Supreme Court Helps Corporate America Emasculate Taxpayers

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Supreme Court Helps Corporate America Emasculate Taxpayers

 

By David Sirota - May 15, 2006

 

In a unanimous decision today, the U.S. Supreme Court struck down a lower court

ruling that would have invalidated massive taxpayer giveaways to Corporate

America. The Supreme Court has long been the victim of a hostile takeover by Big

Money interests. It is a court now headed by a corporate lawyer that has

repeatedly gone out of its way to protect Corporate America's ability to bleed

the middle class dry. Today's ruling, though, is particularly egregious. Not

only did the court strike down an important ruling, but it essentially

emasculated taxpayers' ability to bring any such lawsuits against their own

government in the future.

 

The details are as shocking as they are disgusting. As the Associated Press

reports in the attached story, " Two years ago, the 6th U.S. Circuit Court of

Appeals struck down Ohio's tax credit on new equipment, saying the practice

hinders interstate commerce because the incentives are available only to

businesses that invest in Ohio. " In other words, plaintiffs correctly noted the

credits are creating a race to the bottom that violate interstate commerce laws

by forcing states and cities to compete with each other to give away more and

more taxpayer cash to Big Business. In the Ohio case, the tax credit was used to

give DaimlerChrysler roughly $300 million in taxpayer cash - cash that Toledo's

county auditor says was siphoned away from local schools, forcing the city to

close up to nine schools or fire 380 school workers.

 

In striking down the lower court ruling, the U.S. Supreme Court not only ruled

against Ohio taxpayers, but against all taxpayers. Chief Justice John Roberts,

formerly a corporate lawyer, said in the official opinion that " State taxpayers

have no standing ... to challenge state tax or spending decisions simply by

virtue of their status as taxpayers. "

 

In other words, not only will the Ohio law remain, but state taxpayers

throughout the country now have no legal right to challenge the decisions of

their bought-and-paid-for elected officials who are selling off our government

to the highest bidder.

 

To get a sense of just how far reaching an affront to taxpayers' rights this

ruling is, consider that USA Today earlier reported that taxpayers in other

states were moving forward with similar cases. As just one example, in North

Carolina, taxpayers have challenged the state's $242 million giveaway to Dell

Computer. Now, the Supreme Court has essentially said they aren't even allowed

to bring such a case. Want to try to stop Wal-Mart from abusing interstate

commerce laws by extorting a billion dollars in taxpayer subsidies? Forget even

having your case heard in court - your Supreme Court says you have to simply sit

back and accept higher taxes to fund this kind of largesse.

 

Remember - these taxpayer giveaways are accelerating and come at a huge cost in

terms of higher taxes for individuals. As USA Today noted, " In 1977, nine states

gave tax credits to corporations [but] by 1998, that number had grown to 36. " At

the same time, " individual income taxes are growing at a faster rate than

corporate income taxes " because state/local governments are recovering the tax

giveaways from ordinary citizens. According to the Census Bureau, " corporate

income taxes collected rose 6.5% from 1994 to 2004, while individual income

taxes collected went up 49.7%. "

 

Also remember that, as Greg LeRoy notes in his book The Great American Jobs

Scam, these taxpayer giveaways often do not result in the benefits Big Business

promises. In fact, many of the corporations that receive these taxpayer

giveaways never even follow through on the economic development or job creation

they promise.

 

But then, that's what this is really all about: bought-off politicians giving

away our hard-earned taxpayer dollars to already wealthy corporations without

demanding anything in return. We see this with the Medicare bill and how it

gives away more than $1 trillion to the health care/pharmaceutical industries

without demanding these industries lower their prices (in fact, the bill

prohibits the government from negotiating lower prices for medicines). We see it

with the energy bill and how it gives away billions in new tax breaks to oil

companies without asking them to lower their prices. And we see it with

corporate welfare.

As I note in my new book Hostile Takeover, this is the best we can hope for from

a government: policies that shower Big Business with taxpayer cash in order to

bribe companies to do things. This throw-money-at-the-problem corruption

substitutes for a government that should be asserting itself as a protector of

ordinary citizens by forcing powerful economic institutions to play by a set of

rules. Now, thanks to the Supreme Court, taxpayers have even less of a right to

fight back against this hostile takeover in our own legal system.

 

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Justices block Ohio taxpayers' lawsuit

 

By PETE YOST

Associated Press Writer

 

Taxpayers have no right to challenge nearly $300 million in tax breaks that

Ohio's elected officials used to entice DaimlerChrysler AG to build a new plant

in Toledo, the Supreme Court ruled unanimously Monday.

 

By ruling that the taxpayers had no right to sue, the justices avoided deciding

whether tax incentive programs are constitutional.

 

The high court's decision could have had a significant impact nationally because

nearly every state uses billions of dollars in tax breaks to attract companies.

 

Two years ago, the 6th U.S. Circuit Court of Appeals struck down Ohio's tax

credit on new equipment, saying the practice hinders interstate commerce because

the incentives are available only to businesses that invest in Ohio.

 

In a 9-0 decision, Chief Justice John Roberts said, " State taxpayers have no

standing ... to challenge state tax or spending decisions simply by virtue of

their status as taxpayers. "

 

To lure a $1.2 billion Jeep assembly plant to the area, the city of Toledo and

two local school districts gave the company a 10-year exemption from property

taxes, and the company received additional investment tax credits against the

state's corporate franchise tax.

 

Some taxpayers in Ohio sued, alleging that their local and state tax burdens

were increased by the tax breaks.

 

Roberts said the alleged injury to the taxpayers is hypothetical.

 

" A taxpayer-plaintiff has no right to insist that the government dispose of any

increased revenue it might experience as a result of his suit by decreasing his

tax liability or bolstering programs that benefit him, " the chief justice wrote.

" To the contrary, the decision of how to allocate any such savings is the very

epitome of a policy judgment. "

 

The taxpayers said their status as municipal taxpayers from Toledo gave them

grounds to have their case heard, but the court disagreed.

 

The taxpayers are challenging state law and state decision-making and their

claim of status by virtue of being municipal taxpayers simply introduces " yet

another level of conjecture to their already hypothetical claim of injury, " the

ruling stated.

 

In all, DaimlerChrysler received nearly $300 million in property and investment

tax benefits.

 

Business groups and lawmakers in several states said in friend-of-the-court

filings that a ruling against Ohio and DaimlerChrysler would hurt economic

development throughout the nation and put U.S. manufacturing at a disadvantage

against foreign competitors.

 

The cases are DaimlerChrysler Corp. v. Cuno, 04-1704, and Wilkins v. Cuno,

04-1724.

 

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David Sirota is the author of the book Hostile Takeover, released in May of

2006. To order the book, go to Amazon, Barnes & Noble or Powell's Bookstore.

 

" To be nobody-but-myself in a world which is doing its best, night and day, to

make me everybody else - means to fight the hardest battle which any human being

can fight, and never stop fighting. " -e.e. cummings-