WASHINGTON -- The Supreme Court on Monday struck down as unconstitutional a Maryland tax that has the effect of double-taxing income that residents earn in other states.
Maryland officials estimate the 5-4 ruling will cost the state about $200 million in refunds it will have to pay residents going back seven or eight years. The decision also will cost local governments about $42 million annually.
Writing for the court, Justice Samuel Alito said the tax "is inherently discriminatory" under the Constitution's Commerce Clause. The court has interpreted that provision to ban states from passing laws that burden interstate commerce.
Alito was joined by Chief Justice John Roberts and Justices Anthony Kennedy, Stephen Breyer and Sonia Sotomayor.
Maryland allowed its residents to deduct income taxes paid to other states from their Maryland state tax, but it did not apply that deduction to a local "piggy back" tax collected for counties and some city governments.
Maryland officials argued that the state has authority to tax all the income its residents earn to pay for local services such as public schools and fire protection and police services.
The case arose after Maryland residents Brian and Karen Wynne challenged their tax bill. They had been blocked from deducting $84,550 that they had paid in income taxes to 39 other states. Brian Wynne's income came from his ownership stake in a health care company.
Maryland's highest court ruled in 2013 that the tax violates the Constitution's Commerce Clause.
In dissent, Justice Ruth Bader Ginsburg said nothing in the Constitution requires a state to avoid taxing its residents just because another state targets the same income. She was joined by Justices Antonin Scalia and Elena Kagan. Clarence Thomas wrote separately to say the Commerce Clause cannot be used to strike down a state law.
The tax structure in Maryland is different from the tax structure in Arkansas, according to Tim Leathers, deputy director of the Arkansas Department of Finance and Administration.
Unlike Maryland, Arkansas does not allow city or county governments to levy income taxes, he noted.
Arkansans are able to receive a credit for state income taxes paid to another state, but the "credit cannot exceed the Arkansas income tax on the same income and cannot exceed the total tax" owed to Arkansas, the department's website states.
Savings objections OK
The Supreme Court also ruled unanimously Monday in favor of participants in employee retirement plans who object to companies' investment decisions that eat into retirement savings.
The justices revived claims by current and former employees of energy company Edison International. The employees argued that the company chose mutual funds with excessive fees.
A federal appeals court dismissed the Edison employees' claims under the federal Employee Retirement Income Security Act. The appeals court said the lawsuit was filed too late to contest the choice of funds and that executives who make those decisions only have to reconsider them if circumstances change.
The Supreme Court disagreed with the appellate decision in an opinion by Breyer. People in charge of investment options have an ongoing responsibility to monitor the situation, he said.
Investigation appeal declined
The court declined hear an appeal from Wisconsin Club for Growth, a conservative group seeking to end an investigation into possible illegal coordination between Wisconsin Gov. Scott Walker's 2012 recall campaign and independent groups.
The justices on Monday let stand an appeals court ruling that said the group and its director, Eric O'Keefe, must resolve their claims in state courts.
No one has been charged as a result of the investigation which has sought documents and testimony about possible violation of state campaign finance laws.
The investigation is on hold while a separate legal challenge is pending before the Wisconsin Supreme Court.
Convicts can sell guns
Justices unanimously ruled Monday that the government can't prevent a convicted felon who is barred from possessing firearms from trying to sell his guns after they are confiscated by authorities.
The court sided with Tony Henderson, a former U.S. Border Patrol agent who agreed to turn over his 19 firearms to the FBI as a condition of release after he was arrested and charged with distributing marijuana.
After he pleaded guilty, Henderson wanted to sell the weapons to a friend or transfer them to his wife. But lower courts found that doing so would technically give Henderson possession of the weapons.
Writing for the court, Kagan said letting a convicted felon sell or transfer guns is allowed as long as a court is satisfied that the person getting the weapons won't give the felon control over them.
Police immune to suit
The court ruled Monday that police are immune from a lawsuit arising from the arrest and shooting of a mentally ill woman in San Francisco.
But the justices left undecided the question of whether police must take special precautions when arresting armed and violent people suffering from mental illness.
The case involved a 2008 arrest in which two officers forced their way into Teresa Sheehan's room at a group home and shot her five times after she approached them with a knife. Sheehan said the officers should have used less confrontational tactics because the Americans with Disabilities Act requires "reasonable accommodations" for people with mental illnesses.
Alito said the justices wouldn't take up the disability-rights issue because it hadn't been fully considered by lower courts.
Six justices agreed that the police officers could not be sued in this case. Scalia and Kagan wrote separately that they would have dismissed the case entirely. Breyer abstained because his brother was the federal judge who heard the case.
Information for this article was contributed by Sam Hananel, Brian Witte and staff members of The Associated Press; and by staff members of the Arkansas Democrat-Gazette.
A Section on 05/19/2015