A libertarian group in California filed a legal challenge to President Joe Biden’s plan for student debt cancellation on Tuesday, calling it an illegal overreach that would increase state tax burdens for some Americans who get their debt forgiven.
The lawsuit was filed by the Pacific Legal Foundation and is believed to be the first targeting Biden’s plan.
It was filed in federal court in Indiana, one of several states that plan to tax any student debt canceled by Biden’s plan.
It argues that some borrowers will automatically get tax relief but then face a state tax increase. Some other federal programs offer to forgive their debt without any tax.
CBO: Biden’s student debt plan would cost $400 billion
The Congressional Budget Office estimates that President Joe Biden’s plan for student debt cancellation will cost about $400 billion over the next 30 years.
The estimate was issued Monday in response to a request from Republican lawmakers who oppose Biden’s plan because of its cost.
They cited the estimates as evidence that the plan will “bury” taxpayers.
The Biden administration previously estimated the plan will cost about $24 billion a year over the next decade, while other estimates put it at a total of $500 billion or more.
The White House says the cost of the cancellation plan will be offset by other measures to reduce the federal deficit.