American Airlines’ Tax Preemption Argument Fails, Texas Argues

A federal law doesn’t shield American Airlines Inc. from its obligation to pay nearly $2 million in Texas franchise tax, the comptroller told a state appeals court.

Texas Comptroller Glenn Hegar wants the Texas Fifteenth District Court of Appeals to overturn an August trial court ruling that the federal Anti-Head Tax Act preempts the state from imposing franchise tax on the airline, entitling American to a refund of more than $100,000, plus interest. The court should also hold the company owes an additional $1.8 million, Hegar said in his opening brief filed Wednesday.

The Texas franchise tax isn’t a “tax ...