Brief of Tax Executives Institute, Inc. as amicus curiae in support of petitioners: interest of amicus curiae.

• Position: In The Supreme Court of the United States

IN THE SUPREME COURT OF THE UNITED STATES

No. 04-1704

DAIMLERCHRYSLER CORPORATION, et al., Petitioners,

v.

CHARLOTTE CUNO, et al., Respondents.

On Petition for a Writ of Certiorari to the United States Court of Appeals for the Sixth Circuit

On July 15, 2005, Tax Executives Institute filed the following brief amicus curiae in DaimlerChrysler Corporation v. Charlotte Cuno with the Supreme Court urging the high court to reverse a lower court decision that puts in jeopardy state tax incentives in Ohio and throughout the country. The brief was prepared under the aegis of the Institute's State and Local Tax Committee, whose chair is Janet M. Wilson of Halliburton Company.

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Pursuant to Rule 37 of the Rules of this Court, Tax Executives Institute, Inc. respectfully submits this brief as amicus curiae in support of Petitioners, DaimlerChrysler Corporation, et al. (1) Tax Executives Institute, Inc. ("TEI" or "the Institute") is a voluntary, non-profit association of corporate and other business executives, managers, and administrators who are responsible for the tax affairs of their employers. The Institute was organized in 1944 under the laws of the State of New York and is exempt from taxation under section 501(c)(6) of the Internal Revenue Code (26 U.S.C.). TEI has approximately 5,700 members who represent more than 2,800 of the leading corporations in the United States, Asia, Canada, and Europe. Institute members represent a cross-section of the business community whose employers are, almost without exception, engaged in interstate commerce. The Institute is dedicated to promoting the uniform and equitable enforcement of the tax laws, reducing the costs and burdens of administration and compliance to the benefit of both the government and taxpayers, and vindicating the Commerce Clause and other constitutional rights of all business taxpayers.

Today, TEI has nearly 600 members within the 4 states of the Sixth Circuit, and a majority of the Institute's other members work for companies whose activities (measured, for example, by property, payroll, or sales) extend into the Sixth Circuit. Moreover, many of these companies have availed themselves of the tax incentives at issue here (or to similarly structured incentives offered by other States). Because this case implicates the constitutionality of every state and local tax incentive and, regardless of its disposition, may markedly affect all U.S. state and local tax systems, it is of interest to all TEI members.

By striking down Ohio's investment tax credit, the U.S. Court of Appeals for the Sixth Circuit upset the settled expectations of companies investing in new plants and equipment in Ohio in reliance on the State's investment tax credit. Further, it deprived Ohio (and similarly situated States) of an important and time-honored mechanism for encouraging job-creating investments. Finally, this case raises fundamental issues under the Commerce Clause about the States' freedom to compete for interstate commerce and foster economic development within their borders. A writ of certiorari should issue to permit this Court to confirm that the Commerce Clause does not restrict States' efforts to advance legitimate State interests through their tax systems. As individuals who contend daily with the interpretation and administration of tax laws nationwide, the Institute's members--and their employers--have a vital interest in the proper disposition of this case.

Summary of Argument

1. Following Ohio's enactment of an investment tax credit to encourage economic development, DaimlerChrysler built a vehicle-assembly plant in Toledo, entitling the company to a credit against Ohio's corporate franchise tax. A

   A taxpayer group challenged Ohio's grant of a tax credit as violating the Commerce Clause of the U.S. Constitution. The U.S. Court of Appeals for the Sixth Circuit agreed, striking down the credit. Should the Court grant the petition for a writ of certiorari to clarify the scope of the Constitution's bar on discriminatory taxes? Amicus TEI submits that it should.

2. During the past three decades, this Court has invoked the Commerce Clause to invalidate state taxing schemes that unreasonably burdened interstate commerce by discriminating against out-of-state taxpayers. While the Sixth Circuit was correct to consider those decisions in weighing the constitutionality of the Ohio investment tax credit, it erred in concluding that the Court's jurisprudence mandated striking down Ohio's investment tax credit.

3. In Boston Stock Exchange v. State Tax Comm'n, (2) this Court held a New York transfer tax that more heavily taxed stock transfers if they occurred outside the state to violate the Commerce Clause. Boston Stock Exchange has since provided the lens for reviewing the constitutionality of state taxing schemes.

4. Seven years after Boston Stock Exchange, the Court decided Westinghouse Electric Corp. v. Tully, (3) a case involving a franchise tax credit. The Court said that it made no difference that a transfer tax was not involved, or that a tax credit was at issue. The tax scheme was constitutionally flawed because the manner in which the credit was computed created a greater tax burden on receipts from out-of-state DISC sales. Bacchus Imports Ltd. v. Dias, (4) decided the same year as Westinghouse, dealt with a tax exemption from the Hawaii liquor excise tax for certain locally produced alcoholic beverages. The statute on its face did not discriminate against out-of-state distributors, but the Court found that the reciprocal benefit accorded Hawaii's local liquor products and industry violated the Commerce Clause. More recently, in New Energy Co. of Indiana v. Limbach, (5) the Court...