The Creation of a Groundless Exception to the Dormant Commerce Clause: An Expansion on the Dissenting Opinion in Department of Revenue v. Davis

39 Pages Posted: 6 Apr 2011

See all articles by Eric Smith

Eric Smith

Weber State University (WSU)

Date Written: October 1, 2010

Abstract

Most states exempt from state taxable income interest earned on in-state bonds. Some of those states, however, do not afford the same treatment to out-of-state bonds. This differential taxation scheme was the subject of the Supreme Court Case, Department of Revenue v. Davis, in which the Court upheld the disparate treatment of state-issued bonds.

This article analyzes the Court’s rationale for upholding the differential tax system in light of prior precedent interpreting the dormant Commerce Clause of the Constitution. It is the author’s contention that the doctrine created in, United Haulers Ass'n v. Oneida-Herkimer Solid Waste Mgmt., the “government-entity” exception to the dormant Commerce Clause, and applied in, Davis, was created under a false distinction and therefore should never have come to light. Had the “government-entity” exception not existed, the differential tax scheme most likely would have been struck down as a violation of the dormant Commerce Clause.

Keywords: dormant commerce clause, state bond taxation

JEL Classification: H71

Suggested Citation

Smith, Eric Steven, The Creation of a Groundless Exception to the Dormant Commerce Clause: An Expansion on the Dissenting Opinion in Department of Revenue v. Davis (October 1, 2010). Journal of Accounting, Ethics and Public Policy, Vol. 11, No. 3, p. 341, 2010. Available at SSRN: https://ssrn.com/abstract=1803468

Eric Steven Smith (Contact Author)

Weber State University (WSU) ( email )

1337 Edvalson Dept 3803
Ogden, UT 84408
United States
(801) 626-6041 (Phone)

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