Pennsylvania v. New Jersey

Background

Pennsylvania filed a complaint against New Jersey, and Maine, Massachusetts, and Vermont filed against New Hampshire, asking the Court to hear original suits to recover taxes they say were diverted by commuter-style state income taxes. The complaints relied on the Court’s prior decision in Austin v. New Hampshire and sought declaratory relief, injunctions, and accounting; the Maine-Massachusetts-Vermont suit alleged more than $13.5 million in diverted revenue. Pennsylvania also sued on behalf of its citizens, claiming parens patriae standing.

Reasoning

The Court denied leave to file the bills of complaint because the alleged injuries to the plaintiff States’ treasuries were caused by their own tax decisions. The opinion, citing Massachusetts v. Missouri, explained that a State must show direct injury caused by another State to invoke original jurisdiction. The Court emphasized that the Privileges and Immunities and Equal Protection Clauses protect people, not States, and that nothing required the plaintiff States to provide the tax credits that allowed revenues to be diverted. As a result, the Court found no sovereign or quasi-sovereign interest and concluded the suits lacked the necessary standing.

Real world impact

This procedural ruling stops these States from using the Supreme Court’s original-case process to recover revenues that their own credit laws made available to other States. It also rejects using a State’s name to collect a group of private citizens’ tax claims. The decision leaves the underlying constitutional merits unresolved and indicates that States can alter their own laws if they wish to change tax outcomes.

Dissents or concurrances

Justices Brennan and White dissented and would have granted leave to file the complaints. Justice Blackmun concurred, stressing that the harm flowed from the plaintiff States’ own statutes rather than the defendants’ actions.