In Mack-Cali Realty Corp. v. State of New Jersey, the New Jersey Appellate Division dealt with challenges to a Jersey City ordinance that imposed a payroll tax but exempted from that tax any employee who resided within the city. The ordinance was passed to fund local schools. The Appellate Division viewed the challenge as a dormant Commerce Clause issue to be analyzed under Complete Auto Transit, Inc. v. Brady,430 U.S. 274 (1977). The Court held that the ordinance failed the fair apportionment prong of that test, as one employer could be subject to payroll taxes from more than one taxing authority, and the ordinance does not offer a mechanism to resolve that dispute. Perhaps more tellingly, the Court stayed its order 45 days for the parties to “seek further review.” It looks like the case is headed to the New Jersey Supreme Court.
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