In Pennsylvania, the Local Tax Enabling Act authorizes a variety of municipalities to impose a tax “on the privilege of doing business in the jurisdiction of the local taxing authority.” 53 P.S. § 6924.301.1(a.1)(1). As with any state or local tax, the tax cannot violate the Commerce Clause; as a consequence, a local business privilege tax may only be imposed “when the tax is applied to an activity with a substantial nexus with the taxing State, is fairly apportioned, does not discriminate against interstate commerce, and is fairly related to the services provided by the State.” Complete Auto Transit, Inc. v.… Read More
There are actually three dissents in Comptroller of the Treasury of Maryland v. Wynne, No 13-485 (May 18, 2015). Two are fairly predictable: since it’s a dormant commerce clause case, Justice Scalia and Justice Thomas are dissenting because they think the dormant commerce clause is judge-made nonsense. While predictable, Justice Scalia’s dissent is entertaining, as he delivers his argument with great force.
The third, Justice Ginsburg’s, is different. It is thought-provoking; when I got the chance to read it carefully, I understood why the majority spends so much of its time countering her analysis. It certainly suggests that the case was a much closer call than the majority opinion’s analysis would lead the reader to believe.… Read More
Two provisions of the Constitution limit the authority of states to impose taxes. The due process clause requires that a state have sufficient nexus with a taxpayer or transaction to impose a tax, which is typically a fairly low threshold. In contrast, the commerce clause has historically had more teeth.
While some of the current justices disagree with the Court’s dormant commerce clause jurisprudence, in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977), the Court established a test that is used to determine whether a state tax violates the dormant commerce clause. A tax will withstand a commerce clause challenge “when the tax is applied to an activity with a substantial nexus with the taxing State, is fairly apportioned, does not discriminate against interstate commerce, and is fairly related to the services provided by the State.” 430 U.S at 279.… Read More