Court Allows Smokestack Chasing -- For Now
By Daniel C. Vock, Staff Writer
The U.S. Supreme Court on Monday preserved one of the top tools states use to lure new jobs - corporate tax incentives.
But in preserving a $281 million package of tax breaks that Ohio and Toledo gave to an automaker to rebuild a Jeep factory, the court left the door open to future challenges to such incentives.
Governors and other state officials watched the case closely after the Cincinnati-based 6 th Circuit U.S. Court of Appeals struck down the Toledo incentives. Governors warned that more than 40 states would be in jeopardy if the decision were allowed to stand.
The high court's unanimous decision Monday overturned the 6 th Circuit's decision. It ruled that taxpayers who sued Ohio had no legal standing to bring the case.
But the court didn't address the central question of the case, which is whether the tax breaks interfered with Congress' exclusive authority to regulate interstate commerce.
Kevin Thompson, legislative counsel for the Council on State Taxation , a coalition of 600 large companies that supports the tax breaks, said Monday's decision "restores the balance of where this debate should occur, which is in state capitols and not the federal courts."
Ohio Attorney General Jim Petro (R) issued a statement hailing the outcome. "This win will protect Ohio and other states not only from having good tax laws struck down, but also from fighting endless, expensive court battles on issues like this," he said.
While Petro predicted a swift end to the controversy, the taxpayers who brought the suit vowed to keep fighting.
Northeastern University law professor Peter Enrich , who argued the case before the high court, said the dispute would now return to Ohio state courts, where the plaintiffs would continue to press their cause.
Enrich, who was traveling and could not be reached directly, said in a statement that the taxpayers he represents "like ordinary taxpayers everywhere, are the losers in the states' counterproductive competition to give ever-larger tax breaks to big businesses."
"The states are caught in an expensive and ineffectual competition from which none can risk unilaterally withdrawing. Only enforcement of the Constitution's constraints by the courts can end this race to the bottom," he said.
The challenge in Ohio prompted similar suits in Minnesota, Nebraska North Carolina and Wisconsin.
But a trial judge dismissed a lawsuit last week that attacked a $279 million tax incentive package offered to computer-maker Dell to build a plant in Winston-Salem. The judge in that case also ruled that taxpayers did not have standing to bring the suit.