Comptroller of Treasury of Md. v. Wynne (13-485)

argument 13-485

Comptroller of Treasury of Md. v. Wynne

Supreme Court of the United States 55 min 7 speakers 8 chapters transcribed 6 days ago official recording ↗

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What is Maryland’s “special non‑resident tax” and why does it matter?

John G. Roberts 0:01

With your argument in case thirteen four eighty five, Comptroller of the Treasury of Maryland versus Wynn. Mr. Blackman?

John C. Cruden 0:12

Mr Chief Justice, and may it please the Court. A state's broad power to impose a personal net income tax on its own residents is grounded in the special benefits that a state affords to its own residents, particularly because they are residents. That is things like public schools, social services programs, medical assistance services, and of course, the right to vote in the process that determines both the level of those benefits and the level of taxes that are paid in return for them. There is no reason that a state should have to subordinate this power, this taxing power, just because another state exercising an equally legitimate taxing power but on a very distinct ground is taxing a portion of that income

John C. Cruden 0:58

Merely because it was earned within that state's borders.

Antonin Scalia 1:01

Right, you're relying on the principle that life is not fair, right?

John C. Cruden 1:07

Life is not fair. Uh Maryland taxes are. Uh because Because they All residents are treated the same. Uh they're taxed on their entire income regardless of where it is earned.

John G. Roberts 1:23

Well, but as as your friends on the other side point out in their example, pages twenty two to twenty three of their brief, if you do the internal consistency test, it ends up not being equal. What it ends up is imposing a special tax, they would call it special, right? The special non resident tax on those who live in one state and work in the other. The people who live in the state and work in the state do not have to pay. It doesn't sound That sounds unequal, whether fair or not.

John C. Cruden 1:53

Ronor, let me try and explain why I uh why I disagree that it's unfair. Uh the special non resident tax and the county tax uh both apply one to residents, one to non residents. One has been upheld, the special non resident tax, as a complimentary tax to the other. But we can abstract from all of that and because our position as a constitutional matter is that Maryland is not required to provide a credit at all. So It would be just as uh accurate to do the math uh this way. The special non resident tax accounts for six tenths of one percent of total personal income tax collections, both resident and non resident, combined, state and local. If we said instead there's only one tax, it's a state income tax, and you may take a credit

John C. Cruden 2:40

uh up to the lesser of what you paid the other state or ninety nine point four percent of uh what you would have paid to Maryland, whichever is lesser, we would have the same results. Well,

John G. Roberts 2:51

but that's the case now. But if we uphold a situation where you charge a special non resident tax in a way that is a special tax on people who live in one State and work in the other, then you're free to raise that to whatever amount you want. The fact that it's a smaller amount now doesn't if we say it's okay, then you're free to raise it.

John C. Cruden 3:10

Well I don't think we are, Your Honor. It's been upheld by the Maryland courts because it's complimentary and it's set at the lowest rate uh that any uh county resident pays, uh No, it is it is

John G. Roberts 3:21

now. D do you think there's could you t increase the special non resident tax beyond the lowest rate that the county tax is?

John C. Cruden 3:30

I don't think we'd try. We we believe I think the reason it set at the lowest is because we did not want to be in a situation where uh we were discriminating against non residents who are entitled uh to be

Stephen G. Breyer 3:43

specific. We live in California. You have a hot dog stand in Hawaii. All right. It has a thousand dollars income. It comes back to California. You pay thirteen and a half percent California tax. Hawaii wants to charge another twelve. So you're paying twenty five percent. Can California say, that's fine. We give them no credit for the eleven percent they're paying in Hawaii. So the bottom check that you get is seventy f seven hundred and fifty dollars. Not a thousand. But if your hot dog stand were in California, the check would not be seven hundred and fifty, it would be approximately nine hundred. Okay. Is that constitutional or not?