Interstate Commerce Clause & Taxation Analysis: Multinational Industrial Firm


Our client was one of the United States leading engineering and manufacturing companies, specialized in water and wastewater treatment and industrial processes, defense electronics and services, electronic components such as connectors and switches, and a wide range of other industrial products.

When our client sold a subsidiary that provided components to automotive manufacturers, the State of Michigan charged the firm with a very large Single Business Tax (“SBT”) liability. The SBT is a value-added tax (VAT), unique within the United States, though common in Europe and Canada. For a suit filed against the State of Michigan, we prepared a report and affidavit which described how the application of the tax in this manner would violate the Commerce Clause of the United States Constitution. For the report, we:

-Reviewed value-added taxation in general

-Reviewed Michigan’s SBT in particular

-Reviewed the past interstate commerce cases relating to taxation and state actions violating interstate commerce

-Summarized the structure of the auto industry

-Analyzed how the application of the Michigan SBT in this matter infringed interstate commerce, was contrary to the purpose of the SBT, and resulted in perverse tax treatment of this company and, potentially, many others.

Before the report was presented in court, the State made an acceptable settlement with our client, based partially on the record established by our report.

Economic Analysis & Revenue Forecasting: City of Cincinnati, Ohio


The City of Cincinnati, founded in 1788, is one of the leading cities in the Midwest, and is home to 320,000 people in the City itself, and over 1.6 million people in the metropolitan area. Cincinnati was a pioneer in incorporating planning in the government, and adopts a biennial operating budget of about $731 million, plus a capital budget of about $251 million. The main sources of funds are income and property taxes.

To ensure the City Council and Finance Department have the best available information on current and likely future tax revenue, the City retained Anderson Economic Group to provide forecasts of income and property revenue, as well as state-funded local government revenue, for the next six years. AEG evaluated the economy of Ohio and its relationship to the US economy, and the local economy, demography, geography, and fiscal structure. AEG then used a sophisticated statistical methodology to determine how economic fluctuations in the past had affected the most important revenue sources for Cincinnati.

AEG developed a dynamic forecasting model for the City, including an independent assessment of likely future economic conditions. Assuming stable fiscal policies, the resulting general fund revenues from major sources. Using this model, and professional judgement on the current state of the economy, AEG forecasted tax base and tax revenue for the City, based on reasonable policy and economic assumptions, for the succeeding six years.

AEG prepared a lengthy report, which was presented to the City Finance Department and to the City Council in a public hearing. The report included a discussion of the methodology, assumptions, and revenue forecasts.

Analysis of Michigan's Senate Bill One, 2003: SBC Communications, Inc.

Case Study:
Analysis of Michigan’s Senate Bill One, 2003
SBC Communications, Inc.


SBC Communications, Inc. is one of the nation’s largest telecommunications companies, providing local telephone and telecommunications service in many areas of the United States.

Anderson Economic Group provided a comprehensive analysis on the effects of Senate Bill One. SB1 would reduce the price the largest telephone providers could charge for local phone service by requiring them to obtain regulatory approval to charge a common line or end-user-line-charge (the EUCL). Our analysis provided an explanation of the impact of the bill on consumers, along with a comparison between this bill and the Telecommunication Act of 2000.

Our analysis was used by SBC in meetings with state lawmakers and during State Senate Committee hearings. Additionally, Patrick Anderson, Principal, testified in the hearings about the likely impact of the bill on consumers.

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Commerce Clause & Twenty-First Amendment Analysis: Midwest Beverage Distributor

Case Study:
Commerce Clause & Twenty-First Amendment Analysis
Midwest Beverage Distributor


One of the Midwest’s largest distributors of beer, wine, and spirits, serving 36,000 locations in multiple states, had a Michigan affiliate that was prevented from full participation in the Michigan spirits distribution market due to a provision in the Michigan Liquor Control Code. 

Anderson Economic Group was retained by the distributor to provide expert analysis for a suit filed against the state of Michigan. Out team prepared a preliminary report and affidavit which described how the state law was violating the Commerce Clause of the United States Constitution. The report discussed the peculiarities of the wine industry; the importance of nationally-established standards and laws in all types of commerce; and the intersection between the XXI Amendment and the Commerce Clause.

After a unsatisfactory hearing at the district court level, our client is considering an appeal, based partially on the factual record established by our report.

Public School Per-Pupil Funding Disparity Analysis: Equity in Education Foundation

Case Study:
Public School Per-Pupil Funding Disparity Analysis
Equity in Education Foundation – Michigan


The Equity in Education Foundation was established by the Word of Faith International Christian Center to address the inequality of per-pupil funding between Michigan’s public school districts.

Anderson Economic Group helped the Foundation understand the constitutional argu­ment against funding inequality, and organize legal and public relations campaigns. As part of this process, AEG issued a report analyzing the funding characteristics of all public and charter school districts within the state. The analysis included a comparison between Michigan’s “hold-harmless” school districts and non hold-harmless districts, a look at the change in disparity since the passage of Proposal A in 1994, an assessment of the relationship between different types of funding and student performance, and a geo-spatial analysis of funding information through the use of our Geographic Information System (GIS) facility.

Property Tax Analysis; Federal and State Non-Profit Regulatory Advice: PG&E Generating – Michigan

Case Study:
Property Tax Analysis
Federal and State Non-Profit Regulatory Advice
PG&E Generating – Michigan 


PG&E Generating is a national energy provider that owns and operates merchant generating plants across the country.

Anderson Economic Group assisted PG&E by conducting an economic assessment of a proposed development site. The assessment was used by PG&E, as well as the local community, to secure a tax free Renaissance Zone designation for the site. Furthermore, we provided a sophisticated analysis of the likely property tax burden on the $500 million project. We created a simulation model to project tax bur­dens under various scenarios, and identified specific strategies to minimize tax costs. We also identified tax levies that were outside legal limits.

Finally, we assisted PG&E in identifying the proper structure for a $1 mil­lion contribution to aid the citizens of the local area, given state and federal laws regarding tax-exempt organizations, and eligibility for state tax credits.

Competitive Responses to Corporate Average Fuel Economy Standards

Ilhan K. Geckil

Article in NABE by Ilhan Geckil on CAFÉ.

Likely Impact of Delphi Bankruptcy

On October 8, 2005, Delphi Corporation filed for bankruptcy protection in New York. Given the difficulties of the company, including unprofitable operations and repeatedly severe statements by the company’s management about its uncompetitive cost structure, especially its “legacy costs,” the action was not unexpected.

Delphi, the largest auto parts supplier in the U.S. (and number two worldwide), employs 50,600 workers in the United States and Canada. Headquartered in Troy, Michigan, Delphi is an integral component of Michigan’s economy and the national auto industry. Given its size, Delphi’s bankruptcy filing was widely expected to have far-reaching consequences for not only Delphi’s workers, but also the state and national economy, automakers, and auto parts suppliers.

The purpose of this analysis is to provide an early indication of the likely consequences of the Delphi bankruptcy. Given our past analyses of work stoppages, interruptions, blackouts, and other events that have shut down production in the United States; and our extensive knowledge of the automobile industry; we have background knowledge from which to draw some preliminary conclusions. This is a preliminary assessment of likely events that will be played out over a two or three-year period, and useful for planning and the assessment of risks. However, we caution readers that the future is, of course, unknowable.

The Economic Benefits of Wayne State University

Anderson, Geckil, Watkins

A report on the economic benefits of Wayne State University

The Life Sciences Industry in Michigan: Employment, Economic, and Fiscal Contributions to the State's Economy

Anderson, Watkins

An analysis of the Life Sciences Industry’s employment, economic, and fiscal contributions to the Michigan economy