Comptroller v. Wynne: Internal Consistency, a National Marketplace, and Limits on State Sovereignty to Tax

18 Pages Posted: 25 Mar 2015

See all articles by Michael S. Knoll

Michael S. Knoll

University of Pennsylvania Law School; University of Pennsylvania Wharton School -- Real Estate Department

Ruth Mason

University of Virginia School of Law

Date Written: March 18, 2015

Abstract

On November 12, 2014, the U.S. Supreme Court heard oral argument in Comptroller of the Treasury v. Wynne. The case, which has already been called the Court’s most important state tax case in decades, asks how the dormant Commerce Clause restrains state taxation of individual income. Because Wynne lacks the usual indicia of “certworthiness,” the case raises the possibility that the Court will reshape the constitutional balance between the states’ sovereign interest in collecting taxes and the national interest in maintaining an open economy.

The challenge for the Court, whose dormant Commerce Clause rulings have attracted intense criticism, is to delineate clear limits on state taxation that promote a national market economy without unduly restricting the states’ taxing authority. In earlier writings, we developed a framework to resolve tax discrimination cases in a consistent and intuitive manner that provides states with broad flexibility while maintaining an open interstate market. In this Essay, we apply that framework to Wynne to demonstrate how Maryland’s current system violates the dormant Commerce Clause. We also describe how our approach addresses Maryland’s arguments and resolves many issues that seemed to trouble the Justices at oral argument.

Keywords: Dormant commerce clause, tax discrimination, double taxation, Moorman, Supreme Court of the United States, internal consistency, source and residence priority rule, interstate and intrastate commerce, federalism, competitive advantage

JEL Classification: H24, H25, H71, H77, K34

Suggested Citation

Knoll, Michael S. and Mason, Ruth, Comptroller v. Wynne: Internal Consistency, a National Marketplace, and Limits on State Sovereignty to Tax (March 18, 2015). University of Pennsylvania Law Review Online, Vol. 163, p. 267, 2015; U of Penn, Inst for Law & Econ Research Paper No. 15-10. Available at SSRN: https://ssrn.com/abstract=2584641

Michael S. Knoll (Contact Author)

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-898-6190 (Phone)
215-573-2025 (Fax)

University of Pennsylvania Wharton School -- Real Estate Department ( email )

Philadelphia, PA 19104-6330
United States

Ruth Mason

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

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