The U.S. Supreme Court unanimously denied a taxpayer group's challenge to nearly $300 million in tax breaks given to a DaimlerChrysler AG plant in Toledo, Ohio.
In the 9-0 decision, Chief Justice John Roberts wrote that the municipal taxpayer group had no standing to challenge tax or spending decisions based solely on their standing as taxpayers. Roberts wrote that the argument added "yet another level of conjecture to their already hypothetical claim of injury."
To entice DaimlerChrysler to open a $1.2 billion Jeep assembly plant in the area, the city of Toledo and two local school districts gave the company a 10-year exemption from property taxes and the company received additional investment tax credits against the state's corporate franchise tax.
The taxpayer group had argued that their local and state tax burdens were increased by the tax breaks. The group has also said that the breaks could be better spent on education and other publicly financed programs.
The ruling will send the case back to the Ohio state courts without addressing the central issue -- whether tax breaks for companies that build or expand in Ohio discriminate against out-of-state competitors. Legal experts have said that the answer to that could affect thousands of similar incentive packages used nationwide.
Business groups and lawmakers in several states said in friend-of-the-court filings that a ruling against Ohio and DaimlerChrysler would hurt economic development throughout the nation and put U.S. manufacturing at a disadvantage against foreign competitors.
Previously on WebCPA:
Supremes to Hear Case on Corporate Tax Incentives (March 2, 2006)
High Court to Rule on State Tax Incentives (Sept. 29, 2005)
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