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Law School Case Brief

Comptroller of the Treasury v. Wynne - 575 U.S. 542, 135 S. Ct. 1787 (2015)


The Commerce Clause grants Congress power to regulate Commerce among the several States. U.S. Const. art. I, § 8, cl. 3. These few simple words reflected a central concern of the Framers that was an immediate reason for calling the Constitutional Convention: the conviction that in order to succeed, the new Union would have to avoid the tendencies toward economic balkanization that had plagued relations among the Colonies and later among the States under the Articles of Confederation. Although the Commerce Clause is framed as a positive grant of power to Congress, the United States Supreme Court has consistently held this language to contain a further, negative command, known as the dormant Commerce Clause, prohibiting certain state taxation even when Congress has failed to legislate on the subject. By prohibiting States from discriminating against or imposing excessive burdens on interstate commerce without congressional approval, it strikes at one of the chief evils that led to the adoption of the Constitution, namely, state tariffs and other laws that burden interstate commerce.


Maryland's personal income tax on state residents consists of a “state” income tax, Md. Tax-Gen. Code Ann. § 10-105(a), and a “county” income tax, §§ 10-10310-106. Residents who pay income tax to another jurisdiction for income earned in that other jurisdiction are allowed a credit against the “state” tax but not the “county” tax. § 10-703. Nonresidents who earn income from sources within Maryland must pay the “state” income tax, §§ 10-105(d)10-210, and nonresidents not subject to the county tax must pay a “special nonresident tax” in lieu of the “county” tax, § 10-106.1.

Respondents, Maryland residents, earned pass-through income from a Subchapter S corporation that earned income in several States. Respondents claimed an income tax credit on their 2006 Maryland income tax return for taxes paid to other States. The Maryland State Comptroller of the Treasury, petitioner here, allowed respondents a credit against their “state” income tax but not against their “county” income tax and assessed a tax deficiency. That decision was affirmed by the Hearings and Appeals Section of the Comptroller's Office and by the Maryland Tax Court, but the Circuit Court for Howard County reversed on the ground that Maryland's tax system violated the Commerce Clause of the Federal Constitution. The Court of Appeals of Maryland affirmed and held that the tax unconstitutionally discriminated against interstate commerce. The Maryland State Comptroller of the Treasury petitioned for certiorari review.


Did Maryland's personal income tax scheme violate the dormant Commerce Clause of the U.S. Constitution?




The United States Supreme Court held that the Court of Appeals of Maryland ruled correctly that Maryland statutes which imposed a tax on income Maryland residents earned outside the State violated the dormant Commerce Clause of the U.S. Constitution because they did not offer Maryland residents a full credit against the income taxes they paid to other States. Maryland's tax scheme failed under the internal consistency test, which looked to the structure of the tax at issue to see whether its identical application by every State in the Union would have placed interstate commerce at a disadvantage as compared with intrastate commerce, because it created an incentive for Maryland taxpayers to opt for intrastate rather than interstate economic activity.

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