Legalities of Corporate Tax Incentives Before Court - New York Times

Legalities of Corporate Tax Incentives Before Court - New York Times: "March 1, 2006

The Supreme Court takes up a major case today about the legality of tens of billions of dollars in tax breaks that states and local governments award businesses each year to build new factories or offices, or just to stay put.

Supporters consider the subsidies vital economic development tools while critics denounce them as corporate welfare that helps some towns but weakens the national economy.

The case before the Supreme Court was filed by a group of Ohio residents and small-business owners who are challenging $280 million in state and local tax breaks to DaimlerChrysler for investing $1.2 billion in Toledo to expand a Jeep factory in 1998.

Both sides say that if the court strikes down the Ohio subsidies it will lead to major changes in the use of state and local tax incentives to promote investment.

At issue is whether tax breaks for companies that build or expand factories within Ohio discriminate against other Ohio companies that choose to invest in a different state. State tax laws that favor in-state businesses over those in other states have vexed America from the start and were a major reason that government under the Articles of Confederation proved unworkable."