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May 20, 2008

Paul Caron has analysis and a media roundup of yesterday's Supreme Court decision allowing states to discriminate in favor of their own municipal bonds.

I like this from Gregory Germain's analysis in the TaxProf post:

The decision found common cause between the Court's most liberal and the most conservative justices in agreeing that the dormant commerce clause simply does not apply to traditional state and municipal activities. In fact, Justice Souter, a master in the art of sophistry, contended that the local municipal bond market should be viewed as entirely separate from the market for interstate municipal bonds. As so viewed, there would be no discrimination taking place in the locally-defined market. This theory, which defines the relevant market without regard to the economic motives of those engaged in the market, escapes me. But the broader argument, recognizing that the dormant commerce clause simply does not apply to the traditional functions of governmental entities, is entirely consistent with the holding first advanced last term in United Haulers.

And this:

Only three justices agreed with Justice Souter's contorted (and unnecessary) attempt to apply the old market participant exception to Kentucky's bond issuance activities. I commend this portion of the opinion to those who enjoy reading a detailed analysis of how many angels can dance on the head of a pin.

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