About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

State Investment Tax Credits, the Commerce Clause, and Cuno v. DaimlerChrysler, July 25, 2006 1 (July 25, 2006)

handle is hein.tera/crstax0394 and id is 1 raw text is: Order Code RS22186 Updated July 25, 2006 CRS Report for Congress Received through the CRS Web State Investment Tax Credits, the Commerce Clause, and DaimlerChrysler v. Cuno Erika Lunder Legislative Attorney American Law Division Summary In 2005, the Sixth Circuit Court of Appeals held in Cuno v. DaimlerChrsyler that Ohio's investment tax credit violated the Commerce Clause of the U.S. Constitution. The case received significant attention because most states have similar credits. In 2006, the Supreme Court held that the Cuno plaintiffs lacked standing to challenge the credit in federal court. Because the Supreme Court based its decision on the issue of standing, it did not address whether the credit violated the Commerce Clause. Introduced prior to the Supreme Court's decision, the Economic Development Act of 2005 (H.R. 2471 and S. 1066) would authorize states to offer tax incentives similar to Ohio's investment tax credit. Like most states, Ohio provides various tax incentives to encourage businesses to locate or expand operations in the state. In 1998, DaimlerChrysler agreed to construct a new assembly plant in Ohio in exchange for various benefits, which were valued at $280 million. One benefit the company was qualified to receive because of the plant construction was Ohio's investment tax credit. This credit was a non-refundable credit against the state's corporate franchise tax for taxpayers who purchased new manufacturing machinery and equipment and installed it in the state.1 Taxpayers from Ohio and Michigan then brought suit against DaimlerChrysler, Ohio, and several other defendants, alleging, among other things, that the investment tax credit violated the Commerce Clause of the U.S. Constitution.2 As discussed below, the U.S. district court held that the credit was constitutional, whereas the Sixth Circuit Court of Appeals held the opposite. In 2006, the Supreme Court ordered the case be dismissed because the plaintiffs lacked standing to bring suit in federal court. 'Ohio Rev. Code Ann. § 5733.33. In 2005, Ohio significantly reformed its corporate tax system and has eliminated the credit for taxable years ending on or after July 1, 2005. 2 The plaintiffs' other claims included an allegation that a property tax exemption provided to DaimlerChrysler by an Ohio municipality and authorized under Ohio law violated the Commerce Clause. Both the U.S. district court and Sixth Circuit Court of Appeals held that the property tax exemption did not violate the Commerce Clause, and the issue will not be discussed in this report. Congressional Research Service oe The Library of Congress

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most