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Protecting Taxpayers From Discriminatory Taxes at the U.S. Supreme Court: CSX Transportation, Inc. v. State Board of Equalization of Georgia

3 min readBy: Chris Atkins, Brian E. Bailey

Download Brief of Amicus Curiae in Support of Petitioners?CSX Transportation, Inc. v. State Board of Equalization of Georgia

U.S. Supreme Court No. 06-1287
Amicus Curiae Brief In Support of Petitioner
Filed on July 30, 2007

Argued on November 5, 2007
Decided on December 4, 2007

The Supreme Court issued a unanimous decision opposing taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. discrimination in the case of CSX Transportation, Inc. v. State Board of Equalization of Georgia, brought by a taxpayer railroad against their state tax authorities. In a friend-of-the-court brief filed in the case, the Tax Foundation successfully urged the Supreme Court to reverse a lower court ruling that barred taxpayers from challenging the methods by which property values are assessed for taxation.

“In holding that taxpayers may not challenge the state’s chosen assessment method, the lower court is in error,” said Chris Atkins, senior tax counsel for the Tax Foundation. “This holding violates the text and purpose of the federal 4-R Act, which was designed to protect interstate commerce and individual rights.”

The Tax Foundation’s friend-of-the-court brief, written by Atkins and Brian Bailey of Ice Miller LLP, argued that the ability of taxpayers to challenge flawed property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. assessment methods is important for ensuring transparency and stability in the tax system. The brief cited past cases and other historical evidence in arguing that the Railroad Revitalization and Regulatory Reform Act of 1976 (“4-R Act”) specifically allows railroads to challenge a state’s tax assessment method as discriminatory.

“Discriminatory assessment methods cannot be shielded from legal challenge because Congress has exercised its power to limit states’ ability to use any conceivable method of assessing and taxing railroad transportation property,” Atkins said. “Otherwise, states would get immunity for even absurd assessment schemes, like basing it on the property’s height above sea level.”

The brief also noted that railroads are not alone in being subjected to appraisal and assessment disparities that result in discriminatory taxation. For example, a lawsuit was recently filed in Florida challenging that state’s practice of imposing higher taxes on property owned by out-of-state “snowbirds” than on in-state residents.

“The 4-R Act permits challenges to state and local property tax assessment methods where Congress has demonstrated a desire to protect interstate commerce,” Atkins said. “Ensuring a transparent process is the best way to protect interstate commerce and individual rights, and uphold the text, purpose, and meaning of the 4-R Act.”

Chief Justice John Roberts wrote the Court’s opinion, which echoed many of our arguments. “The total lack of textual support for Georgia’s position is not surprising,” the opinion states. “The dichotomy the State presses would eviscerate the statute by forcing courts to defer to the valuation estimate of the State, when discriminatory taxation by States was the very evil the Act aimed to ban.” The opinion also notes that “preventing courts from scrutinizing valuation methodologies would render [the 4-R Act] a largely empty command.”

The Supreme Court’s opinion.

Transcript of the U.S. Supreme Court oral argument.

Blog Posts

Supreme Court Protects Taxpayer From Discriminatory Property Taxation, by Joseph Henchman, December 4, 2007

U.S. Supreme Court Questions Georgia’s Discriminatory Property Tax Assessment in CSX Case, by Joseph Henchman, November 5, 2007

Tax Foundation Urges Supreme Court to Protect Taxpayers From Discriminatory Taxation, by Joseph Henchman, November 2, 2007