Transcript

IN THE SUPREME COURT OF THE UNITED STATES

DAIMLERCHRYSLER CORPORATION, ET AL., Petitioners, v. CHARLOTTE CUNO, ET AL.; and WILLIAM W. WILKINS, TAX COMMISSIONER FOR THE STATE OF OHIO, ET AL., Petitioners, v. CHARLOTTE CUNO, ET AL.

No. 04-1704, No. 04-1724

March 1, 2006

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 10:05 a.m.

APPEARANCES: THEODORE B. OLSON, ESQ., Washington, D.C.; on behalf of the Petitioners in 04-1704.

DOUGLAS R. COLE, ESQ., State Solicitor, Columbus, Ohio; on behalf of the Petitioners in 04-1724.

PETER ENRICH, ESQ., Boston, Massachusetts; on behalf of the Respondents.

PROCEEDINGS

CHIEF JUSTICE ROBERTS: We'll hear argument first this morning in 04-1704, Chrysler versus -- DaimlerChrysler versus Cuno, and 04-1724, Wilkins versus Cuno.

Mr. Olson.

ORAL ARGUMENT OF THEODORE B. OLSON

ON BEHALF OF PETITIONERS IN 04-1704

MR. OLSON: Mr. Chief Justice, and may it please the Court:

Respondents dispute the wisdom, efficacy, and constitutionality of Ohio's franchise tax system, but they face two insurmountable obstacles in this Court. First, they cannot demonstrate any actual, concrete, and direct injury as a result of Ohio's investment tax credit to satisfy the irreducible minimum requirement for standing in this Court. Secondly, the facial Dormant Commerce Clause challenge that they bring is without merit.

Ohio imposes no burdens or tariffs on interstate commerce. Its investment incentive program is available on equal terms to in-State, out-of-State, local, or interstate businesses. It is nondiscriminatory, and it stimulates, rather than impedes, commerce.

Respondents are not injured when a business with which they do not compete receives a reduction in their taxes as a result of a tax credit. Respondents pay no higher taxes for products. They suffer no coercion because of a tax credit that is given to others. Their tax burden is not increased by Ohio's investment tax credit, nor will it be lessened if it is eliminated.

JUSTICE GINSBURG: Mr. Olson, who would have -- who would have standing? I understand your argument that Ohio taxpayers don't, but are there people who would have standing?

MR. OLSON: I'm not sure, Justice Ginsburg. In some of this Court's Dormant Commerce Clause cases, competitors, who are arguably injured because they are paying a higher tax against the -- compared to the company that's receiving the benefit -- in a couple of cases, this Court has recognized customers of companies that are paying higher products, and, therefore, potentially higher prices, for the products that they purchase. And, in one or two cases, States have been recognized for purposes of standing. But --

JUSTICE SCALIA: You think there has to be somebody who can challenge it, though.

MR. OLSON: No, we don't think that at all. As this Court --

JUSTICE SCALIA: Some of our opinions say that, don't they, that --

MR. OLSON: Well --

JUSTICE SCALIA: -- it's not necessarily true that there has to be --

MR. OLSON: What -- Justice Scalia, I think the strongest statement is in the Valley Forge case, at page 489, where the Court said, "If Respondents have no -- the argument that if Respondents have no standing to sue, no one would have standing, is not a reason to find standing." This would convert "standing" into a requirement that must observed only when satisfied. But the fact is that under any standard articulated by this Court in its Article III cases, the Respondents here do not having standing. The effect of the tax is very "uncertain, hypothetical, or speculative," to use the words of this Court, with respect to them. They cannot demonstrate that they are affected by it. And as --

JUSTICE GINSBURG: Mr. Olson, I had asked you the question, because I wanted to know whether this case was distinguishable from Flast in that regard, although I recognize your quotation from Valley Forge. That -- Flast seemed to be a case that fit that description, that there was no one who would have a better claim for injury, in fact.

MR. OLSON: Well, nonetheless, the Court made that distinction in the Flast case with respect to the Establishment Clause, and, specifically, the spending and taxing powers exercised by Congress. And the Court determined, in that case, that the Establishment Clause was a specific limitation on spending authority. The Court has been very careful, and many Justices of this Court, individually, have said that that distinction in that case will not be extended beyond the Establishment Clause, in the context of spending, in connection with a religious conviction, or the establishment of a religion. The Court has indicated, frequently, I think, that that is not going to be extended.

At any rate, it wouldn't be extended -- the logic of Flast wouldn't be applicable here anyway. This is not an application of the spending power by Congress or the taxing power by Congress. This is the Commerce Clause, which is a permissive grant of authority to Congress, and, at most, under the Dormant Commerce Clause, a limitation on the States.

These respondents are not remotely close to what this Court has said are the irreducible minimums. Even if they --

CHIEF JUSTICE ROBERTS: With respect to the claims that are before us. But there was standing below for the municipal taxpayers with respect to their challenge to the property taxes.

MR. OLSON: We believed, at the time, that there was standing with respect to the property taxes - - the municipal taxpayers, with respect to the property taxes. That was the --

CHIEF JUSTICE ROBERTS: Right.

MR. OLSON: -- basis for the --

CHIEF JUSTICE ROBERTS: So, why isn't -- these -- why aren't the present claims brought under -- you know, within the same nucleus of operative facts, the same sort of supplemental jurisdiction that allows the Federal Court to consider purely State law claims if they have jurisdiction of another related Federal claim?

MR. OLSON: The Court has never treated Article III standing that way, Mr. Chief Justice. The Court has said, "a standing is not dispensed in gross" -- that was the Lewis versus Casey case -- that standing has to looked at -- be looked at individually with respect to the claim. Furthermore, this -- there was not an identical nucleus of facts. I mean, it is a -- the property tax exemption was issued pursuant to a contract between the company here, DaimlerChrysler, and the City of Toledo. The State tax --

CHIEF JUSTICE ROBERTS: But just to get -- I mean, you don't dispute the standing of the municipal taxpayers on the property tax issue?

MR. OLSON: We did not, and do not. Now, I -- there may be arguments that might be made, that are not before this Court, with respect to the whole idea of --

CHIEF JUSTICE ROBERTS: Well, if it's an Article III issue, I think that's always before us.

MR. OLSON: Well, with respect to the municipal taxpayers and the -- and whether there would be standing to challenge the property tax exemption. That's not an issue that has been briefed here. It's --

CHIEF JUSTICE ROBERTS: Well, I was thinking if your -- if the argument is that the claims that you're concerned about today can be piggybacked onto the other ones, then we do have to consider whether there's a pig to piggyback them onto.

MR. OLSON: Yes. But that would require a rather significant change in the Court's Article III standing jurisprudence. It would, furthermore, allow the tail to wag the dog, the exception to swallow the rule. If anybody could bring any kind of a case at all, then all manner of cases of -- with -- for which the Court had no jurisdiction at all could be along with them.

JUSTICE SCALIA: In any case, it's clear that that -- that that entity no longer has standing, isn't it?

MR. OLSON: No, the -- there's a separate entity, called Kim's Auto. That --

JUSTICE SCALIA: Yes.

MR. OLSON: -- that entity no longer has standing. There are still property taxpayers, but that --

JUSTICE SCALIA: But they don't --

MR. OLSON: -- that's cause --

JUSTICE SCALIA: But they don't -- I mean, I thought the assumption here is that they don't have standing. The --

MR. OLSON: The --

JUSTICE SCALIA: The former standing of Kim's Auto cannot allow this suit to proceed, under any theory --

MR. OLSON: That's --

JUSTICE SCALIA: -- can it?

MR. OLSON: That's --

JUSTICE SCALIA: Don't you have to have standing during the entire --

MR. OLSON: That's --

JUSTICE SCALIA: -- process --

MR. OLSON: That's absolutely correct. But the Chief Justice was asking me about the municipal property taxpayers with respect to the claim concerning the property tax exemption. Those plaintiffs -- respondents are still in the case. That's not Kim's Auto.

JUSTICE SCALIA: Yes, but the only person who could give them standing, even by this associational theory, is gone.

MR. OLSON: No, there are -- there are still property tax -- some of the respondents that are still in the case are property taxpayers. Kim's Auto --

JUSTICE SCALIA: But --

MR. OLSON: -- wasn't the only one.

JUSTICE SCALIA: But they are not property taxpayers who have standing under any -- under the argument that you've just made.

MR. OLSON: With respect to --

JUSTICE SCALIA: The only property-tax individual who had standing was somebody whose land had been condemned. None of these other people in it have had their land condemned --

MR. OLSON: In --

JUSTICE SCALIA: -- have they?

MR. OLSON: In fairness, Justice Scalia, I think that there are other respondents who claim to be property taxpayers in the City of Toledo, aside from Kim's Auto.

JUSTICE SCALIA: Whose land has been condemned.

MR. OLSON: No. They are -- they are complaining about the --

JUSTICE SCALIA: Well, but --

MR. OLSON: -- property tax --

JUSTICE SCALIA: -- but you say that a property taxowner, simply by being -- simply by being subject to the property tax, does not having standing. Isn't that your position?

MR. OLSON: No, we're saying -- we -- the property -- under this Court's jurisprudence, municipal taxpayers have been permitted, under some circumstances, to challenge municipal actions, irrespective of the imminent domain proceeding. So, there is that separate issue that's in the case.

If I might, I would like to spend a moment or two with respect to the merits of this case, because it is a very important issue.

Nearly every State in the United States has some sort of incentive program. This -- with respect to the location of businesses or the drawing of businesses within the State, which is --

JUSTICE GINSBURG: Mr. Olson, I don't mean to deflect you from getting on to the merits, but there was one point in your brief that was of concern to me. That is, you said that you questioned whether, assuming we accept your argument on standing, it would be appropriate to return this case to the Court of Appeals with instructions that it be remanded to the State Court and with the counsel fees that 1447 entitle one to. And you said that would not be right.

MR. OLSON: No. We believe that the case was properly removed, and, therefore, there's not counsel fees with respect to the removal statute; that the proper resolution would be to vacate the Sixth Circuit decision and then remand to the District Court for a dismissal because of lack of standing, or the Court -- this Court hasn't resolved whether it would be a dismissal or a remand to the -- to the State Court. We don't believe that there would be standing under State Court taxpayer or State -- Ohio jurisprudence, either.

If I may, Mr. Chief Justice, I'd like to reserve the balance of my time.

CHIEF JUSTICE ROBERTS: Thank you, Counsel.

Mr. Cole.

ORAL ARGUMENT OF DOUGLAS R. COLE

ON BEHALF OF PETITIONERS IN 04-1724 MR. COLE:

Mr. Chief Justice, may it please the Court:

We agree with DaimlerChrysler's position, both as to standing and as to the merits. The Respondents' grievance as taxpayers, the sole standing argument they press here, is a textbook example of the generalized public grievance that the Court has repeatedly rejected as a basis for -- or for standing. Respondents' only claimed taxpayer harm is their assertion that the State fist loses money as a result of the investment tax credit.

CHIEF JUSTICE ROBERTS: Do they have standing in State Court?

MR. COLE: Your Honor, we do not believe that they have standing in State Court, either. Ohio has a taxpayer standing doctrine much like the Federal taxpayer standing doctrine. They would need to show some unique harm separable to them. I believe the language is that they would have to show that they contribute to a special fund. And that's out of a case called Masterson, in Ohio. There is a separate Sheward case that the Respondents cite in, I believe, footnote 5 of their brief. We don't believe that this falls within the Sheward exception to standing, in Ohio. There's a certain exception that allows certain cases of great public importance to go directly to the Supreme Court, but we do not believe that --

CHIEF JUSTICE ROBERTS: So --

MR. COLE: -- this would fall within that.

CHIEF JUSTICE ROBERTS: And what about the municipal taxpayers on the property tax claim that we were talking about earlier?

MR. COLE: Yes, Your Honor --

CHIEF JUSTICE ROBERTS: Do they have standing?

MR. COLE: Yes. And I wanted to respond a little bit to Justice Scalia's point. I think what they're trying to claim is, because they have municipal taxpayer standing to challenge the property tax exemption, that that somehow allows them, then, to sweep in their challenge to the investment tax credit, as well. We don't dispute that they have municipal taxpayer standing to challenge the property tax exemption. We do, however, dispute whether or not that gives them standing to also challenge the ITC.

JUSTICE GINSBURG: And that's because it's a local -- it's a Toledo city property tax, is that the distinction you're making?

MR. COLE: Well, the property tax exemption is a State tax program, Your Honor, but it requires action by local city leaders --

JUSTICE GINSBURG: So, that's --

MR. COLE: -- to --

JUSTICE GINSBURG: You would be challenging the local action --

MR. COLE: It --

JUSTICE GINSBURG: -- rather than the State --

MR. COLE: It --

JUSTICE GINSBURG: -- action, and that's how you distinguish the municipal taxpayer.

MR. COLE: In a sense, that's right, Your Honor. This Court has noted that the relationship between a municipal citizen and a municipal corporation is akin to between a shareholder and a corporation, generally, and that, in some instances, that will allow the municipal citizens to challenge the actions of their municipal leaders, in a sense. This property tax exemption involves that type of action. It would, in a sense, be a challenge to that, and, I think, cognizable under the Court's municipal taxpayer --

CHIEF JUSTICE ROBERTS: So, a tax -- just -- so, a taxpayer in Wyoming can't challenge a State tax, because his claim is too diffuse, but a resident in New York City can challenge the city tax, because it's not.

MR. COLE: Your Honor, when looked at from a numerical basis, I agree that the distinction might not seem to carry a lot of weight. The Court, however, has not looked at it in terms of numbers, it has looked at it in terms of the, quote, "special relationship" that arises between a municipal citizen and a -- and a corporation. And presumably that special relationship exists independent of the size of the municipality.

But, in any event, whether or not they have municipal taxpayer standing to challenge the property tax exemption, there's no way to somehow grow that into standing to challenge the separate enactment by the Ohio General Assembly.

JUSTICE SCALIA: There's also a redressability problem, too, isn't there? I mean, assuming they could, is there any -- would action against the Assembly eliminate their tax?

MR. COLE: It wouldn't, Your Honor, although --

JUSTICE SCALIA: No?

MR. COLE: -- I think it puts a point on the problem with, in a sense, trying to grow standing. You asked, Would it redress? And I guess the question is, Redress what? I mean, they don't have any separate harm associated with the investment tax credit that's constitutionality cognizable.

JUSTICE GINSBURG: There are some -- at least it's arguable that there's Federal municipal taxpayer standing. And certainly some States have said that there is. And that -- and whatever Ohio might or might do is not relevant to this proceeding. We don't know that. I'm -- you've given your opinion on what it would be.

MR. COLE: Well, that's correct, Your Honor, but, still, there needs to be some way to grow the municipal taxpayer standing into --

JUSTICE GINSBURG: Well, that's a --

MR. COLE: -- standing to --

JUSTICE GINSBURG: -- that's the piggybacking question. That's quite different. And --

MR. COLE: Right. Exactly, Your Honor. And my only suggestion was that, even if there is municipal taxpayer standing to challenge a property tax exemption, which we've conceded below, that doesn't somehow confer standing to challenge of separate enactment by Ohio's General Assembly. Respondents, in their brief, talk about this notion of ancillary standing, but that -- the case they cited -- and they -- principally, they talk about the Flast case, where, in addition to considering the Establishment Clause challenge, the Court also, in a footnote, mentioned the free-exercise challenge and the question of whether there would be separate standing for that.

But there, in the Flast case, it was a situation where they were using two theories to attack the same legislative enactment. Here, they're trying to attack a statute which they haven't shown causes them any harm. And so, the case is -- the challenge that they are bringing is, in a sense, an abstract challenge. It isn't one that's in a -- in a form that's judicially cognizable. That's why this ancillary standing theory, which would represent a dramatic expansion of the Court's Article III jurisprudence, would not be a sound constitutional interpretation. It would allow the Court to interject itself into disputes where there's no injury to any -- no concrete injury to any specifically identified plaintiff.

Article III's case for a controversy requirement is supposed to ensure that when the Court takes action, it takes action in the context of a particular concrete harm, and it can do its legal analysis against the backdrop of this plaintiff who's been harmed in this manner. These plaintiffs can't meet that. They haven't shown any harm to themselves, any judicially cognizable harm, under Article III.

If I could, for a moment, Your Honors, I'd also like to turn to the merits, briefly, of the Respondents' claim.

We believe Respondents' claim also fails on the merits of the Dormant Commerce Clause. Ohio provides a benefit for those who invest in the State; but Respondents have not, and cannot, identify any burden that the ITC places on interstate commerce. Absent that burden, their Dormant Commerce Clause claim fails.

JUSTICE BREYER: On the merits, I think that their claim is -- take company A and company B. Both are located in Toledo, both hire a certain number of people, have a certain payroll, have a certain amount of property, and have a certain amount of business. Identical. And they're charged a tax. And now, what -- company B, when it's thinking of building a new plant or make new investment in machinery, if it goes to Wisconsin, it will discover it pays less taxes on all those things that were already in Ohio. And, therefore, the people who sell land or machinery in Wisconsin are discovering it isn't being bought, because that old tax, which really had nothing to do with this new investment, is now less because of the new investment. So, that hurts businesses in Wisconsin.

As I understand it, that's their claim. And if I've got it wrong, I'm sure you'll correct me.

MR. COLE: Well, I don't think that -- that's not the way that I understand their --

JUSTICE BREYER: All right.

MR. COLE: -- claim, Your Honor.

JUSTICE BREYER: Well, then I'm probably wrong.

[Laughter.]

MR. COLE: I understand their claim -- I understand their claim more to be that two identically situated businesses, if -- both have the same tax bill --one builds a new facility in Ohio, one builds a new facility in Wisconsin. The one who builds the new facility in Ohio is going to have a lower tax bill than the one who builds the new facility in Wisconsin.

JUSTICE BREYER: So, that -- that is true, and then the effect of that is that firms that now do business in Ohio won't build their new facility in Wisconsin, because they like the lower tax bill in Ohio. And that hurts businesses and others in Wisconsin.

MR. COLE: Your --

JUSTICE BREYER: You were saying they have no harm? I think they're pointing to that harm.

MR. COLE: Well, Your Honor, first, I'd note that's not a harm that they face, of course, going back to --

JUSTICE BREYER: Well, what is the harm --

MR. COLE: -- standing issue, but --

JUSTICE BREYER: -- they think -- well, they can tell me. All right.

MR. COLE: Yes. But --

[Laughter.]

MR. COLE: -- separately, Your Honor, I think what -- in this Court's Dormant Commerce Clause jurisprudence, when the Court has talked about "burden," in the past, the Court has talked about the situation where activity out of State is somehow assessed a tax. That is, the tax in State A goes up as a result of activities in State B. The Westinghouse case is a perfect example. There, there was a New York tax that increased for each export transaction that occurred outside the State. In a sense, New York was exporting the tax burden to activities that existed in some other State. And that's the sense in which the Court has used the word "burden" in its past cases, not this more amorphous sense that Plaintiffs -- or Respondents are pushing here.

JUSTICE GINSBURG: There isn't -- the tax credit doesn't give them -- require them to buy, in State. I mean, the purchase -- whatever they equip the plant with can come from vendors and manufacturers, out of State?

MR. COLE: That's absolutely right, Your Honor. There's no limit on where the taxpayer purchases the equipment they install in the State. There's no limit -- no effect on where the goods from the factory go. There's no limit on who you can hire to work in the factory, or where they come from.

JUSTICE SCALIA: And the credit's available to out-of-State companies.

MR. COLE: Absolutely, Your Honor. The credit is available independent of whether you already have a presence in Ohio, whether you've never had a presence in Ohio, whether you've never even paid taxes in Ohio before. Certainly, if you invested in the State, you're now going to have a corporate franchise tax bill, and the credit would be useful to you at that point. But you could have had no pre-existing relationship with the State at all, as a taxpayer, and still take advantage of this tax credit. It's equally available to all comers.

The only question is, What do you do in the State of Ohio? Do you invest money in the State of Ohio? And the credit turns on the amount of that activity in Ohio. If DaimlerChrysler establishes a new plant in Missouri or Montana or California, it, in no way, impacts the credit that they receive in Ohio. They're not deprived of that credit. It doesn't become of a -- of a lower value because of their decision to invest elsewhere.

And so, under this Court's --

CHIEF JUSTICE ROBERTS: Well, but it would be of higher value if they invest it in Ohio. I mean, that's all --

MR. COLE: Interestingly, Your Honor, it --

CHIEF JUSTICE ROBERTS: Presumably, the Ohio legislators were not doing this irrationally.

MR. COLE: I would -- I would hope not, Your Honor. I mean, I think the sense is that it increases investment in Ohio. And that's what this Court has called a "laudable goal" of State economic policy, is to try to increase investment within the State to benefit the citizens of the State. Certainly, that's --

CHIEF JUSTICE ROBERTS: That -- in some sense, at the expense of the citizens in other States.

MR. COLE: I don't know, Your Honor. A couple of responses to that. First, to the extent this spurs investment that otherwise would not have taken place anywhere else, of course that's just positive sum. That's new economic development that wouldn't have occurred, but for this incentive, or incentives like it.

Of course, at some level there's going to be competition for where these manufacturing facilities are located. But, again, this Court has noted that competition among the States for their share -- or their fair share of interstate commerce is not, in and of itself, a Commerce Clause problem. The question is only when that competition becomes discriminatory in some way. And what the Court has meant by "discriminatory" is, Does it somehow tax your decision to be somewhere else? When you decide to be in Missouri, does that increase your Ohio tax bill over what it would otherwise be?

Camps Newfound, perfect example. You decide that you're going to serve an interstate clientele, your tax bill goes up above what it would be if you didn't serve an interstate clientele. And Ohio's tax credit doesn't have that characteristic that the Court has found so troubling.

In fact, looking back through the Court's cases, over and over again this notion of burden comes up, and -- whereby, "burden," it means "imposing taxes on the business of other State," all the way back to Guy versus Baltimore, "You can't build up your commerce by means of an -- unequal and oppressive burdens upon the industry and business of other States."

So, certainly if Ohio were attempting to tax DaimlerChrysler, or treat DaimlerChrysler worse because it had put a plant in Missouri, that would create a Dormant Commerce Clause question. But here, there's simply nothing like that. In fact, Respondents' theory would dramatically expand this Court's Dormant Commerce Clause jurisprudence, and would strike down a whole swath of State laws that have engendered substantial investment-backed expectation at this point. Billions of dollars have been invested by thousands of companies in reliance on various forms of locational credits, whether it be job incentive credits, whether it be investment tax credits, whether it be environmental cleanup credits. All of those credits would be at risk under the theory that Plaintiffs espouse.

Your Honors, this Court has more than once noted that the Commerce Clause demands that the States must sink or swim together, but it has never suggested that the States must be indifferent between those two options. Frankly, Your Honor, the States would prefer to swim. ITCs like Ohio's help the States keep their economies afloat.

Respondents disagree with this, as a policy matter, but that debate belongs in Ohio's statehouse, not here. The ITC is not protectionist, and it imposes no burden on interstate commerce. And, thus, it does not violate the Dormant Commerce Clause.

Ohio respectfully urges the Court to reverse the decision below or, in the alternative, to vacate the decision for lack of standing.

JUSTICE STEVENS: May I ask this question? Would the case be any different if, instead of a tax credit, they offered a cash subsidy?

MR. COLE: Your Honor, I don't actually think it would be any different, in the sense that neither one of those two would violate the Dormant Commerce Clause. Of course, this Court has noted, in various cases, albeit in dicta, that subsidies ordinarily do not run afoul of the Dormant Commerce Clause. I think this tax credit ends up having the same economic impact. And, for all the reasons I stated about a lack of burden, even if some tax credits that might be like subsidies could create a Dormant Commerce Clause problem, this tax credit does not. It imposes no burden on out-of-State activities.

Thank you.

CHIEF JUSTICE ROBERTS: Thank you, Mr. Cole.

Mr. Enrich.

ORAL ARGUMENT OF PETER ENRICH

ON BEHALF OF THE RESPONDENTS

MR. ENRICH: Mr. Chief Justice, and may it please the Court:

I'd like to begin with the question of standing, and then turn to the Commerce Clause merits.

Let me begin at the point where Petitioners and Respondents agree on the question of standing. The original lawsuit brought by Respondents in the Ohio State Court raised two claims, one challenging the investment tax credit that's before this Court today, the other challenging the property tax exemption. The point on which Petitioners and Respondents agree is that Respondents do have standing, in their status as municipal taxpayers, to bring their challenge to the property tax exemption. And, indeed, the District Court agreed and found that there was standing, in the District Court's judgment, to reach both parts of the case on the basis of the Respondents' municipal taxpayer standing.

JUSTICE GINSBURG: Is there any --

CHIEF JUSTICE ROBERTS: What was --

JUSTICE GINSBURG: Is there any authority at all for saying you can piggyback the basic case or controversy requirement? I mean, it's one thing to say you can hook a nondiverse claim, but it's a claim; it's a case or controversy. I'm -- I don't know of any authority that says that you can -- you can take a matter that is not a constitutional case or controversy and latch it onto something that does qualify.

MR. ENRICH: Justice Ginsburg, there are two reasons why we believe that there is such a basis. First, there are cases -- one case in this Court, in Flast v. Cohen, where the Court has found that standing to raise one claim extended, as well, to raise, in that case, a free-exercise claim. There are a number of such cases in the Courts of Appeals. Wright and Miller has recognized a concept of what they refer to as "ancillary standing" on that basis.

But the second point that we think is perhaps more important is, once there is one claim in the case that satisfies the Article III "case and controversy" requirement, then there is a case or controversy here. The question that then faces this Court is, How far should it reach in addressing the other claims which are part of that very same case or controversy?

JUSTICE GINSBURG: I think it was pointed out that, in Flast, at least, you were dealing with the same spending on the part of the Federal Government. Here, you have apples and oranges. The property tax is quite discrete from the investment tax credit.

MR. ENRICH: That is true, Your Honor. And in at least some of the Circuit Court cases, they have reached a second claim where the -- where a different part of the same transaction was being attacked. The Sierra Club case that we cite in our brief is one good example of that.

In the present case, the two issues that we challenge both arise out of the very same transaction, out of a deal that was entered into between the City of Toledo and DaimlerChrysler --

CHIEF JUSTICE ROBERTS: Can I back you up just a bit before we talk about piggybacking? This Court hasn't held that municipal taxpayers have standing in this sort of situation, have they?

MR. ENRICH: No, this Court has not ever had to address the question of municipal taxpayer standing, except in Establishment Clause contexts.

CHIEF JUSTICE ROBERTS: So, if you want us to piggyback, we -- and if it is an Article III question - - we would have to decide that issue before we can decide whether we can piggyback your current claims onto it.

MR. ENRICH: Mr. Chief Justice, you would at least have to decide the question of whether municipal taxpayer standing was -- satisfied the Article III requirements under your standing doctrines. If you found that it satisfied the Article III requirements, then that would suffice to bring this case or controversy past the Article III threshold --

CHIEF JUSTICE ROBERTS: Right. And you agree that the --

MR. ENRICH: -- bring us to prudential threshold.

CHIEF JUSTICE ROBERTS: And you agree that the municipal taxpayer standing on the property tax question is an open issue before this Court. We have not had a holding on that.

MR. ENRICH: That's absolutely correct, Your Honor. We would suggest that, in keeping with the consistent holdings of every Circuit Court that has addressed this topic, it would make sense for this Court to acknowledge municipal taxpayer standing, or, at the very least, to acknowledge that the obstacles, any obstacles to municipal taxpayer standing, are prudential obstacles, rather than Article III obstacles.

There are actually other reasons why we believe the Article III barrier is crossed. We believe that this case -- that, as Judge Posner wrote in a recent opinion that we referenced in a letter to the Court -- it came out after our brief was filed -- in his analysis of the taxpayer standing cases, he concluded that the Court's burden on taxpayer standing was based on prudential, not on constitutional grounds. We believe his analysis is correct.

Once this becomes a question of the prudential standards, we believe that the very particular factual history of this case provides ample reason for the Court to find that there should be standing in this particular case to reach the investment tax-credit claim.

Respondents brought this case in the Ohio State Courts largely out of a recognition that the standards for standing were different in the State and Federal Courts in this area. In fact, if Petitioners felt that we didn't have standing in Ohio, perhaps the wisest strategy for them would have been to oppose standing there. But, instead, they chose to remove the case to the Federal Court. And there, we requested that the case be remanded to the State Courts, because we identified to the District Court the risk, that if the Federal Court kept the case, we might find ourselves, years later, before a higher court that might say, "But you don't have standing," and require us to go back and begin all over in the State Courts.

Petitioners, at that time, argued that, in fact, we did have standing. And the District Court so held. And then Petitioners have not again raised the question of standing until before this Court.

JUSTICE BREYER: Have you found any other instance in which -- any case -- there was a absolute lack of standing, prudential standing, but the Court waived that, because it was prudential and not constitutional?

MR. ENRICH: Yes, Justice Breyer.

JUSTICE BREYER: Which one?

MR. ENRICH: In Craig v. Boren, this is exactly what the -- this Court did. There, the one plaintiff who provided standing for a sex discrimination claim no longer had standing by the time the case was adjudicated. The plaintiff who ultimately had standing to keep the case going was one who, although she suffered an actual injury, was not -- was asserting third-party rights, and so, did not satisfy prudential standing requirements.

JUSTICE KENNEDY: Did the case use the phrase "capable of repetition and evading review," or -- which is a mootness --

MR. ENRICH: I actually --

JUSTICE KENNEDY: I just have to read Craig --

MR. ENRICH: -- don't believe that --

JUSTICE KENNEDY: -- on the --

MR. ENRICH: -- they did use that concept in Craig. I think that's a concept that has come into this Court's jurisprudence more frequently in later days --

JUSTICE GINSBURG: The problem in Craig, with the name plaintiff, is, it wasn't a class action, an 18-year-old sent to turn 21 in the fullness of time. But I didn't understand your answer about the beer seller whose standing saved the case, at least in the view of the majority of this Court. She had a real pocketbook injury. She was not able to sell her beer to the thirsty boys. So --

[Laughter.]

JUSTICE GINSBURG: -- I don't understand why that's an example of a loose standing connection. I mean, she surely had an -- a pocketbook injury. True, she was complaining about a denial of equal protection to the fraternity brothers, but that she had an injury, in fact, there was no doubt.

MR. ENRICH: Justice Ginsburg, the premise behind our argument is that the Article III hurdle is cleared on other grounds, on grounds that I've already discussed and we can certainly reiterate. The question then becomes -- on prudential grounds. And that is the issue that was presented in Craig, that she had a direct injury, but she was in -- she did not satisfy the prudential standards because she was asserting third-party rights. And what this Court there held was, because the parties had adjudicated the issue below without objecting about standing, that the Court would proceed to the merits.

JUSTICE GINSBURG: There was no lack of standing below. The problem was that the -- Craig turned 21 while the case was pending in this Court. There was standing below. He was 18 when the litigation started.

MR. ENRICH: Yes, Your Honor, that -- and, similarly, we believe that there was standing, and still is standing, for the Plaintiffs to be in this Court on Article III grounds because of the continuing pendency of our challenge to the property tax exemption as municipal taxpayers. We --

JUSTICE SCALIA: Counsel, could I ask about the ancillary doctrine? You say the case you cite to establish it is Flast versus Cohen. Was the doctrine discussed in Flast versus Cohen, or are you relying simply on the fact that Flast versus Cohen involved both an Establishment Clause and a free-exercise challenge, and the Court only discussed the Establishment Clause challenge?

MR. ENRICH: No, Justice Scalia, in a footnote in Flast, the Court specifically says, "Having now decided that there's Establishment Clause standing, we can also reach the free-exercise question without discussing whether there would be" --

JUSTICE SCALIA: Okay. I --

MR. ENRICH: -- "independent standing" --

JUSTICE SCALIA: -- I had not --

MR. ENRICH: -- "for that" --

JUSTICE SCALIA: -- recollected that footnote. I will -- I will find it. I don't read footnotes, normally.

[Laughter.]

JUSTICE GINSBURG: In any event, they were attacking the same thing. So, your case is different, at least to that extent, that you have two discrete taxes.

MR. ENRICH: It is, indeed, Your Honor. We acknowledge that, although, again, as I say, in some of the lower court cases there have been challenges where the claim that the plaintiffs did not have standing with regard to was challenging a different outcome in the same transaction or occurrence. The specific example was a challenge to an environmental impact statement, where the plaintiffs had standing to challenge certain elements, but did not have standing to challenge the potential -- the failure of this impact statement to consider impacts on indigenous tribes. And the District -- the District of Columbia Circuit held that they did have standing, based on their other standing claims, to reach that claim, as well.

If I can turn, Your Honors, to the merits, if Ohio were to impose an income tax on those corporations which did their manufacturing outside of the State of Ohio, but not to impose that tax on those businesses which did their manufacturing inside of Ohio, there's no question that such attacks would violate the Commerce Clause by facially discriminating in favor of in-State business activity. It would be a tariff, by any other name.

JUSTICE SCALIA: What about the fact that a State has a lower income tax or a lower property tax than any other State in the Union? Does that violate the Commerce Clause because it induces businesses to --

MR. ENRICH: No, Your Honor, we are not suggesting that any tax measure gives an -- which encourages businesses to locate in the jurisdiction, poses a Commerce Clause problem. A Commerce Clause --

JUSTICE SOUTER: What's --

MR. ENRICH: -- problem --

JUSTICE SOUTER: What's the difference?

MR. ENRICH: A Commerce Clause problem, Your Honor, is posed only when the provision provides a benefit which is specifically distinguished and provided to in-State activity but not provided --

JUSTICE SOUTER: But that's the case --

MR. ENRICH: -- to out-of-State --

JUSTICE SOUTER: That's the case --

MR. ENRICH: -- activity.

JUSTICE SOUTER: -- in the tax example. I mean, the taxes are apportioned. The part of the tax -- or the business that would be taxable in the State gets taxed at a lower rate. Businesses say, "Gee, let's do more business in Ohio and pay less taxes." In this case, they're getting, effectively, taxed at a lower rate, because they make an investment in Ohio.

MR. ENRICH: But, Your Honor, in this case, the only ones who are getting the lower effective tax rate are those who locate their manufacturing activity in the State.

JUSTICE SOUTER: Well, I --

MR. ENRICH: They --

JUSTICE SCALIA: The only one who gets the advantage of the lower -- the lower income tax rate and the lower property tax rate is someone who is located in the State. It's exactly the same.

MR. ENRICH: Well, I'm -- in the case of a lower income tax rate, Your Honor -- it's a different situation for the lower property tax rate, but take the lower income tax rate first -- the lower income tax rate will reduce the tax burden on all businesses, wherever their manufacturing capacity is located, who have a taxable business presence in Ohio. There is no discrimination based on where they locate any activity. If they locate new activity in Ohio, more of their income will be subjected to that lower rate of tax, but that is not discriminating between two businesses, based on where they locate their activity.

JUSTICE SCALIA: I told you, you have to locate -- you'd have to locate in the low-tax State to get advantage of the low -- of the low tax.

MR. ENRICH: That's not true, Your Honor. The way that corporate income taxes work, they look at a tax -- an apportioned share of the worldwide income of the business.

CHIEF JUSTICE ROBERTS: Well, then all the -- but all you're saying -- but you have to do business in the State with the lower income tax rate to get the advantage of the lower rate.

MR. ENRICH: Yes. If you're not doing business in the State, then you will not pay any tax.

CHIEF JUSTICE ROBERTS: Well, that --

MR. ENRICH: If --

CHIEF JUSTICE ROBERTS: -- would seem to present the same Commerce Clause problem that you're posing for us today.

MR. ENRICH: Well, Your Honor, a business that doesn't have a business presence in the State of Ohio will not pay any Ohio tax. It is not subject to any burden. It is not discriminated against in any way. That's the same situation for the property tax.

JUSTICE SCALIA: Likewise, a business that does not locate in Ohio is not subject to the -- to the higher Ohio tax, which has been reduced for them.

MR. ENRICH: Yes, Your Honor. The --

JUSTICE SCALIA: I mean, they're --

MR. ENRICH: -- discrimination --

JUSTICE SCALIA: -- they're exempt from it entirely, which is even better, I suppose.

MR. ENRICH: Yes, Your Honor. The discrimination here is not between those businesses which are not present at all in Ohio and those which are doing their manufacturing in Ohio, the discrimination is between those who are doing business in Ohio, but not locating their new manufacturing activity in Ohio, and those who do business in Ohio, but do locate their new manufacturing activity. This is the same situation that the Court has confronted over and over again. In Boston Stock, the discrimination only affected those purchasers or sellers of stock where the transactions had sufficient nexus with New York to be subject to New York's tax. The problem was that, of that universe of transactions, the ones where the sale was made on a New York exchange were subjected to a lower rate of tax than the ones that were transacted on an out-of-State exchange.

JUSTICE SCALIA: Was the legislation that established this tax benefit -- was it controversial? Were there those who opposed it as a giveaway to --

MR. ENRICH: Your Honor, the record does not disclose what the political context was in Ohio at the time that --

JUSTICE SCALIA: Well, they --

MR. ENRICH: -- that this was enacted.

JUSTICE SCALIA: I have -- I will take judicial cognizance of the fact that such proposals are sometimes politically controversial. Isn't that the place to fight out this thing? Isn't your basic objection here that you don't agree that a State should give tax credits to business, and that's something that, you know, is in the political arena, and let the people fight it out?

MR. ENRICH: Justice Scalia, our objection --

JUSTICE SCALIA: Why should that be an issue that a court should decide?

MR. ENRICH: -- our objection is that when States use discriminatory tax measures as a way to provide tax benefits to those businesses that locate in the jurisdiction, that it leads to a competition between the States that ends up hurting taxpayers, like Respondents here, by reducing the ability of the States to generate tax revenues from business.

JUSTICE SOUTER: Yes, but what you call --

MR. ENRICH: This Court has --

JUSTICE SOUTER: -- what you call discrimination is any differential. In fact, in this case, the effective tax differential is a quid pro quo for an investment. And, basically, your argument boils down to saying that there's discrimination whenever the State offers a quid pro quo for an advantage and somebody decides not to take advantage of it.

MR. ENRICH: Your Honor --

JUSTICE SOUTER: That's not discrimination. That is simply the effect of a free choice, and any business is free to make that choice.

MR. ENRICH: Your Honor, we would suggest that that is exactly the situation in many of the cases that this Court has previously struck down as facially discriminatory tax provisions. In Bacchus Imports, anyone could move to Hawaii and produce pineapple wine and receive the benefit of the tax exemption. In Boston Stock, anyone could make their transactions on the New York exchanges, rather than an out-of-State exchange, and get the benefit of the lower rate.

What this Court has consistently said is, when the benefit that is given is -- takes the form of a credit, an exemption, a reduction in a tax which applies to out-of-State businesses, transactions, and activities, that that constitutes the kind of discrimination --

JUSTICE SOUTER: Oh.

MR. ENRICH: -- that the Commerce Clause forbids.

JUSTICE SOUTER: I could -- I could see your argument, if, for example, in the tax exchange case, there was not taxation being made of the out-of-State transactions. But that was the case in --

MR. ENRICH: Yes. And --

JUSTICE SOUTER: -- the tax. And there is -- there's no such parallel here.

MR. ENRICH: Yes, Your Honor, there is a very precise parallel here. The corporate income tax imposed by Ohio applies to any business that transacts business in Ohio, whether or not it has manufacturing presence.

JUSTICE STEVENS: May I ask you the same question I asked your adversary? Suppose, instead of a tax credit, they said, "We'll pay for the construction cost of a building, or we'll give you a piece of real estate, in order to get you to come in. Part of big redevelopment progress" --

MR. ENRICH: Yes.

JUSTICE STEVENS: -- "program, we would give you this parcel of real estate." Would that also be subject to the same analysis?

MR. ENRICH: No, Your Honor, it would not. As this Court has suggested, as far back as Hughes v. Alexandria Scrap, when the State is essentially acting as a participant in the market, deploying its own resources --

JUSTICE STEVENS: No, they wouldn't be acting -- other than the one transaction, "We'll give you one particular benefit in this new development progress -- project, with no further participation as a market participant or anything like that," that would -- it seems to me that would fit right into your analysis.

MR. ENRICH: Well, in terms of its economic effect, it would, Your Honor, but this Court, in cases like Camps Newfoundland, has recognized a significant distinction between cash subsidies, on the one hand, and tax benefits, on the other, largely because the tax that is reduced is a tax which does involve an exercise of what this Court has called "a primeval governmental activity," and constitutes a kind of regulation which brings it within the scope of the Dormant Commerce Clause; whereas, in -- ordinarily, a direct subsidy paid out of the general funds of the State does not involve any such regulatory impact on interstate commerce.

JUSTICE STEVENS: But in terms of discrimination and economic impact, they really are the same, right?

MR. ENRICH: Yes, Your Honor. In fact, there's a wide, wide continuum. At the one end, there is the standard -- the pure tariff. On the other end, there is providing training for workers or infrastructure for a plant. This Court has clearly recognized that tariffs are unconstitutional. There is no suggestion that providing training or infrastructure would be. All of those have the same economic effect.

JUSTICE SCALIA: Yes, but they're -- what our opinions hold are that there are some matters of producing the same result as a cash subsidy --

MR. ENRICH: Yes.

JUSTICE SCALIA: -- that are no good, but there are other matters that are perfectly okay.

MR. ENRICH: That --

JUSTICE SCALIA: And the mere fact that it has the same effect as a cash subsidy is not a problem, as far as the Commerce Clause is concerned. And what you're arguing here is, the mere fact that it has that effect of favoring businesses that choose to locate in Ohio is what makes it bad, not the fact that it's relieving, from a tax that applies to both in-State and out-of-State businesses, only in-State business. That's -- that was the Hawaii case, and all the other cases you cite. But what -- your argument here is that the mere fact of providing a subsidy violates the Commerce Clause. And I don't know --

MR. ENRICH: No, Your Honor --

JUSTICE SCALIA: -- any case --

MR. ENRICH: -- what we're suggesting is that a measure which has the identical effect, and is structured very much like a provision which applies a tax to those businesses who engage in out-of-State activity, while excusing from tax those businesses that engage in in-State activity, is a tariff, by another name. And this provision, as --

JUSTICE SOUTER: Except the criterion is not mere in-State activity. The criterion is a particular in-State activity, an investment, as to which the credit is a quid pro quo. And the opportunity to make that investment is open to every business, presently in-State, presently out-of-State, no matter where domiciled.

MR. ENRICH: Yes, Your Honor. And, in that respect, this is no different than, for instance, the Westinghouse Electric case, which granted -- which struck down a grant of a credit against a corporate income tax that was available to any business that chose to locate some of its export activity in the State of New York. Again --

JUSTICE SCALIA: But that tax did apply to out-of-State businesses --

MR. ENRICH: It was --

JUSTICE SCALIA: -- and they got no reduction --

MR. ENRICH: It was exactly --

JUSTICE SCALIA: -- right?

MR. ENRICH: -- the same tax as the tax in question here, Your Honor. It was a corporate income tax apportioned on the basis of the ordinary three factors that Ohio uses, on the basis of where the company's sales are located, where the company's payroll is located, where the company's property is located. The two taxes, in Westinghouse and here, were identical. There were some small differences in exactly the way that the credit was structured, but the underlying taxes were, in all respects, identical.

The problem that the Court recognized in Westinghouse is that by giving a credit that was restricted to a particular kind of in-State activity, and not to its out-of-State counterpart, the State was effectively providing a benefit to in-State business and a burden on out-of-State business that constituted the functional equivalent of a tariff, and the Court struck it down. Now --

CHIEF JUSTICE ROBERTS: Some States -- Counsel, some States have homestead exemptions to property taxes for people when they're buying homes in the State. That -- those would be invalid under your theory?

MR. ENRICH: Your Honor, I don't believe that they would be. Again, a homesteader who buys a property in another State is not going to owe any tax to --

CHIEF JUSTICE ROBERTS: Yes, but that --

MR. ENRICH: -- Ohio.

CHIEF JUSTICE ROBERTS: -- that person may have another piece of property in the -- in the other State.

MR. ENRICH: But --

CHIEF JUSTICE ROBERTS: And he's not getting the benefit of this, because his homestead -- he lives somewhere else.

MR. ENRICH: Your Honor, we would suggest that the question is whether the tax scheme in question in the State whose provision is being challenged imposes differential burdens on two different entities based on where they locate some activity. In the case of the homestead exemption, the State offering the homestead exemption is not saying, "We'll tax you if you locate outside the State." Perhaps some other State is taxing them. But, again, this Court has repeatedly avoided judging the legitimacy of one State's tax by the question of what other States did.

CHIEF JUSTICE ROBERTS: But they're two identical cases of property, and they'll say -- one say, "You're going to be taxed at a lower rate if that's where you're living, if that's your homestead; but if you have to live outside the State, you're going to get taxed at a higher rate." It would seem to me very similar to what you're challenging here.

MR. ENRICH: Your Honor, maybe I'm not understanding your example. Are you imagining that the State that's offering the homestead exemption was imposing a tax on the property located outside the State?

CHIEF JUSTICE ROBERTS: No, it's imposing tax on property in the State at a higher rate if it's not the person's homestead; in other words, if they don't live in the State.

MR. ENRICH: Okay. So, that is a provision that, I think, does raise at least --

CHIEF JUSTICE ROBERTS: Yes.

MR. ENRICH: -- some questions. It's one where I think there are strong justifications outside of the effect on interstate commerce that very well might provide ample justification for it. It raises -- and the question on which we have asked this Court to grant cert about the property tax exemption raises precisely the question of what sorts of conditions on a property tax exemption do, and what sorts do not, constitute discrimination against interstate commerce. I would suggest that there would be ample opportunity to distinguish something like the homestead provision, which is directed at a quite different purpose than encouraging in-State economic activity from --

CHIEF JUSTICE ROBERTS: It's the same purpose. There's some place -- they want people to move in -- into the District here, for example, just like Ohio wants businesses to move in.

MR. ENRICH: I would suggest that the Commerce Clause is much more concerned with efforts to relocate businesses than with efforts to protect individuals from burdens of local property taxation.

JUSTICE SCALIA: A lot of money in building homes.

MR. ENRICH: That is true, Your Honor.

We would suggest that that raises a very different set of questions from the facially discriminatory distinction between out-of-State businesses who are subjected to the tax, in the case of the Ohio investment tax credit, and in-State businesses, which are excused from paying that same tax, which is, again, exactly what a tariff does, Your Honor.

CHIEF JUSTICE ROBERTS: Thank you, Counsel.

Mr. Olson, you have 4 minutes remaining.

REBUTTAL ARGUMENT OF THEODORE B. OLSON

ON BEHALF OF PETITIONERS IN 04-1704

MR. OLSON: Thank you, Mr. Chief Justice.

In the first place, this is Article III standing that we're talking about, not prudential considerations of standing, as the Court made very clear in Valley Forge, where a taxpayer seeks to employ a Federal Court to air grievances about the conduct of Government or the allocation of power in the Federal system. The "case and controversies" requirement of Article III is not met.

With respect to the issue of municipal taxpayer standing, the Court would have to determine that that did exist, something that has not happened before, and then would piggyback onto that claim a challenge to a separate tax by a separate Government under a separate claim arising out of a separate transaction. The deal between DaimlerChrysler and Toledo was separate from the tax granted by the investment tax credit under the State's system.

Respondents state, in the first page of their brief, that, because all of these States do these things, these investment tax credits have only minimal effect on business transactions. That's the first page of their brief. That's harmful to their standing, that's harmful to their Commerce Clause challenge.

Ohio only taxes in-State activity. It uses a constitutionally appropriate apportionment formula to determine how much of the interstate business's activity is attributable to Ohio, and only taxes that. So that if there is a benefit given because someone comes to the State and builds a plant there, it may result, actually, in increased taxes in Ohio, because the plant will raise the proportion of business being done in Ohio. But what Ohio does not do is -- what this Court has held unconstitutional -- is, tax the out-of-State activity, or burden the out-of-State activity, or make interstate commerce itself more burdensome.

As the Court has pointed out in questions, Justices have pointed out in questions, this same issue could be raised with respect to the State of Nevada. There's no franchise tax in the State of Nevada, and same with other States. Some States offer accelerated permitting requirements or relaxed environmental rules or different educate -- employment standards, all matters of State regulation. This Court has said that competition between States for commerce lies at the heart of a free-trade society. That is what's going on here. States are competing with appropriate permissive incentives to do business within the State. This is, as this Court said, a laudable purpose for State activity.

What the Respondents would do would nationalize State tax systems. You couldn't have a more beneficial tax system in Massachusetts than in Ohio, because that would provide some sort of a burden, under the Respondent's theory. The same with other regulations by States of business. We would have a system where this Court would be deciding -- all States would have to have uniform taxation, uniform systems of regulations, the very antithesis of federalism.

JUSTICE BREYER: If you have --

MR. OLSON: Now, what I would --

JUSTICE BREYER: -- dog license -- dog license costs $10, but you have to pay 20 if you invest next time in Wisconsin.

[Laughter.]

JUSTICE BREYER: By the way, we're not going to do it that way, we're just going to say you pay half.

MR. OLSON: If you have your dog in Wisconsin, you may pay whatever --

JUSTICE BREYER: No, no.

MR. OLSON: -- Wisconsin --

JUSTICE BREYER: No. But, you see -- but my point is --

MR. OLSON: If --

JUSTICE BREYER: -- separate tax in Ohio, and we're going to double it, though, if your next investment is in some --

MR. OLSON: That would be --

JUSTICE BREYER: -- other State.

MR. OLSON: That would be something this Court would be severely concerned with.

JUSTICE BREYER: Correct. Now, all we do is, we say, "We're not going to double it. You're going to pay the same. But everybody invests here, pays half."

MR. OLSON: Well, again, that's -- and I think that goes to Justice Souter's point, that there's a relationship between the tax system and the investment.

We should end on the point that every -- virtually every State has this kind of system, not just because of competition with States, but to find the right location, a depressed area within a State. And this is important with respect to businesses in the United States competing with foreign countries.

JUSTICE SCALIA: You don't believe in harmonization, Mr. Olson?

[Laughter.]

MR. OLSON: We don't believe that the Dormant Commerce Clause stands the -- stands for the proposition that these regulations should be nationalized.

CHIEF JUSTICE ROBERTS: Thank you, Counsel.

The case is submitted.

[Whereupon, at 11:06 a. m., the case in the above-entitled matter was submitted.]