Docket nos. 06-666 End date 2008 | Concurrence Roberts | |
Full case name Department of Revenue of Kentucky, et al. v. George W. Davis, et ux. Citations 553 U.S. 328 (more)
128 S. Ct. 1801; 170 L. Ed. 2d 685; 2008 U.S. LEXIS 4312; 76 U.S.L.W. 4288; 21 Fla. L. Weekly Fed. S 227 Prior history On Writ of Certiorari to the Court of Appeals of Kentucky. Plurality Souter (opinion of the Court except for Part III-B), joined by Stevens, Breyer; Roberts, Ginsburg (all but Part III-B); Scalia (all but Parts III-B and IV) People also search for United Haulers Ass'n v. Oneida-Herkimer Solid Waste Management Authority | ||
Department of Revenue of Kentucky v. Davis, 553 U.S. 328 (2008), is a United States Supreme Court case in which the Court upheld a Kentucky law that provides a preferential tax break to Kentucky residents who invest in bonds issued by the state and its municipalities (municipal bonds). The Court held in a 7-2 vote that the State of Kentucky does not engage in unconstitutional discrimination against interstate commerce by exempting the interest on its bonds from residents' taxable income while taxing the interest earned on the bonds of other states. The case has national implications because thirty-six (36) states have tax schemes similar to the one at issue in Kentucky.
Contents
Background
George and Catherine Davis sued the State of Kentucky under the legal theory that the State of Kentucky violated the Dormant Commerce Clause, a legal implication of the Commerce Clause, by providing a differential tax treatment to gains earned from investments in municipal bonds from Kentucky versus other states.
Opinion of the Court
The majority opinion stated that the Kentucky tax scheme benefited a clearly public issuer, while treating all private issuers exactly the same. There was no forbidden discrimination because Kentucky, as a public entity, did not have to treat itself as being "substantially similar" to the other bond issuers in the market. The Kentucky tax scheme was constitutional because the Commonwealth's direct participation favored, not local private entrepreneurs, but the Commonwealth and local governments.