Statement of Peter Enrich
Lead Attorney for Plaintiffs
5/15/2006
The 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.
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