State economic development incentives.A recent Sixth Circuit case challenged the validity of un Ohio income tax investment credit. In Charlotte Cuno v. DaimlerChrysler, Inc., 386 F3d 738 (6th Cir. 2004), rev'g in part and aff'g in part 154 FSupp2d 1196 (ND OH 2001), the court found that an investment tax credit Ohio offered for increased in-state investment violated the U.S. Commerce Clause. On Sept. 27, 2005, the Supreme Court granted certiorari certiorari In law, a writ issued by a superior court for the reexamination of an action of a lower court. The writ of certiorari was originally a writ from England's Court of Queen's (King's) Bench to the judges of an inferior court; it was later expanded to include writs . Facts The credit in question allowed DaimlerChrysler to reduce its Ohio franchise tax liability by 13.5% of the amount of the new investment made in a Toledo auto manufacturing plant. The taxpayer also received city and school district property tax abatements on the new investment. Holding The Sixth Circuit held that the credit violated the Commerce Clause nondiscrimination test in Complete Auto Transit, Inc. v. Brady, 430 US 274 (1977), in that it favored expansion in Ohio, to the exclusion of expansion by Ohio-nexus businesses in other states. The credit was found to be discriminatory, because it did not reduce Ohio taxes by a percentage of non-Ohio investment. The property tax abatement was upheld. Analysis If Cuno's reasoning stands, the decision will have far-reaching effects an the types of economic development incentives states can offer to new and existing businesses. Currently, 22 states offer tax credits based on machinery and equipment purchases that are similar to Ohio's investment tax credit. Of states with a corporate income tax, only Alaska, Hawaii and New Hampshire New Hampshire, one of the New England states of the NE United States. It is bordered by Massachusetts (S), Vermont, with the Connecticut R. forming the boundary (W), the Canadian province of Quebec (NW), and Maine and a short strip of the Atlantic Ocean (E). do not use broad-based income tax credits to encourage economic development. William A. Raabe, Ph.D., CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. , The Ohio State University Ohio State University, main campus at Columbus; land-grant and state supported; coeducational; chartered 1870, opened 1873 as Ohio Agricultural and Mechanical College, renamed 1878. There are also campuses at Lima, Mansfield, Marion, and Newark. , and Roby B. Sawyers, Ph.D., CPA, North Carolina State University History
See American Institute of Certified Public Accountants (AICPA). Tax Section |
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