The Cuno Decision: The Supreme Court Deals a Victory

By May 16, 2006General

Yesterday, the US Supreme Court handed down a major 9-0 decision in Cuno v. Daimler-Chrysler. The NAM had filed an amicus brief in this case, so we were most happy with such a decisive win.

The state of Ohio used tax breaks to incentivize Daimler Chrysler to build a new Jeep plant in Toledo. See, folks compete for new manufacturing facilities because of the wealth that we generate and bring to area that needs it. Ohio certainly understood the prosperity that comes with manufacturing and moved to make sure Daimler Chrysler would build its plant there.

“Not so fast”, said Ralph Nader. A Nader-backed plaintiff, one Ms. Cuno, sued the state of Ohio, clamining that state-funded tax incentives were illegal. The Sixth Circuit actually agreed with the plaintiff and stuck down the investment tax credit. This obviously had far-reaching consequences, as all 50 states basically are in competition for jobs and investment and all are using tax incentives in one form or another.

Well, today the Supreme Court agreed with our view of the facts and found — unanimously — that the plaintiffs, ” have no standing under Article III to challenge state tax or spending decisions simply by virtue of their status as taxpayers.”

Here’s a link to the full decision and here’s a link to our press release applauding the result. The Court clearly recognized that states have the ability to offer economic incentives and ought not be vulnerable to lawsuits for doing so. At the end of the day, we will still need legislation which will leave no doubt that such incentives are legal and desirable for a thriving economy.

And, incidentally, the opinion is written by Chief Justice Roberts. His appreciation of the law’s impact on commerce (one of our criteria in our decision to endorse him) is evident from this opinion. We’re glad he’s on the Court and look forward to his service for many years to come.

Join the discussion 2 Comments

  • phd says:

    Congratulations on your victory.

    You are, I believe, overstating it a bit though. While there is dicta in the opinion that supports your argument, it is ultimately an opinion about the standing doctrine, which should have little precedential effect when applied to cases where an individual can actually show injury (as opposed to a taxpayer whining about increased taxes or lost revenue).

  • Jim Osburn says:

    It is still corporate welfare.

    What ever happened to the kind of capitalism where the profit motive was sufficient without raiding the taxpayer’s treasury?