No Standing Merely by Virtue of Membership in the Tax Base

DaimlerChrysler Corp. v. Cuno

DaimlerChrysler entered into a contract with the city of Toledo Ohio whereby the city would increase a widely available tax credit and grant an outright property tax exemption (with the agreement of the school district) in exchange for specific expansions of the company’s Jeep production. A group of citizens sued, alleging that the tax credits/exemptions violated the commerce clause by diminishing the funds available to the city and disproportionately burdened the plaintiffs (who were mostly residents of the city). The question here is whether the group has standing to sue. The lower court ruled that the “municipal taxpayer standing” rule guaranteed them that standing.

In this case, the Court holds, the burden falls to the plaintiffs to demonstrate that they have standing, specifically by demonstrating that there is some “case or controversy” for the courts to concern themselves with. Apparently the Court has denied U.S citizens standing to challenge a federal tax simply by virtue of those citizens’ membership in the tax base because the individual’s interest in the funds of the treasury is so minute and indeterminate that it affords no basis for a suit. More concretely, the Court argues that tax breaks are not designed to ‘deplete the treasury,’ but are rather designed to increase revenues. Also, the Court argues, the injury on which such an action is premised in conjectural because even if the treasury is depleted no individual injury necessarily occurs. Finally, the outcomes of these schemes are paradigmatically policy decisions, as are the decisions as to how to respond to any increase or decrease in the treasury funds. This is to say that being a taxpayer is a necessary but insufficient condition for standing to challenge specific tax schemes. The Court carries out this same argument at the federal, state and municipal levels, and fights the plaintiffs where they try to conflate these areas, including where the plaintiffs try to take a rule allowing federal supplemental jurisdiction over state law claims where they derive from a "common nucleus of operative fact” as the established federal claim. Clearly, to do so inverts the rule.

The same logic does not extend to First Amendment challenges according to Flast, but the Establishment Clause has been the only law to support such challenges. The Court is not willing to draw a direct analogy from the Establishment Clause to the Commerce Clause and maintains that Flast is consistent with the underlying principle that “a litigant may not assume a particular disposition of government funds in establishing standing.” “Standing is not dispensed in gross.”