Special Education

Challenge to Corporate Tax Incentives Rejected

By Andrew Trotter — May 23, 2006 3 min read
  • Save to favorites
  • Print

In a blow to efforts to curb corporate incentives offered by states, cities, and school districts, the U.S. Supreme Court ruled last week that a group of taxpayers may not challenge tax credits that Ohio gave to an auto company in return for its investments in a manufacturing plant in the city.

The incentives, which typically forgive or abate property taxes and other levies, are intended to encourage development in depressed communities. But critics say they amount to giveaways that result in higher taxes for individual residents and other businesses, and do not boost the economy in the long run.

Ohio and Michigan taxpayers separately sued over a 1998 deal in which DaimlerChrysler Corp. agreed to build a new $1.2 billion assembly plant in Toledo, Ohio, in exchange for about $280 million in state and local tax incentives.

In a part of the deal not reviewed by the Supreme Court, the 30,000-student Toledo school district and the 6,900-student Washington district, also in Toledo, granted DaimlerChrysler a 100 percent exemption from property taxes for 10 years. Lower federal courts ruled that the exemption was permissible.

The taxpayers claimed in their suit that the state’s investment tax credit depletes state funds and thus “diminishes the total funds available for lawful uses and imposes disproportionate burdens” on the taxpayers for public works, including schools.

The Supreme Court ruled unanimously on May 15 that the taxpayers did not have standing because they could not show that they suffered a legal injury because of the tax credit.

Their alleged injury was “conjectural or hypothetical, in that it depends on how legislators respond to a reduction in revenue, if that is the consequence of the [tax] credit,” Chief Justice John G. Roberts Jr. wrote for the court in DaimlerChrysler Corp. v. Cuno (Case No. 04-1704).

“[I]t is unclear that tax breaks of the sort at issue here do in fact deplete the treasury,” he wrote. “The very point of the tax benefits is to spur economic activity, which in turn increases government revenues.”

Fritz Fekete, the research director for the Ohio Education Association, said that although some school districts have supported tax incentives for corporations, by and large public education has not benefited.

“What’s happened over the last decade is that the state has continually shifted the burden of school financing onto local government, cutting corporate and business taxes overall, and de-funded their commitment to public schools,” he said.

Nonlawyer Parents

Separately, the justices asked the Bush administration for its views on whether, and when, parents who are not lawyers may represent their child in a federal lawsuit under the Individuals with Disabilities Education Act.

A lawsuit by two Ohio parents that challenges the appropriateness of a school’s educational plan for their son, who has autism spectrum disorder, was ordered dismissed by the 6th Circuit court in 2005 because the parents represented their child in the appeal.

In their high court appeal, the parents say that the federal appellate courts have adopted three different positions on the issue.

The 6th Circuit court ruled that nonlawyer parents may not press an IDEA case in federal court on behalf of their child under any circumstances. Another federal appeals court has ruled that nonlawyer parents are not limited at all. And four others have held that such parents need a lawyer to press a child’s substantive claims under the IDEA, but not the parents’ procedural claims.

The high court will wait for a brief to be filed by the U.S. solicitor general’s office before deciding whether to grant review of the appeal in Winkelman v. Parma City School District (No. 05-983).

A version of this article appeared in the May 24, 2006 edition of Education Week as Challenge to Corporate Tax Incentives Rejected


English-Language Learners Webinar The Science of Reading and Multilingual Learners: What Educators Need to Know
Join experts in reading science and multilingual literacy to discuss what the latest research means for multilingual learners in classrooms adopting a science of reading-based approach.
School & District Management K-12 Essentials Forum Get a Strong Start to the New School Year
Get insights and actions from Education Week journalists and expert guests on how to start the new school year on strong footing.
Reading & Literacy Webinar A Roadmap to Multisensory Early Literacy Instruction: Accelerate Growth for All Students 
How can you develop key literacy skills with a diverse range of learners? Explore best practices and tips to meet the needs of all students. 

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Special Education Quiz Quiz Yourself: How Much Do You Know About Learning Differences?
Answer 10 questions to assess your knowledge on learning differences.
Special Education What the Research Says Co-Teaching: Valuable But Hard to Get Right
Teachers worry that cramped schedules, power struggles, and uncertainty can hinder learning for students with disabilities.
5 min read
special report v38 15 specialeducation 860
Fifth grade teacher Kara Houppert and special education teacher Laura Eisinger co-teach a class in Naples, N.Y., in 2018.
Mike Bradley for Education Week
Special Education Reports Teaching Students With Learning Differences: Results of a National Survey
This report examines survey findings about implementation of best practices for teaching students with learning differences.
Special Education New Discipline Guidance Focuses on Discrimination Against Students With Disabilities
The Biden administration aims to clarify how federal law protects students with disabilities.
6 min read
Education Secretary Miguel Cardona speaks during the daily briefing at the White House in Washington on Aug. 5, 2021.
U.S. Secretary of Education Miguel Cardona speaks at a White House briefing in August 2021. The U.S. Department of Education has just released guidance on protecting students with disabilities from discriminatory discipline practices.
Susan Walsh/AP