There are five basic legal forms of business structures found in the United States: C corporations, S corporations, sole proprietorships, partnerships, and Limited Liability Companies (LLCs). In order to understand...
- The Tax Policy Blog
- Supreme Court to Hear Challenges to Indianapolis Tax Refu...
Supreme Court to Hear Challenges to Indianapolis Tax Refund Policy & Health Care Reform Law
This morning we learned that we were successful in asking the U.S. Supreme Court to hear an appeal in Armour v. City of Indianapolis, involving a challenge to a discriminatory tax refund system in Indianapolis, Indiana. They "granted certiorari" in the case (agreed to hear it) and an argument session will occur in the spring. We had filed an amicus brief asking the Court to hear the case.
At the same time, the Court agreed to hear three other cases involving constitutional challenges to the health care reform law passed last year (PPACA or "Obamacare").
The case involves the Indianapolis city sewer tax, which taxpayers had to pay either in fullor in installments. In 2005, the city reduced the tax and forgave all future obligations by taxpayers paying in installments. Taxpayers who paid in full requested a prorated refund but were denied, which was upheld 3-2 by the Indiana Supreme Court.
The city claims that by not providing refunds to those who paid in advance, they are saving administrative costs and helping low-income taxpayers. Our brief rejects those arguments, noting refund processing of any kind is costly but necessary, and that the policy does not benefit poor taxpayers exclusively or even primarily. "If poor taxpayers do benefit disproportionately, it is only by chance," we wrote.
Our brief: "When governments act arbitrarily in their tax procedures, scarce tax-payer resources must be allocated to cumbersome compliance procedures. Without the ability to make reasonable predictions about tax climates and resource allocation, making important business decisions becomes more difficult and reduces business activity. For many citizens, paying taxes is one of the few ways that they interact with the government. Tax policy widely perceived as unusual and unfair threatens to boster a general disenchantment with the government, creating tensions between the law and citizens."
Read more on Armour and our brief here.
About the health care cases:
The Court will be scheduling 5-1/2 hours of argument on four questions:
- Whether the "individual mandate" requiring citizens to buy health insurance is constitutionally permissible. 2 hours of argument.
- Whether striking down the "individual mandate" as unconstitutional necessarily invalidates the entire health care law. 90 minutes of argument.
- Whether the states can challenge the law under the Anti-Injunction Act. 1 hour of argument.
- Whether the Medicaid expansion is constitutional. 1 hour of argument.
See SCOTUSblog for latest developments on this important issue, and follow our blog for additional commentary!
Subscribe to the Tax Foundation Newsletter
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.