- The Washington Times - Monday, May 15, 2006


The Supreme Court yesterday rebuffed the efforts of a group of taxpayers in Toledo, Ohio, to challenge nearly $300 million in tax breaks for DaimlerChrysler AG’s new Jeep plant.

Chief Justice John G. Roberts Jr. said in the 9-0 decision that the purported injury to the taxpayers was mere conjecture and that they had no standing to challenge tax or spending decisions “simply by virtue of their status as taxpayers.”

DaimlerChrysler called the ruling “a big win for America” and said Congress and the states should seek legislation to reinforce the ability to use tax incentives as a tool to compete for investment and jobs.

The message from the ruling is that states “will not be held hostage to lawsuits” brought by people with “no direct connection to the issue at hand,” said W. Frank Fountain, DaimlerChrysler’s senior vice president for government affairs and public policy.

Herman Blankenship, whose Toledo auto shop was torn down to make way for the Jeep plant, said he hoped the challenge made people more aware about how much money government gives away to business.

“It seems to me that the government wants to tax us for everything, and that the corporate world is controlling the government,” said Mr. Blankenship, who was among neighbors in the area of the plant who joined in the lawsuit.

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.

Peter Enrich, an attorney for the taxpayers, said the decision “simply sends us back to the Ohio state courts, where we began six years ago.” Mr. Enrich, a Northeastern University law professor, said “tax giveaways” similar to Toledo’s cost states and municipalities around the country billions of dollars that could be better spent on education and other publicly financed programs.

In an earlier ruling in favor of the taxpayers, 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.

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.

Also yesterday, the Supreme Court sided with EBay in a patent fight, ordering a lower court to reconsider whether the Web auction giant should have been barred from using contested technology.

Justices, in an unanimous opinion, said that judges have flexibility to consider several factors before they impose court orders barring continued use of a technology after juries find a patent violation.

A judge must now consider whether an injunction is appropriate in the case involving EBay and a small company, MercExchange.

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