Oneida-Herkimer Decision Opens the Door for High Court to Address Muni Bonds Case

Date: May 22, 2007

Source: News Room

The Supreme Court may distinguish a case about a state's preferential treatment of its own tax exempt bonds from its recent decision in United Haulers Association v. Oneida-Herkimer Solid Waste Management Authority, No. 05-1345. At issue in that case was whether two New York counties could require private haulers to deliver all solid waste to a single publicly owned landfill. The court decided that a state could prefer itself over privately owned companies. In the new case, Department of Revenue of Kentucky v. Davis, No. 06-666, the court will decide whether a state can exempt interest payments from its own bonds from income tax for its residents, while still taxing the interest payments from other states' bonds. The Kentucky Court of Appeals ruled the law unconstitutional as violating the Commerce Clause. Usually the Supreme Court would simply remand a case to follow a relevant recent decision, which in this case would appear to be United Haulers Association v. Oneida-Herkimer Solid Waste Management Authority. Because the court has agreed to hear the case, it seems that the court distinguishes the case from the United Haulers decision.

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