Comptroller of the Treasury of Maryland v. Wynne

PETITIONER:Maryland State Comptroller of Treasury
RESPONDENT:Brian Wynne et ux.
LOCATION: Maryland Comptroller of the Treasury, Howard County

DOCKET NO.: 13-485
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: Maryland Court of Appeals

CITATION: 575 US (2015)
GRANTED: May 27, 2014
ARGUED: Nov 12, 2014
DECIDED: May 18, 2015

Eric J. Feigin – Assistant to the Solicitor General, Department of Justice, for the United States as amicus curiae supporting the petitioner
William F. Brockman – Acting Solicitor General, Maryland, for the petitioner
Dominic F. Perella – for the respondent

Facts of the case

Brian Wynne and his wife are Howard County, Maryland residents who own stock in Maxim Healthcare Services, Inc. (Maxim), a company that provides health care services nationally. Maxim’s income is “passed through” to its owners, and the owners are then taxed individually. In 2006, Maxim filed income tax returns in 39 states and allocated a share of taxes paid to each shareholder. The Wynnes claimed the share of Maxim’s income taxes that they paid as a credit against their Maryland individual income tax, which includes Maryland state taxes and Howard County taxes. The Comptroller of Maryland determined that the Wynnes had incorrectly calculated their county tax credit by including the taxes they had paid to other states and issued an assessment for the remaining tax owed. The Wynnes appealed to the Hearings and Appeals Section of the Comptroller’s Office, which noted that the wrong county tax rate had been applied initially and revised the assessment, but nonetheless affirmed that the tax credit was limited to Maryland state taxes and not applicable to Howard County taxes.

The Wynnes appealed to the Maryland Tax Court and argued that the limitation violated the dormant Commerce Clause of the Constitution. The Tax Court rejected the Wynnes’ argument and affirmed the revised assessment. The Wynnes then appealed to the Maryland Circuit Court for Howard County. The Circuit Court reversed the Tax Court’s decision and held that the county tax without a credit violated the dormant Commerce Clause. The Comptroller appealed to the Maryland Court of Appeals and argued that the Commerce Clause was not implicated by the county tax. The Maryland Court of Appeals affirmed the Circuit Court by finding that the county tax implicates the dormant Commerce Clause because it affects the interstate market for capital and business investment and the overlapping power to tax income from such sources. The Maryland Court of Appeals held that the county tax without a credit violated the Commerce Clause because the county tax is not fairly apportioned, since taxpayers who earn income from interstate activities would be taxed at higher rates than taxpayers who earn income exclusively in Maryland while the tax covers income earned wholly outside of Maryland. The Maryland Court of Appeals also held that the county tax is discriminatory against interstate commerce since it favors businesses that do business primarily in Maryland.


Does the dormant Commerce Clause of the Constitution prohibit states from taxing all the income of their residents by mandating a credit for taxes paid related to income earned in other states?

Media for Comptroller of the Treasury of Maryland v. Wynne

Audio Transcription for Oral Argument – November 12, 2014 in Comptroller of the Treasury of Maryland v. Wynne

Audio Transcription for Opinion Announcement – May 18, 2015 in Comptroller of the Treasury of Maryland v. Wynne

John G. Roberts, Jr.:

Justice Alito has the opinion of the Court this morning in two cases.

Samuel A. Alito, Jr.:

The first is Comptroller of the Treasury of Maryland v. Wynne.

Like most states Maryland taxes the income that its residents earn both within the State and outside of the State, as well as income that nonresidents earn from sources within Maryland, but unlike most other states Maryland does not offer its residents a full credit against the income taxes that they pay to other states.

Respondents Brian and Karen Wynne challenged this unusual feature of Maryland’s personal income tax scheme on the ground that it violates the dormant Commerce Clause.

The Wynnes earned income in several states other than Maryland and they pay tax on that income to the states in which it was earned.

Maryland declined to give the Wynnes a full credit for the taxes that they pay to these other states.

As a result, a portion of their income was taxed twice.

The Wynnes challenged this feature of Maryland law in Maryland courts and the Court of Appeals of Maryland, the State’s highest court, agreed with them that Maryland’s income tax scheme violates the Commerce Clause because it taxes interstate commerce at a higher rate than intrastate commerce.

We agree with the Court of Appeals of Maryland and we therefore affirm its judgment.

The decision in this case is dictated in large part by three earlier decisions in which we invalidated State tax schemes very similar to Maryland’s scheme in this case.

Those three decisions governed even though they involved a tax on gross receipts rather than net income.

Our previous decisions have already rejected the formal distinction between these two types of taxes and these three decisions govern even though they involved the tax on corporations rather than individuals.

There’s no reason why the Commerce Clause should treat individuals less favorably than corporations.

Nor does the right of individuals to vote in political elections justify disparate treatment of corporate and personal income.

Maryland argues that its tax scheme is constitutional because the State has the jurisdictional power to impose the tax.

We do not dispute that Maryland has the power under the Due Process Clause to impose the tax, but the fact that a tax survives scrutiny under the Due Process Clause says nothing about whether it violates the Commerce Clause.

Maryland’s tax scheme fails the internal consistency test which is a central part of our dormant Commerce Clause jurisprudence about State taxes.

This tax looks to the structure of the tax and asks whether its identical application by every State would place interstate commerce at a disadvantage as compared with intrastate commerce.

Maryland’s tax scheme has that effect.

If every State adopted a similar plan then taxpayers who earned money only in their home states would pay only one tax but taxpayers who earned money out of State would pay twice.

The Maryland law has the same economic effect as a State tariff on goods from other states.

For these reasons and others set out in more detail in our opinion we affirm the judgment of the Court of Appeals of Maryland.

Justice Scalia has filed a dissenting opinion in which Justice Thomas joins in part.

Justice Thomas has filed a dissenting opinion in which Justice Scalia joins in part.

Justice Ginsburg has filed a dissenting opinion in which Justices Scalia and Kagan join.