican-led Congress and White House, he believes it has put states in a position to push back.

"In the absence of the congressional willingness to check the executive branch, it has fallen to the second layer of protections built into our constitutional system, and that means states have had to step up," Schneiderman said.

Joseph Spector is chief of the USA TODAY Network’s Albany, N.Y., bureau