U.S. Supreme Court rejects challenge to Ohio tax break

The U.S. Supreme Court on May 15 overturned a Cincinnati appeals court ruling that had thrown out Ohio’s investment tax credit as a violation of the constitution’s interstate commerce clause. It did not act on the merits of the case, but said those who brought it lacked standing to do so. The case was closely watched by those seeking fair and effective economic development policies.

When states offer tax credits, it often undercuts funding for important public sector programs, including education and other things vital to economic development. These tax breaks are not a large factor in corporate location decisions. But as long as other states are offering these credits, it can be hard to avoid what is often called a race to the bottom. Advocates for smarter economic development policy had hoped that the Supreme Court would reduce this negative competition. The court’s unwillingness to rule on the tax break itself means that – for now, at least – state and local tax breaks will continue to proliferate.
 

Links below provide more information and perspective on the case.

Statement of Peter Enrich, lead attorney for the plaintiffs

Statement of Greg LeRoy, executive director of Good Jobs First and author of The Great American Job Scam

Read the Supreme Court decision

More analysis that preceded the court decision:

Policy Matters Ohio op-ed, February 2006

Analysis of a bill introduced by Sen. George Voinovich authorizing the states to grant a variety of tax incentives, Michael Mazerov, Center on Budget and Policy Priorities (June 2005)
 

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