Chip Taylor

Cuno: Tax Foundation Amicus Brief

Brief of Amicus Curiae in Support of Petioners—DaimlerChrysler Corp. v. Charlotte Cuno et al.

by Chris Atkins and Kyle O. Sollie

(Supreme Court Case No. 04-1704 & 04-1724)

Executive Summary

As a threshold matter, it is critical to examine whether any respondent has standing to bring this suit. Each respondent lacks Article III standing, as any alleged injury is general, speculative, and attenuated. Further, a favorable decision would be unlikely to provide relief. Respondents in this case seek to change what they consider bad tax policy, not to address individual injuries. Such a grievance should be addressed to the legislature.

On the merits, respondents seek to transform this Court’s past discussion of “tax neutrality” into a mandate for tax conformity. Disregarding this Court’s clear recognition of the importance of permitting States to design tax systems that foster a competitive business climate, respondents would have the Commerce Clause interpreted to preclude any tax measure that might affect capital investment decisionmaking.

Clarification is needed as to which types of competitive tax advantages States may enact consistent with the Commerce Clause. Further, this Court should take this opportunity to explain its statements about tax neutrality in previous decisions, which respondents have misinterpreted in pressing this lawsuit, and which have left lower courts, commentators, and economists struggling to articulate its import for the scope of the dormant Commerce Clause. A clarification that the Commerce Clause requires competitive neutrality, not tax or economic neutrality, would lift uncertainty surrounding programs that encourage investment. The Commerce Clause prohibits tariff-like coercion and punishment of out-of-state activity, not every law that affects economic decision-making.

Full text.

HT: TaxProf Blog