The Supreme Court and State Taxation: 1999-2000, the Court Decides to Let Sleeping Dogs Lie

In the October 1999 Term, the United States Supreme Court continued its recent trend of deciding relatively few cases. Only 79 oral argument slots - representing 83 cases - were filled, and those cases resulted in even fewer signed opinions: 74. The Supreme Court unanimously decided three cases involving state or local taxation issues during the 1999 Term, the same number it considered during the 1998 Term, and a slight improvement over the Court's plenary consideration of only one state tax case during the 1997 Term. The Court, however, continues to deny certiorari in large numbers of cases involving state and local tax issues. During the time frame in which the Court was granting review in cases heard during the 1999 Term, the Court denied 41 petitions raising state or local tax issues. At the time of this writing approximately half of the argument slots are filled for the 2000 Term, but of the 37 cases docketed, only one involves an issue at all related to state or local taxation. During the 1999 Term, however, the Court considered three state and local tax cases. In two cases, the Court considered the constitutionality of California's interest offset provision. In Hunt-Wesson, the Court reviewed California's attempt to employ a bright-line approach to interest offsets, an extreme approach taken by [n]o other taxing jurisdiction, whether federal or state. In rejecting the California law, the unanimous Court applied a traditional constitutional analysis with potentially far-reaching implications for other state tax measures involving multi-jurisdictional taxpayers. The Court also summarily vacated the judgment in F.W. Woolworth in light of its Hunt-Wesson decision. In Raleigh, the Court unanimously upheld an Illinois law placing the burden of proof on taxpayers for resolving state tax claims in bankruptcy court. In all three cases, the losing parties urged the Court to adopt novel positions to address perceived inequities. These arguments, however, fell on deaf ears as all nine Justices deferred to well-established principles of both federal and state law to continue to resolve these taxpayer problems.