TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, July 22, 2005

Tax Foundation Files Amicus Brief in Cuno v. DaimlerChrysler

Tax_foundation_logo_2For the first time in its 68-year history, the Tax Foundation has filed an amicus brief with the U.S. Supreme Court, requesting that the Court grant certiorari in Cuno v. DaimlerChrysler, 386 F.3d 738 (6th Cir. 2004) (previously blogged here, here, here, here, and here).  Here is the Executive Summary:

The Supreme Court’s guidance is needed to prevent immediate and permanent harm to commerce, particularly in Sixth Circuit states. The Court should grant certiorari because the Sixth Circuit’s ruling imperils the ability of the states—especially those in the Sixth Circuit (Kentucky, Michigan, Ohio, and Tennessee)—to compete for investment. This case involves an important issue of federalism: It affects the balance of authority between the federal and state governments. The Sixth Circuit has severely limited states’ autonomy in adopting their own competitive tax policies. Accordingly, this is exactly the kind of case the Supreme Court needs to decide.

The Supreme Court should also grant certiorari to provide needed clarity to its own decisions on the limitations imposed by the Commerce Clause on state tax authority. The Supreme Court’s own sweeping language in several of its past opinions serves, in part, as the basis for the lawsuit in this case. In fact, certain statements made by the Supreme Court in the past, if taken literally, could serve as the basis for even more lawsuits in the future against other state tax and spending programs. The Supreme Court’s review of this case is needed to clarify the standards for discrimination under the Commerce Clause.

Finally, the Supreme Court should grant certiorari to emphasize an important point: the Commerce Clause does not require a state to be more generous to out-of-state taxpayers than in-state taxpayers. The Sixth Circuit’s focus on pre-existing tax liability and coercion would turn the Commerce Clause on its head and require Ohio to give investment tax credits only when an investor first comes to Ohio from another state, a ruling that cannot be squared with the Supreme Court’s rulings that the Commerce Clause requires fair, not special, treatment of interstate commerce.

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