By Ginika Igboke
The U.S. Supreme Court on June 1 declined to allow Florida to move forward with a lawsuit against California over a business tax policy that Florida argued unfairly disadvantages other states and deprives them of tax revenue.
The decision came in an unsigned order, with the court providing no explanation for its refusal to hear the case. As is common in such orders, the justices did not disclose how individual members voted, except for noted dissents.
Florida had sought permission to file a lawsuit directly with the Supreme Court, alleging that California’s corporate tax structure violates the U.S. Constitution by encouraging businesses to keep operations within California while penalizing companies that expand or relocate activities to other states.
In its bill of complaint filed in October 2025, Florida argued that California had established “an unconstitutional business income apportionment scheme” that distorts interstate commerce and unfairly affects states competing for business investment and economic growth.
According to Florida, the tax policy allows California to collect a larger share of corporate tax revenue from multistate businesses by using a formula that places heavy emphasis on in-state sales. State officials contended that the approach discourages companies from moving jobs, facilities, and operations outside California, thereby reducing economic opportunities and potential tax revenues for other states.
Florida asked the Supreme Court to declare the policy unconstitutional and to prevent California from continuing to enforce it. The state argued that the dispute involved issues of interstate competition and constitutional principles that could only be resolved through the Court’s original jurisdiction.
Under the Constitution, the Supreme Court has original jurisdiction over disputes between states, meaning such cases may be filed directly with the nation’s highest court rather than beginning in lower federal courts. However, states do not have an automatic right to proceed with such lawsuits. Instead, they must first obtain the Court’s permission before a case can move forward.
In matters involving disputes between states, the Court often appoints a special master—a judicial officer tasked with gathering evidence, overseeing proceedings, and making recommendations to the justices regarding how the case should be resolved. Only after reviewing those findings does the Court typically issue a final ruling.
By declining Florida’s request, the Supreme Court effectively ended the challenge before it could advance to that stage.
Two justices disagreed with the majority’s decision. Justices Clarence Thomas and Samuel Alito dissented from the Court’s refusal to hear the case.
Neither justice issued a written opinion explaining the basis for the dissent. However, both have previously expressed concerns that the Court too frequently declines to hear disputes between states despite the Constitution specifically granting the Supreme Court authority over such matters.
The Court’s decision leaves California’s business tax system intact and allows the state to continue enforcing its current corporate tax rules. It also means that Florida and other states that may share similar concerns will not receive a judicial ruling on the constitutional questions raised in the complaint.
The case highlighted growing tensions among states over tax policies, economic competition, and the movement of businesses across state lines. As states continue to pursue different approaches to taxation and economic development, disputes over how those policies affect interstate commerce are likely to remain a subject of legal and political debate.
Original article
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