September 28, 2005
Supreme Court Takes Business Tax Credits Case
The Supreme Court of the United States agreed Tuesday to hear and decide an appeal of DaimlerChrysler Corp. v Cuno and Wilkins v Cuno, two Sixth Circuit cases on business tax credits. The Sixth Circuit had invalidated an Ohio investment tax credit for DaimlerChrysler's modernization of an old Jeep factory in Toledo. The court held that the credit violates the Commerce Clause of the United States Constitution because it interferes with interstate commerce. The credit provides an incentive for in-state investments, discriminating against out-of-state investment locales.
In granting certiorari, the Supreme Court also directed the parties to brief and argue the following question:
Whether respondents have standing to challenge Ohio's investment tax credit, Ohio Rev. Code Ann. §5733.33.
Both of these cases have been consolidated and one hour will be allotted for oral argument. (The Supreme Court Order in .pdf format can be found here.)
I have written here about the tawdry business of negotiating states against each other for tax credits and believe that the country would be better off if state and local governments could collude to end these auctions. recall I doubt, however, that the Supreme Court will find such collusion in the already abused and over-stretched Commerce Clause.
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