Defending Tax Competition in the Supreme Court

July 15, 2005

Today marks something of a Tax Foundation milestone—for the first time in our 68-year history we filed an amicus brief this morning with the U.S. Supreme Court.

The issue? A Sixth Circuit Court ruling in the case of Cuno v. DaimlerChrysler (see our previous work on Cuno here and here).

On the surface, Cuno attempts to end the practice of lawmakers handing out tax incentives to get companies to relocate. But in the process, it ends up threatening all forms of state tax competition—both good and bad—because of its overly broad interpretation of the Constitution’s Commerce Clause. From the press release:

“Handing out tax incentives to lure companies may be poor tax policy, but the Cuno ruling imperils all forms of state tax competition, not just tax incentives…

“The Commerce Clause of the Constitution was designed to encourage competition, including tax competition, between the states. It was not designed to broadly suppress competition for jobs and investment, which is what Cuno threatens to do.”

Read the press release here, or read the full brief here.

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