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US Federal Constitution QUESTION #5824
Question 1

To promote domestic energy production, a state offers a $5,000 tax credit to residents who buy solar panels manufactured within that state. No credit is available for panels bought from out-of-state. Is this constitutional?

  • Yes, because the state is acting as a 'market participant.'
  • Yes, because the state has a compelling interest in environmental protection.
  • No, because it discriminates against out-of-state commerce in violation of the Commerce Clause.✔️
  • No, because it violates the Equal Protection Clause.
Correct Answer Explanation

Even if the state is spending its own money (subsidy), it cannot use its taxing power to discriminate against interstate commerce. Subsidies are often allowed under the 'Market Participant' exception, but discriminatory tax credits are almost always struck down.