ANSWER: Several religious and other kinds of encyclopedias offer an explanation regarding at least one likely reason Martin Luther wanted the book of James REMOVED from God's word. Summing it up, Lutherans believe that the only correct way to respond to God's plan of salvation for all man is to simply trust in his perfect love. What is known as works or obedience to God does not play a leading role in the salvation of the individual. This has led to an often quote phrase regarding Lutheranism that it believes in "faith alone" as the means to be saved. Those who oppose this concept state that it lessens the responsibility before God that believers have to produce good works. The Lutheran rebuttal is that faith must be the sole foundation of a believer and that after it fully exists then good works will flow from it.
What comes immediately to mind is the correlation of Psalm 119 to Hebrews 11 that teaches we must put FAITH together with WORKS (actions). It was by and through faith, according to Hebrews, that Abel, Abraham and others OBEYED God (verses 4, 8). Psalm 119 extols the virtue of those who OBEY God's law, who keep his testimonies, who walk in his ways and who not only seek God will all their heart but also diligently keep his precepts (Psalm 119:1 - 4)!
As you can see action is required. Additionally, consider the Israelites in Egypt, and why God gave them the lands of the heathen, pagan, Gentile nations.
44 He gave them the lands of other peoples and let them take over their fields, 45 so that his people would obey his laws and keep all his commands. (Psalms 105:44 - 45)
A New Testament verse that refutes Martin Luther's teachings that you only need faith and that once you have it, works will follow, is Revelation 14:12. This Biblical verse says the life of the saints is one where they not only have faith in Jesus but also keep the Commandments of God.
The book of James also holds a very important scripture to the basic way of life Jesus Christ expects a Christian to walk. Those who are believers in God, if they want to worship him in undefiled purity, must not only keep themselves "unspotted" from the world but also do works like visiting those in need such as widows and orphans (James 1:26 - 27). This acceptable way of living a Christian life is not only supported in the Bible's Old Testament (see Isaiah 58:5 - 7 and other passage), but was a regular theme of Jesus' teachings. It is primarily because of its sharp focus on works being a critical part of salvation that Martin Luther did not like James.