State Investment Tax Credits, the Commerce Clause, and Cuno v. DaimlerChrysler

Publication Date: July 2005

Publisher: Library of Congress. Congressional Research Service


Research Area: Law and ethics



Many states offer tax incentives to companies that invest or expand business operations in the state. In a 2004 decision, Cuno v. DairnlerChrysler, the U.S. Court of Appeals for the Sixth Circuit addressed the constitutionality of two such incentives. The court held that Ohio's investment tax credit violated the Commerce Clause of the U.S. Constitution, but that its property tax abatement scheme did not. Approximately 40 states have credits similar to the one struck down in Cuno. The Economic Development Act of 2005 (H.R. 2471 and S. 1066, 109th Congress) has been introduced to give states the authority to offer tax incentives like Ohio's investment tax credit.