Economics and Finance

As Washington State Department of Licensing v. Cougar Den illustrates, not all 5-4 Supreme Court cases involve high-profile, controversial issues where the Justices are divided on ideological lines.

In this case the Supreme Court held 5-4 that a treaty forbids the State of Washington from imposing a tax upon members of the Yakama Nation that import fuel.

An 1855 treaty between the United States and the Yakama Nation reserves to the Yamakas “the right, in common with the citizens of the United States, to travel upon all public highways.” A Washington statute taxes fuel importers who bring large quantities of fuel into the state by ground transportation. Cougar Den is a wholesale fuel importer owned by a Yakama member that transports fuel by truck from Oregon to Yakama-owned gas stations in Washington. Cougar Den argued the treaty preempted the tax.

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Seeking to survey Florida’s occupational licensing regulations for unreasonably onerous provisions, Florida Gov. Ron DeSantis recently held a one-day “Florida Deregathon” workshop at Valencia College in Orlando.

Seventeen of Florida’s 23 licensing boards had representatives in attendance to respond to the challenge posed by DeSantis in his invitation letter to the event: “Our expectation is that each board arrives prepared to roll-up its...

This case would have been a lot more interesting had it gone the other way. In an unanimous decision the Supreme Court held in Dawson v. Steager that West Virginia violated a federal statute by taxing all the retirement benefits of former federal law enforcement employees but not certain state law enforcement employees.

4 U.S.C. § 111 allows states to tax the pay of federal employees only “if the taxation does not discriminate . . . because of the source of the pay or compensation.” James Dawson, a former U.S. Marshal, sued West Virginia alleging it violated this statute because it taxed his pension but not the pensions of certain state law enforcement employees. The West Virginia Supreme Court found no discrimination because relatively few state employees received the tax break and the statute’s intent was to benefit those state retirees not harm federal retirees.

On Jan. 14, the U.S. Department of Justice issued a memo that reinterpreted a 1961 law designed to combat organized crime involvement in gambling. The Wire Act of 1961 specifically applies to anyone “in the business of betting or wagering” who “uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest.” Evolving telecommunications technology raised questions about the law’s applications, especially once online lottery sales became feasible.
In 2009, the New York State Lottery Division and then-Illinois Gov. Pat Quinn wrote to the DOJ separately to ask for clarification concerning interstate transmission of lottery data. New York argued that all lottery tickets would be bought and sold within the state, but that transaction data may be rerouted to data centers in other states to deal with heavy network traffic and weather issues. They also pointed out that New York had used this system since 2005, and over 40 state lotteries used similar systems. Quinn explained that their state lottery was a pilot program implemented to avoid “an unprecedented fiscal crisis,” and the program was “a key part of the State’s strategy to address this crisis and raise additional revenue to fund critical state programs…”

CSG Midwest
The U.S. Tax Cuts and Jobs Act, which became law in December 2017, included a $10,000 cap on the deductibility of state and local taxes from federal taxes, the so-called “SALT deduction.” Prior to the 2018 tax year, there was no cap on the deductibility of state and...

The issue the Supreme Court will decide in McDonough v. Smith is whether the statute of limitations for a due process fabrication of evidence claim begins to run when the criminal proceedings terminate in the defendant’s favor, or when the defendant becomes aware of the tainted evidence and its improper use.

Edward McDonough, former Democratic Commissioner of Rensselaer County Board of Elections, approved forged absentee ballot applications which he claims he didn’t know had been falsified. Youel Smith investigated and prosecuted McDonough. McDonough claims Smith “engaged in an elaborate scheme to frame McDonough for the crimes by, among other things, fabricating evidence.” After two trials, McDonough was ultimately acquitted.

Just before three years passed since McDonough was acquitted he sued Smith under Section 1983 for violating his due process rights by fabricating evidence and using it against him. Section 1983 allows citizens to sue state and local government officials in federal court for constitutional violations.

In The Law of Trusts and Trustees, George Gleason Bogert describes trusts as a “legal abstraction: a fiction created to represent the tripartite relationship among a settlor, a trustee, and a beneficiary.” The debatable location of a trust makes it difficult for courts to agree which jurisdictions may tax a trust’s income. For example, what if only a trust beneficiary is located in the state, may the state tax the trust’s income? 

In North Carolina Department of Revenue v. The Kimberley Rice Kaestner 1992 Family Trust the Supreme Court will decide whether the Due Process Clause prohibits states from taxing trusts based on trust beneficiaries’ in-state residency.

CSG Midwest
State fiscal conditions were the focus of several recent national studies — here are some of the key findings for the Midwest.

Ohio Gov. John Kasich signed SB 255 on Friday which puts an expiration date of 6 years on all state licensing boards unless they are renewed by the legislature. Prior to a board’s end date, the board must present to standing committees so that lawmakers can evaluate the usefulness, performance, and effectiveness of the board. Each board will have the burden of proof to demonstrate there is a public need for its continued existence. The...

A focus on serving the logistics sector is in part responsible for the business expansions and additions that have brought record job growth to Kentucky in recent years, a state transportation official told attendees at the CSG National Conference in December.

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