Michael H. Lubetsky of Davies has been kind enough to provide the following commentary (I am indebted to Guy Du Pont, Ad. E., for initiating the collaboration):
On May 27, 2014, the Supreme Court of the United States (the “SCOTUS”) granted certiorari (i.e., leave to appeal) of the decision of the Court of Appeals of Maryland (the “CAMD”) in Maryland State
Comptroller of Treasury v. Wynne, 431 Md. 174 (2013) (“Wynne”).
The MDCA decision and the various briefs filed with the SCOTUS are available online at:
http://www.scotusblog.com/case-files/cases/comptroller-v-wynne 
In addition, the MDCA judgement denying reconsideration is available at:
http://www.mdcourts.gov/opinions/coa/2013/107a11mr.pdf. (PDF)
On this side of the border, Wynne is of interest given that, although there seems to be a consensus among Canada’s various tax authorities that double taxation by provinces is to be avoided, there are apparently few recourses available to a taxpayer should double taxation actually occur. Wynne invites an inquiry of whether the “Trade & Commerce Clause” at section 91(2) of the
Constitution Act, 1867 could provide relief in such situations.
Wynne involved a county income tax that had previously included a tax credit for out-of-state income tax paid. The tax credit was subsequently repealed, thereby exposing taxpayers with out-of-state income to double taxation. In a divided decision (5-2), the CAMD held the lack of a tax credit to account for taxes paid in other states that violated the “Commerce Clause” of the US Constitution, which has been interpreted (inter alia) as barring states from enacting legislation that unduly burdens interstate commerce:
The Commerce Clause provides Congress with the power to “regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” United States Constitution, Article I, §8, cl. 3. “Though phrased as a grant of regulatory power to Congress, the [Commerce] Clause has long been understood to have a ‘negative’ aspect that denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce.”
Oregon Waste Systems, Inc v. Department of Environmental Quality, 511 U.S. 93, 98 (1994). This negative aspect of the Commerce Clause is an “implied limitation on the power of state and local governments to enact laws affecting foreign or interstate commerce.”
Board of Trustees v. City of Baltimore, 317 Md. 72, 131, 562 A.2d 720, 749 (1989).
Following a lengthy analysis the majority concluded that:
For the reasons explained above, the failure of the Maryland income tax law to allow a credit against the county tax for a Maryland resident taxpayer with respect to pass-through income of an S corporation that arises from activities in another state and that is taxed in that state violates the dormant Commerce Clause of the federal Constitution.
Rather than striking down the income tax altogether (which, as one might imagine, was the remedy sought by the taxpayer), the CAMD remanded the case to the Maryland Tax Court and for a recalculation with a credit for out-of-state taxes paid. The Court arrived at this remedy by invalidating the amendment that abolished the tax credit:
As for relief, the Wynnes suggest in their brief that the Maryland county income tax, the credit, or some part of the Maryland tax scheme be “struck down.” In fact, the county income tax itself is not unconstitutional. Nor is the credit, which serves to ensure that the Maryland income tax scheme operates within constitutional constraints. Nor is the Maryland income tax law generally. What is unconstitutional is the application – or lack thereof – of the credit to the county income tax. As this Court explained in some detail in Blanton, a credit previously applied to the county income tax in these circumstances. The county income tax was only eliminated from the computation and application of the credit by a 1975 amendment of the tax code. Chapter 3, Laws of Maryland 1975. It is that amendment, when applied to the particular circumstances of taxpayers like the Wynnes, that contravenes the Constitution. On remand from the Circuit Court, the Tax Court should recalculate the Wynnes’ tax liability in a manner consistent with this opinion.
One is left to speculate on the remedy the CAMD would have ordered had the county tax had been instituted ab initio without a tax credit for out-of-state taxes paid. Would the Court have read a tax credit into the tax statute?
The State of Maryland sought reconsideration of the decision, which was rejected by the MDCA in a brief, unanimous judgement issued May 17, 2013 that also clarified two points in the majority’s reasons (431 MD. 147). However, the MDCA stayed execution of its judgement to allow for the filing of a petition for certiorari to the SCOTUS. Maryland filed its petition, the processing of which was delayed partly because the SCOTUS invited the federal Solicitor-General to “file a brief in this case expressing the views of the United States”.
Leave has been granted and, as of today, the State of Maryland, the United States, the International Municipal Lawyers Association, the United States Conference of Mayors, the National Association of Counties, the International City/County Management Association, and the Maryland Association of Counties have all lined up in the SCOTUS against the Wynnes. It will be very interesting to see how the case unfolds when it is hear in the SCOTUS’ October 2014 Term.