Perspectives

U.S. Supreme Court hears oral arguments in dormant Commerce Clause case

Multistate tax alert | November 21, 2014

On November 12, 2014, the U.S. Supreme Court heard oral arguments in Comptroller of the Treasury of Maryland v. Wynne (“Wynne”),¹ a case involving Maryland’s individual income tax regime, which is comprised of two components - a “State” income tax and a “County” income tax.² The issue before the Supreme Court is whether Maryland’s failure to allow a credit against the “County” portion of the tax violated the U.S. Constitution.

Maryland's individual income tax regime

On November 12, 2014, the U.S. Supreme Court heard oral arguments in Comptroller of the Treasury of Maryland v. Wynne (“Wynne”),1 a case involving Maryland’s individual income tax regime, which is comprised of two components - a “State” income tax and a “County” income tax.2 Under that tax regime, Maryland residents may take a credit against the “State” tax, but not against the “County” tax, for income taxes paid on income earned in and taxed by other states.3 The issue before the Supreme Court is whether Maryland’s failure to allow a credit against the “County” portion of the tax violated the U.S. Constitution.

In this Tax Alert we summarize the Maryland court decisions and the parties’ arguments before the U.S. Supreme Court. We also provide some taxpayer considerations, including the potential broader implications that this case may have on the dormant Commerce Clause.

1 Comptroller of the Treasury of Maryland v. Wynne, No. 13-485 (U.S. argued Nov. 12, 2014).
2 Md. Code Ann., Tax-Gen. §§ 10-102, 10-103(a)(1). It should be noted that the Maryland Supreme Court has previously held that both taxes are state taxes; that the County tax is applied locally has no bearing on its characterization. See, Frey v. Comptroller of Treasury, 29 A.3d 475, 492 (Md. 2011).
3 Md. Code Ann., Tax-Gen. § 10-703(a).

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The Multistate Tax Alert Archive includes external tax alerts issued by Deloitte Tax LLP's Multistate Tax practice during the last three years. These external alerts highlight selected developments involving state tax legislative, judicial, and administrative matters. The alerts provide a brief summary of specific multistate tax developments relevant to taxpayers, tax professionals, and other interested persons.

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