Department of Revenue of Kentucky v. Davis (2007)
- Docket
- 06-666
- Decided
- 2007-01-01
Summary
Question: Does a state violate the dormant Commerce Clause by providing an income tax exemption for interest on bonds issued by the state, while denying the exemption to interest on bonds issued by other states? Conclusion: No. The Court held 7-2 that Kentucky's differential tax scheme does not offend the Commerce Clause. No single opinion commanded a majority. Bond proceeds are a "quintessentially public function," the Court noted, and are therefore likely motivated by legitimate state objectives other than simple economic protectionism. These objectives outweigh any negative effect the tax may have on interstate commerce.