Maryland's double tax on residents violates dormant commerce clause, Supreme Court rules
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The U.S. Supreme Court has held in a 5-4 opinion that Maryland’s personal income tax scheme violates the commerce clause because it fails to offer its residents a full credit for taxes paid in other states.
Justice Samuel A. Alito Jr. wrote the majority opinion (PDF), joined by Chief Justice John G. Roberts Jr. and Justices Anthony M. Kennedy, Stephen G. Breyer and Sonia Sotomayor.
“We have long held that states cannot subject corporate income to tax schemes similar to Maryland’s, and we see no reason why income earned by individuals should be treated less favorably,” Alito wrote.
Maryland gave a credit on state income taxes, but not on state-collected county taxes, for income tax paid to another jurisdiction. As a result, part of the income earned by residents outside the state was double taxed. The system created an incentive for intrastate rather than interstate activity, Alito said.
Alito said the tax system is a burden on commerce and violates dormant commerce clause jurisprudence, the “negative command” of the commerce clause giving Congress the power to regulate commerce between the states.
One of the dissenters, Justice Antonin Scalia, said he was writing separately “to point out how wrong our negative commerce clause jurisprudence is in the first place.” Justice Clarence Thomas joined most of Scalia’s dissent and wrote his own dissent, which was mostly joined by Scalia.
“The fundamental problem with our negative commerce clause cases is that the Constitution does not contain a negative commerce clause,” Scalia said. “It contains only a commerce clause. Unlike the negative commerce clause adopted by the judges, the real commerce clause adopted by the people merely empowers Congress to ‘regulate commerce with foreign nations, and among the several states, and with the Indian tribes.’ ”
A dissent by Justice Ruth Bader Ginsburg argued that nothing in the Constitution or court precedent requires overturning Maryland’s tax scheme. Her dissent was joined by Scalia and Justice Elena Kagan.
The decision is Comptroller of the Treasury of Maryland v. Wynne.
Related article:
ABAJournal.com: “Can Maryland tax income earned and taxed in another state? SCOTUS to decide”
