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The Dormant Commerce Clause Wins One: Five Takes on Wynne and Direct Marketing Association

October Term 2014 featured what is to date the most important state and local tax case since 1992’s Quill Corp. v. North Dakota.  In Comptroller v. Wynne, the U.S. Supreme Court affirmed a state court decision holding unconstitutional Maryland’s refusal to grant a credit for taxes paid by a resident taxpayer to other states on income earned by the taxpayer in those states.  This essay offers a summary of the case, as well as five takes on Wynne and another state and local tax case from the 2014-2015 term, Direct Marketing Association v. Brohl.

First, it is notable that the Court affirmed the lower court’s decision below, making it the first time in years that the Court weighed a state tax scheme against the dormant Commerce Clause doctrine and found it wanting.  Second, in so doing the Court relied in part on the “internal consistency” doctrine, an aspect of fair apportionment whose continued viability was questioned just a few years ago.  Third, the Court’s invocation of internal consistency and the linkage of it with the DCCD’s anti-discrimination principle raises the possibility that the Court’s DCCD jurisprudence in tax cases might be undergoing a transformation.  Fourth, additional evidence that doctrinal change is afoot is furnished by Justice Kennedy’s concurring opinion in Direct Marketing Association, in which Kennedy signaled a willingness to reconsider Quill’s holding that the Commerce Clause requires the taxpayer’s physical presence in a state to trigger an obligation to collect and remit sales and use taxes.  Fifth, and finally, a recent decision by the U.S. Supreme Court to grant certiorari to, vacate, and remand the decision of the Massachusetts Supreme Judicial Court in First Marblehead Corporation v. Commissioner of Revenue, offers some hints at the potential scope of Wynne.