The state of Ohio will ask the full 6th US Circuit Court of Appeals to reconsider a ruling by a three-judge panel that declared Ohio’s investment tax credit unconstitutional, officials told The Associated Press (AP).
The panel struck down the tax last Thursday, saying it gives preferential treatment to companies [such as the DaimlerChrysler Jeep plant in Toledo] that expand within the state, rather than in other states. The judges said the breaks hinder interstate commerce.
Companies that have gotten the tax credits have invested nearly $32 billion in Ohio since the program started in 1995, state officials told AP.
“From the governor’s standpoint, these tax breaks are a very important tool for Ohio’s competitiveness and Ohio’s economic development,” governor Bob Taft’s spokeswoman Ann Husted told the news agency.
The lawsuit challenging the tax breaks reportedly was filed by a dozen taxpayers and three small businesses in Toledo over the $US280 million credit Ohio gave DaimlerChrysler to build the Jeep plant opened in 2001 that employs about 3,800 workers.
Terry Lodge, a lawyer who argued against Ohio’s programme, told AP the appeals court ruling could be used to challenge similar programs used by up to 40 other states to promote economic development.
A 1996 report by the state of New York found that 35 of the 45 states with a corporate income tax had some type of investment tax credits, the Associated Press said, citing the National Taxpayers Union.