State Tax Credits on Trial in Supreme Court
Last Wednesday, the Supreme Court heard oral arguments for and against state-sponsored corporate tax incentives in DaimlerChrysler v. Cuno and companion case Wilkins v. Cuno, in which the 6th U.S. Circuit Court of Appeals in Cincinnati ruled that Ohio's $280-million tax credit (including an investment tax credit from the state and a 10-year local property tax exemption) to DaimlerChrysler for building a Jeep plant in Toledo was unconstitutional. Specifically, the federal appeals court said that the credit violates the Constitution's Commerce Clause which allows Congress to regulate interstate commerce to ensure free trade.
The case began when longtime consumer activist and former presidential candidate Ralph Nader teamed up with Northeastern law professor Peter Enrich to recruit Toledo taxpayers to challenge Ohio's DaimlerChrysler credit on the grounds that suchs tax credits breed interstate bidding wars to capture corporate investment.
After the 6th Circuit ruling, DaimlerChrysler appealed the case to the Supreme Court. The company's lawyer, Theodore Olson, argued to the high court last week that tax incentives are key in developing depressed areas and are crucial in competing with foreign countries.
Reporters who covered the oral arguments got the sense that the Supreme Court was skeptical of the lawsuits against the tax credit, particularly harping on the question of whether the Ohio taxpayers had grounds to sue. Typically, to file suit agains the government, citizens have to show that specific harm is being done to them, and while the Ohio taxpayers argued that the lost tax revenue has been detrimental to public schools and services in Toledo, comments by several of the justices indicated that this was not a sufficient argument to prove specific harm.
The final judgment on these cases are expected in June. If the Supreme Court upholds the 6th Circuit ruling deeming Ohio's DaimlerChrysler tax credit unconstitutional, the decision would have serious implications for all of the states that offer some kind of corporate tax credit--that would be all fifty states, including Hawaii.
>> Ohio tax incentives on trial [Scripps Howard via Cincinnati Post, 2/25/06]
>> Court considers Ohio tax credit for Jeep plant [Reuters, 3/1/06]
>> Top court skeptical of tax credit lawsuits [Gannett via USA Today, 3/1/06]
RELATED POSTS:
>> Read His Lips: No New Tax Credits!
>> Everyone Else Is Doing It...
>> States Cannibalizing States
>> Film Incentives That Aren't Tax Credits
>> Hawaii's Tax Incentives for Film & TV
The case began when longtime consumer activist and former presidential candidate Ralph Nader teamed up with Northeastern law professor Peter Enrich to recruit Toledo taxpayers to challenge Ohio's DaimlerChrysler credit on the grounds that suchs tax credits breed interstate bidding wars to capture corporate investment.
After the 6th Circuit ruling, DaimlerChrysler appealed the case to the Supreme Court. The company's lawyer, Theodore Olson, argued to the high court last week that tax incentives are key in developing depressed areas and are crucial in competing with foreign countries.
Reporters who covered the oral arguments got the sense that the Supreme Court was skeptical of the lawsuits against the tax credit, particularly harping on the question of whether the Ohio taxpayers had grounds to sue. Typically, to file suit agains the government, citizens have to show that specific harm is being done to them, and while the Ohio taxpayers argued that the lost tax revenue has been detrimental to public schools and services in Toledo, comments by several of the justices indicated that this was not a sufficient argument to prove specific harm.
The final judgment on these cases are expected in June. If the Supreme Court upholds the 6th Circuit ruling deeming Ohio's DaimlerChrysler tax credit unconstitutional, the decision would have serious implications for all of the states that offer some kind of corporate tax credit--that would be all fifty states, including Hawaii.
>> Ohio tax incentives on trial [Scripps Howard via Cincinnati Post, 2/25/06]
>> Court considers Ohio tax credit for Jeep plant [Reuters, 3/1/06]
>> Top court skeptical of tax credit lawsuits [Gannett via USA Today, 3/1/06]
RELATED POSTS:
>> Read His Lips: No New Tax Credits!
>> Everyone Else Is Doing It...
>> States Cannibalizing States
>> Film Incentives That Aren't Tax Credits
>> Hawaii's Tax Incentives for Film & TV
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posted by mynette at
5:06 PM
