Breaking: Supremes uphold corporate give-aways
As readers may know, we've been closely following Cuno v. DaimlerChrysler Corp., a lawsuit filed by taxpayers in Ohio that would banned many of the huge tax breaks given to corporations in the name of "economic development."Today, the Supreme Court made its decision -- in favor of the corporations, saying taxpayers have no right to sue about the use of taxpayer money: Taxpayers have no right to challenge nearly $300 million in tax breaks that Ohio's elected officials used to entice DaimlerChrysler Corp. to build a new plant in Toledo, the Supreme Court ruled unanimously Monday. By ruling that the taxpayers had no right to sue, the justices avoided deciding whether tax incentive programs are constitutional. The high court's decision could have had a significant impact nationally because nearly every state uses billions of dollars in tax breaks to attract companies.The decision allows DaimlerChrysler to collect the Ohio give-aways, but the court didn't address the underlying legal challenge. This will remain a contentious issue.UPDATE: You can find the full statement from Peter Enrich, attorney for the plaintiffs in the case, below the fold:Statement from Peter Enrich (plaintiff attorney) on Cuno v. DaimlerChryslerThe Supreme Court's decision today, vacating the lower court's decision for lack of standing, is deeply disappointing, if hardly unanticipated.Frustratingly, the Court's ruling sheds no new light on the constitutionality of Ohio's investment tax credit or of the similar tax giveaways around the country that are costing states and localities billions of dollars that could be far better spent on programs, like education and infrastructure, that, unlike these tax breaks, really can expand economic opportunity.The effect of the Court's ruling is not to end our challenge or to uphold Ohio's discriminatory use of its tax system to steer business investment into the state. Rather, the decision simply sends us back to the Ohio state courts, where we began six years ago. We intend to pursue the case promptly and fully in that forum, whose rules for citizen standing are far more permissive than those in the federal courts. If the Ohio state courts follow the lead of the Sixth Circuit Court of Appeals and find Ohio's investment tax credit unconstitutional, then the case can come back to the Supreme Court for a nationally applicable ruling on the merits. And, in the meanwhile, similar cases are underway in the courts of several other states.The Court's decision rests on its determination that the plaintiffs in the case -- citizen taxpayers and small businesses in Toledo -- have not suffered the kind of direct, personal injury which entitles them to a hearing in the federal courts. It will not be easy to explain this conclusion to the plaintiffs. As one said to me at the conclusion of oral argument in the case, "How can they say that I haven't been injured?"Many of the plaintiffs lost their homes and small businesses when the city of Toledo agreed to acquire the site for Daimler's new Jeep plant, using its eminent domain powers when necessary. First the plaintiffs' properties were taken for Daimler's benefit, and now, each year, their taxes are being taken to provide tax breaks for Daimler, while the state and city provide woefully inadequate funding for the local schools and other services on which the plaintiffs rely. They -- like ordinary taxpayers everywhere -- are the losers in the states' counterproductive competition to give ever-larger tax breaks to big businesses.Today's decision is doubly frustrating because we tried so hard to avoid this long procedural detour, in a case where a timely ruling on the merits is desperately needed. 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. We brought the case in Ohio's state courts, because we wanted to avoid the procedural concerns about standing that produced today's decision. When Daimler and Ohio removed the case to the federal courts, we sought to return it to the state courts to avoid the years of delay in reaching a decision on the merits that have now come to fruition. Daimler and Ohio argued at that time that standing was not a problem, and only changed their tune after losing on the merits of the case before the Sixth Circuit. Their procedural machinations have now succeeded in avoiding a ruling on the merits for six years, while Daimler continues to receive tens of millions of dollars of constitutionally questionable tax breaks every year.That is why we will redouble our efforts, on behalf of our plaintiffs and citizens and taxpayers everywhere. Today's decision casts no doubt on the long line of court rulings striking down discriminatory state tax breaks as unconstitutional. We fully expect that the Ohio courts will ultimately apply this body of law, as did the Sixth Circuit, to invalidate Ohio's investment tax credit.