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Title: State Sovereignty to Use Tax Policy for Economic Growth
Committee: Communications, Technology & Interstate Commerce
Type: Action Calendar - Draft
WHEREAS, under the United States Constitution, states have enjoyed the ability to levy taxes for the support of state government as decided by the elected representatives of the people; and
WHEREAS, under this regime of fiscal federalism, state legislatures have enjoyed the ability to set tax policy to encourage economic growth while maintaining balanced budgets; and
WHEREAS, the United States Court of Appeals for the Sixth Circuit ruled in DaimlerChrysler Corp. et al. v. Cuno et al. that state tax policy to encourage economic growth as decided by elected state policymakers violates the Interstate Commerce Clause of the Constitution; and
WHEREAS, such federal court intrusion into state tax policy is a violation of the long standing constitutionally ensured fiscal federalism and threatens to tear at our nation’s long held belief that states are the laboratories of democracy; and
WHEREAS, the United States Supreme Court on May 15, 2006, vacated the lower court decision by ruling that the plaintiffs did not establish their standing to challenge the state franchise tax credit; and
WHEREAS, the decision by the United States Supreme Court did not rule on the merits of the issue of state sovereignty to determine its tax policy in this instance; and
WHEREAS, legislation has been introduced in Congress by two former Governors, Senators Voinovich of Ohio and Alexander of Tennessee to reaffirm the authority of elected state policymakers to determine tax policy that ensures a state’s economic viability;
NOW, THEREFORE BE IT RESOLVED, the National Conference of State Legislatures reaffirms its support for fiscal federalism and the ability of each state legislature to set its own tax policy to meet the needs of the state; and
BE IT FURTHER RESOLVED, that NCSL finds that the use of state tax policy by elected state policymakers to ensure and enhance the economic viability of the state is not a violation of the Constitution’s Interstate Commerce Clause, but rather a manifestation of what Supreme Court Justice Brandeis termed the “states as laboratories of democracy;” and
BE IT FURTHER RESOLVED, that NCSL will support congressional efforts as sponsored by Senators Voinovich and Alexander that seek to reaffirm the authority of elected state tax policymakers to determine tax policy and spending decisions.
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