Reductions on deductions and state courts on out-of-state businesses
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This week we highlight cert petitions that ask the Supreme Court to consider, among other things, whether a 2017 law’s cap of $ 10,000 for the deduction for state and local taxes on federal income returns violates the Constitution by coercing states’ tax policies, and whether state courts can exercise jurisdiction over out-of-state businesses on the basis of their registration as foreign corporations.
The 2017 cap on the federal tax deduction for state and local taxes
New York v. Yellen addresses the Constitution’s allocation of taxing authority between the federal and state governments. In 2017, Congress passed a tax law that allowed taxpayers to deduct from federal income taxation only up to $ 10,000 of state and local taxes. Previously, taxpayers could deduct all or nearly all state and local taxes — and in 2015, the average deduction for state and local taxes claimed by the 3.3 million New Yorkers who itemized their deductions on their federal tax returns was $ 21,943. Then-President Donald Trump described the 2017 law as an “incentive” for taxpayers “to say, hey, make sure that your politicians do a good job of running your state.” New York, Connecticut, Maryland, and New Jersey filed suit, arguing that the new law violated the Constitution — specifically, Article I, Section 8, and the 10th and 16th Amendments — because it interfered with states’ sovereign taxing authority by unduly coercing them to change their sovereign tax policies and by denying them equal sovereignty.
The U.S. District Court for the Southern District of New York rejected the states’ claims, ruling that the negative economic effects of the $ 10,000 cap were not so severe as to impermissibly coerce the states into changing their policies. The district court also ruled that a flat dollar cap on the deduction was not unlawful. The U.S. Court of Appeals for the 2nd Circuit affirmed, concluding that Congress had the constitutional authority even to eliminate the deduction. In their petition, the states maintain that the 2017 law diverges from 150 years of history and introduces a novel question about federal taxing power.
State courts’ general jurisdiction over out-of-state businesses
In Cooper Tire & Rubber Company v. McCall, a tire manufacturer resists Georgia courts’ exercise of jurisdiction on the basis of its compliance with Georgia’s registration statute for foreign corporations. Tyrance McCall, a Florida resident, sued Cooper Tire & Rubber Company, a Delaware corporation with its headquarters in Ohio, after a 2016 accident in Florida resulting from the alleged failure of a tire that Cooper manufactured in Arkansas. Cooper’s activities in Georgia had no connection to McCall’s claims against Cooper, meaning that Georgia courts lacked “specific jurisdiction” over Cooper (the jurisdictional issue in last term’s Ford Motor Company v. Montana Eighth Judicial District Court). Instead, the Georgia Supreme Court upheld “general jurisdiction” over Cooper on the ground that Cooper, by registering as a foreign corporation in Georgia, had consented to suit in Georgia as a condition of doing business in the state. Even though the Georgia Supreme Court acknowledged recent case law from the Supreme Court that a corporation consents to general jurisdiction in the states where it is incorporated (here, Delaware) and has its headquarters (here, Ohio), the court ruled that the Supreme Court had not formally overruled earlier case law supporting the theory that registration supports general jurisdiction.
These and other petitions of the week are below:
Thacker v. United States
21-877
Issue: Whether a district court may consider the 2018 amendment to the sentences mandated by 18 U.S.C. § 924(c) in determining whether a defendant has shown “extraordinary and compelling reasons” warranting a sentence reduction under 18 U.S.C. § 3582(c)(1)(A)(i).
Gore v. Oklahoma
21-883
Issue: Whether McGirt v. Oklahoma applies retroactively to convictions that were final when McGirt was decided.
Martin v. Johnson
21-896
Issue: Whether the U.S. Court of Appeals for the 10th Circuit violated the backward-looking nature of Section 2254(d) of the Antiterrorism and Effective Death Penalty Act of 1996 and the clear mandates announced by the Supreme Court in Sexton v. Beaudreaux, Cullen v. Pinholster, and Harrington v. Richter when it considered — and based its ultimate decision upon — an argument the respondent, Alonzo Cortez Johnson, never made to the Oklahoma Court of Criminal Appeals on direct appeal.
Cooper Tire & Rubber Company v. McCall
21-926
Issue: Whether the due process clause of the 14th Amendment permits a state to assert personal jurisdiction over an out-of-state corporation, for claims not arising from or related to any contacts between the corporation and the forum state, on the ground that the corporation’s registration to do business in the state is deemed consent to general jurisdiction there.
Stirling v. Stokes
21-938
Issues: (1) Whether the U.S. Court of Appeals for the 4th Circuit violated basic principles of Strickland v. Washington when it failed to reweigh the whole of the evidence in its prejudice analysis in Sammie Stokes’ habeas action to determine if there was a reasonable probability of a different result; (2) whether the 4th Circuit erred in granting relief on a defaulted ineffective-assistance-of-trial-counsel claim when trial counsel had reasonable strategic reasons not to pursue a “bad upbringing” mitigation defense and collateral counsel had reasonable strategic reasons not to pursue an ineffective-assistance-of-trial-counsel claim; and (3) alternatively, whether this case should be held pending the outcome of Shinn v. Ramirez, argued Dec. 8, 2021.
New York v. Yellen
21-966
Issue: Whether Congress’s imposition of a $ 10,000 cap on the deduction of state and local property and income taxes from federal taxable income violates Article I, Section 8 and the 10th and 16th Amendments of the United States Constitution.
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