Georgetown Journal of Law and Public Policy, Vol. 4, No. 1 (Winter 2006), pp. 73-100


If anything is clear about Cuno and the controversy the opinion has spawned, it is that Congress has the last word on the matter. Whether Congress will speak to the issues Cuno has raised is currently an open question, although in one narrow respect Congress already has. Broader legislation, however, has been introduced into Congress as the "Economic Development Act of 2005," and debate over the efficacy and wisdom of this proposal is as intense as the debate over the defensibility of Cuno itself. My purpose here is not to join that debate, although I am already on record as supporting in principle broad legislation that will draw a clear line between appropriate state tax incentives and inappropriate burdens on interstate commerce. Rather my narrow purpose here is to analyze the now-pending legislation from a technical standpoint and, specifically, to describe how it would modify the constitutional landscape reflected in Cuno. Insofar as I suggest changes in the proposed statute, it is my intention to improve upon legislation that I support in principle and, with the changes suggested, would support in practice as a technically sound implementation of the proposed legislation's apparent intent. Part I of the paper briefly elaborates on the initial proposition advanced above, namely, that Congress has unquestionable authority to make whatever rules it deems appropriate regarding the states' ability to provide tax incentives affecting interstate commerce. Part II provides an overview of the proposed Economic Development Act of 2005 and its relationship to existing constitutional restraints on state tax incentives. Part III examines in more detail the impact of the proposed legislation on the Court's dormant Commerce Clause doctrine barring taxes that discriminate against interstate commerce.