Court to Weigh Ohio Case on Tax Credits

The Supreme Court agreed Tuesday to take up an Ohio case that tests whether states can offer huge tax breaks to corporations to lure them to build plants in their states.

Last year, a U.S. appeals court said such incentives were unconstitutional.

Ohio offered German automaker DaimlerChrysler Corp. tax breaks worth about $280 million in exchange for building a $1.2-billion Jeep assembly plant near Toledo. The practice has been common for decades as states competed to win large factories.

Several taxpayers and small-business owners challenged the tactic in the case of Cuno vs. DaimlerChrysler Corp. and won a victory in the U.S. 6th Court of Appeals in Cincinnati. Its judges said this “preferential” tax plan violated the Constitution’s guarantee of free-flowing interstate commerce.

Lawyers for Ohio and the automaker separately appealed to the high court, and the justices voted to hear both cases. That suggests the justices are inclined to reverse the ruling.