Monday, September 19, 2005
Edward A. Zelinsky (Cardozo) has published Ohio Incentives Decision Revisited, 37 State Tax Notes 859 (Sept. 19, 2005), also available on the Tax Analysts web site as Doc 2005-18369, 2005 STT 180-1. Here is the Introduction:
Cuno v. DaimlerChrysler Inc. is an important case. In Cuno, the U.S. Court of Appeals for the Sixth Circuit struck on dormant Commerce Clause grounds the state income tax investment credits DaimlerChrysler had claimed for the replacement facility DaimlerChrysler built in Toledo, Ohio.
As I write these words, the ultimate fate of Cuno is uncertain. We do not know whether the U.S. Supreme Court will hear Cuno or whether any of the various legislative responses to Cuno will make its way through Congress. Subcommittees of the House Judiciary Committee have held an oversight hearing on Cuno and the legislation introduced in response to that decision. Cuno has provoked much thoughtful commentary, both pro and con. Precisely because the Cuno story is a work in progress, now is a good time to clarify the various issues raised by Cuno.
I contend that Cuno makes sense neither as a matter of tax policy nor as a matter of Commerce Clause doctrine. Moreover, Cuno fails to prevent corporations from whipsawing states with demands for subsidies. Indeed, Cuno permits most tax and all nontax subsidies. Many Cuno supporters evince an unhealthy distrust of democratic decisionmaking. Paradoxically, the greatest and most beneficial impact of Cuno will be to provoke broader debate about state and municipal subsidies for corporations like DaimlerChrysler.