Monday, February 24, 2020

BREAKING: U.S. Supreme Court Tells Arizona It Won't Hear Complaint Against California For Stealing Tax Revenues; Thomas and Alito Dissent

The U.S. Supreme Court this morning decided NOT to hear Arizona's complaint against the state of California for stealing tax revenues from Arizona and Arizonans.

Attorney General Mark Brnovich asked the Court to accept the case one year ago. The Justices exercised their discretion to not accept the case. However, Justice Clarence Thomas wrote a brief dissent, saying that this decision leaves Arizona with "no judicial forum in which to seek relief." He was joined by Justice Samuel Alito. (The dissent is published below.)

Arizona tried to rely upon the U.S. Constitution (Article III, Section 2), which makes the Supreme Court the initial - and, only - court when one state is suing another.

Arizona alleges that California unconstitutionally taxes Arizona LLCs for doing business in California - even if that LLC is only an investor in another company that does business in the Golden State. The Attorney General's Office estimates that Arizona LLCs pay $10M/year to California that they should not have to, which causes the loss of $500,000/yr to the state of Arizona in tax revenues.

The Attorney General's Office may not be done with the matter. Spokesperson Katie Conner tells AZ Law, "We filed our lawsuit because California is collecting more than $10 million every year from Arizona taxpayers and small business owners who don't conduct business in the state. While we are disappointed in today’s news, the Supreme Court did not reject the merits of our claims; it only exercised its discretion not to hear the case.  We will continue to explore ways to rectify California's unconstitutional taxes."

Both the state of California and the U.S. Solicitor General urged the Court not to hear the case, although a few amicus briefs were filed siding with Arizona.

Arizona's Law has requested comment from the Attorney General and will update as warranted. Arizona did not hire outside counsel for this case.

This is the 2nd attempt by Brnovich's office to convince the highest court in the land to take original jurisdiction of a case. The Justices also declined to take the case against the family that owned Purdue Pharma in the wake of the opioid crisis.

(UPDATED, 12pm: Updated to add reaction from Attorney General's Office.)

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