In the Supreme Court of the United States: No. 04-1704: DaimlerChrysler Corporation, et al., Petitioners, v. Charlotte Cuno, et al., Respondents: brief of Tax Executives Institute, Inc. as amicus curiae in support of petitioners: interest of amicus curiae.

IN THE SUPREME COURT OF THE UNITED STATES

No. 04-1704

DAIMLERCHRYSLER CORPORATION, et al., Petitioners,

v.

CHARLOTTE CUNO, et al., Respondents.

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

INTEREST OF AMICUS CURIAE

On December 1, 2005, Tax Executives Institute filed the following brief amicus curiae in DaimlerChrysler v. Cuno. TEI previously filed a brief amicus curiae in support of DaimlerChrysler's petition for writ of certiorari, urging the Court to review the decision finding Ohio's investment tax credit unconstitutional. The Institute's brief builds on the arguments in its earlier brief. The brief was prepared under the aegis of TEI's State and Local Tax Committee, whose chair is Janet M. Wilson of Halliburton Company.

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, Canada, Europe, and Asia. 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 virtually 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 tax credit. It also deprived Ohio (and similarly situated States) of an important and time-honored mechanism for encouraging job-creating investments. More fundamentally, the court's decision raises key issues under the Commerce Clause about the States' freedom to compete for interstate commerce and foster economic development within their borders, as well as important issues of who may challenge a State's tax policy choices. 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. To foster economic growth and development, Ohio enacted an investment tax credit for businesses that install new manufacturing machinery and equipment in the State. DaimlerChrysler qualified for and claimed the credit following expansion of its vehicle-assembly plant in Toledo. DaimlerChrysler's entitlement to this credit was challenged by Ohio and Michigan citizens (collectively "Cuno") asserting the credit violates the Commerce Clause of the U.S. Constitution.

  2. This case involves two questions: (a) Does Cuno have standing to bring this action? and (b) Does Ohio's tax credit discriminate against interstate commerce in violation of the Commerce Clause? As to the first question, amicus TEI submits that Respondents do not. As to the second question, amicus TEI submits that Ohio's tax credit does not discriminate against interstate commerce and the decision below misapprehends this Court's Commerce Clause jurisprudence.

  3. The standing requirement emanates from Article III, [section] 2 of the Constitution, which limits the federal courts' jurisdiction to "cases" or "controversies." (2) It asks simply whether "a party has sufficient stake in an otherwise justiciable controversy to obtain judicial resolution of that controversy." (3) For a party to have standing, three elements must be satisfied: (1) the party must have suffered an injury in fact, (2) the injury must be fairly traceable to the actions of the defendant, and (3) the injury must be redressable by a favorable decision. (4)

  4. To satisfy the standing requirement, the Ohio and Michigan citizens here must show that they have suffered some actual or threatened injury as a result of the unlawful conduct of the State of Ohio in granting tax incentives to DaimlerChrysler and other manufacturers. (5) The injury must be distinct and palpable, not merely abstract, conjectural, or hypothetical. Conjectural or hypothetical possibility of injury--injury that is not "actual or imminent"--is insufficient. (6)

  5. Even assuming Cuno is correct in averring that the investment tax credit "depletes the funds of the State of Ohio ... thereby diminishing the total funds available for lawful uses" (an allegation at odds with the legislature's determination), the matter is one for the legislative or executive branch to address, not the courts. Indeed, there is no real injury alleged, and Respondents' generalized grievance is only an effort--disdainful of the separation-of-powers doctrine--to "vindicate their value preferences through the judicial process." (7)

  6. More problematic than the ethereal nature of the challengers' alleged injury is that the declaratory and injunctive relief sought would do absolutely nothing to redress their supposed injury. Thus, the third element of standing evanesces, and Cuno's lack of standing is apparent.

  7. 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.

  8. In Boston Stock Exchange v. State Tax Comm'n, (8) 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. Seven years after Boston Stock Exchange, the Court explained in Westinghouse Electric Corp. v. Tully, (9) that it made no difference that a transfer tax was not involved, or that a tax credit was at issue. The franchise tax scheme in that case was constitutionally flawed because the State imposed a greater tax burden on receipts from out-of-state DISC sales. Bacchus Imports Ltd. v. Dias, (10) decided the same year, dealt with a tax exemption from the Hawaii liquor excise tax for certain locally produced alcoholic beverages that did not facially discriminate against out-of-state distributors, but that violated the Commerce Clause by according reciprocal benefits to Hawaii's local liquor industry. More recently, in New Energy Co. of Indiana v. Limbach, (11) the Court struck down an ethanol tax credit applied against...

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