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Wednesday, November 30, 2005

Tax and the Constitution

This is an interesting blog because of its attention to a wide range of issues, as with yesterday's posts on immigration, death penalty, the First Amendment, etc.   These are all important topics, of course, but not quite my field.  Tax professors frequently hold themselves a bit apart from the rest of the legal academy; but I have never liked that approach, either.  So I am always on the lookout for good cases that bridge tax and other areas of the law, like constitutional law.

There is an interesting case coming up this term that fits just this description:  DaimlerChrysler v. Cuno.  The case involves state tax incentives for economic development -- yet another topic that sounds like a real snoozer to most people, even though most if not all states utilize tax incentives (and thus, in a sense, spend your tax dollars) to lure business and jobs.  The case really isn't about the economics of state tax incentives, although opposition to state tax incentives as a matter of policy drove the plaintiffs to challenge such programs in court.  Last fall, the Sixth Circuit struck down an Ohio investment tax credit provision on dormant commerce clause grounds while upholding a local property tax waiver against a similar claim.  The Supreme Court granted certiorari on the investment tax credit aspect of the case (but not the property tax waiver), and told the parties to brief whether the plaintiffs had standing to raise their claim in federal court in the first instance.  There is actually a circuit split of the requirements state taxpayers must satisfy to challenge state statutes in federal court.  So this is one of those sleeper cases that fly under the radar of media coverage and public awareness but that raise economically significant and doctrinally important questions.

In the shameless plug department, yesterday I posted on SSRN essays summarizing the issues underlying the Cuno case and discussing the standing question.  They can be accessed here and here.  Ultimately, I think the Court will overturn the Sixth Circuit on standing grounds, potentially without even resolving the aforementioned circuit split.  But many parties are filing amicus briefs in the case.  It should be a fun one to follow.

Posted by Kristin Hickman on November 30, 2005 at 12:05 AM in Constitutional thoughts | Permalink


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Thanks for the post on Cuno. I will confess to not having spent very much time thinking about those issues, as they are not highly relevant to my practice (in contrast, I could bore the readership of this blog to death with a detailed analysis of all the ways Judge Foley got it wrong in Xilinx v. Commissioner). Looking forward to reading your two pieces on the case.

It's one of the curious ironies of tax practice that while the Supreme Court seems to be largely out of the business of deciding Federal tax cases (except when it sees fit to rewrite the Tax Court's rules), there seems to be a state tax case on its docket almost every year. It wouldn't surprise me if next year's Supreme Court state tax case was the recent New Jersey case on intangible holding companies and nexus (the name of the case is escaping me right now). The Geoffrey line of cases is an irreconcilable mess that probably does need to be reconciled.

Posted by: burnspbesq | Nov 30, 2005 10:27:03 AM

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