The US Supreme Court [official website] ruled [opinion, PDF] 5-4 Monday in Comptroller v. Wynne [SCOTUSblog materials] that Maryland’s personal income tax scheme violates the dormant Commerce Clause [Cornell LII backgrounder]. The question before the court was whether the US Constitution prohibits a state from taxing all the income of its residents—wherever earned—by mandating a credit for taxes paid on income earned in other states. Maryland allows such a credit against its state income tax but not against its local county taxes. The Maryland Court of Appeals ruled [opinion] this practice unconstitutional, and the state appealed. In an opinion by Justice Samuel Alito, the Supreme Court affirmed:

We have long held that States cannot subject corporate income to tax schemes similar to Maryland’s, and we see no reason why income earned by individuals should be treated less favorably. Maryland admits that its law has the same economic effect as a state tariff, the quintessential evil targeted by the dormant Commerce Clause. We therefore affirm the decision of Maryland’s highest court and hold that this feature of the State’s tax scheme violates the Federal Constitution.

Justice Antonin Scalia filed a dissenting opinion, joined in part by Justice Clarence Thomas. Thomas also filed a separate dissent, joined in part by Scalia. Justice Ruth Bader Ginsburg also filed a dissenting opinion, which was joined by Scalia and Justice Elena Kagan.

Maryland taxed the income earned by its residents both inside and outside the state. However, Maryland does not offer residents a full credit against income tax paid to other states, resulting in some of the residents’ income being taxed twice. The Supreme Court granted certiorari in the case last May and heard arguments [JURIST reports] in November.