WILLIAMS v. VERMONT
Legal provision: Equal Protection
ORAL ARGUMENT OF NORMAN CHARLES WILLIAMS, ESQ. ON BEHALF OF THE APPELLANTS
Chief Justice Warren E. Burger: We will hear arguments first this morning in Norman Williams and Susan Levine v. Vermont.
Mr. Williams, you may proceed whenever you're ready.
Norman Charles Williams: Thank you.
Mr. Chief Justice and may it please the Court, this appeal challenges discrimination between residents and non-residents under the Vermont Motor Vehicle Purchase and Use Tax.
We believe that discrimination violates the equal protection clause and the privileges and immunities clause of the United States Constitution.
We also believe that the statute violates the commerce clause.
Everyone who moves to Vermont and owns a car has to pay a 4 percent tax on the value of their car when they register it in Vermont.
Residents in exactly the same circumstances pay no tax.
Let me tell you how the tax system works.
Nominally, everyone, every individual who first registers a car in Vermont is required to pay a 4 percent tax.
However, residents of Vermont who buy cars in other states are granted a credit for taxes paid to the other state.
Nonresidents in exactly the same circumstances are denied that credit.
In effect, this means that a Vermont resident who goes to Illinois and buys a car, pays an Illinois tax of 7 percent, comes back to Vermont and registers the car there, pays no tax to the State of Vermont.
An Illinois resident in exactly the same situation goes to exactly the same dealership on exactly the same day, pays the tax, buys the car, pays the tax of 7 percent, moves to Vermont.
When that person registers his car in Vermont, he pays a 4 percent tax to the State of Vermont.
Unidentified Justice: Mr. Williams, I was going to inquire whether it isn't the case that Illinois and New York laws exempt Vermont residents from payment of the sales tax if they leave Vermont and buy the vehicle in Illinois or New York?
Norman Charles Williams: No, they don't.
If a Vermont resident bought a car in Illinois and stayed for only two or three weeks or bought a car in New York and stayed for only two or three weeks, in that case they would have an option.
They would not have to pay Illinois or New York.
But let's take the case of, for example, an executive who is transferred to Illinois for three months; buys a car in Illinois for his stay there.
He has got to pay the Illinois tax in order to drive that car in Illinois for three months.
Other situations might be retirees who went to Florida and stayed over the winter.
They would have to pay a tax to Florida.
When they got back to Vermont, they would get a credit for the tax paid.
So I don't think it's true of... if you stay for only two or three weeks, you have a choice.
Other than that, you have to pay to the other state.
Unidentified Justice: You say the proper basis for comparison here is not the Vermont resident who stays for two or three weeks in New York or Illinois, but the one who stays for the longer... three, three month or longer period?
Norman Charles Williams: Well, the person who stays longer than two or three weeks, just like the Appellants stayed longer than two or three weeks after they bought their cars in Illinois and New York.
Unidentified Justice: But are there any... does the record show there are any such Vermont residents?
Norman Charles Williams: There's no record in this case because it comes up on a motion to dismiss.
Unidentified Justice: What if the facts were that there were no Vermont residents who ever stayed more than three months in Illinois and also bought a car there?
I mean more than three weeks.
Do we know there are many people in that category?
Norman Charles Williams: I think we have to assume it, because it's a motion to dismiss.
I think that as a matter of judicial notice, it is undoubtedly clear that there are people who go to California, college students who go to California for a year, or people that are... business executives that are transferred for three months, a year, two years; retirees that go to Florida; people that go on a long vacation.
There's any number of situations that one can imagine where a Vermonter would buy a car in a distant state and not register in Vermont, but register in the other state.
Unidentified Justice: Mr. Williams, you're the Illinois one, rather than the New York one in this case?
Norman Charles Williams: That's correct.
Unidentified Justice: Could it be said that your real argument is not with Vermont, but with Illinois?
Norman Charles Williams: I don't think it could--
Unidentified Justice: Which, after all, doesn't grant you a refund even though you're out there just a short time.
And you could make an argument with Illinois, I suppose, that you didn't use their roads for 12 months and so ought to get a refund.
Isn't that your problem, rather than Vermont?
Norman Charles Williams: --I have no problem with Illinois.
I think Illinois treated me fairly.
I would have no problem under the equal protection clause or under the privileges and immunities clause with Vermont if Vermont charged me a 4 percent tax that it also charged to all its residents.
My problem is with Vermont under the equal protection clause and the privileges and immunities clause because residents of Vermont don't pay Vermont anything, but I pay Vermont 4 percent.
And so does everyone that moves to Vermont.
Unidentified Justice: What do you mean when you say residents of Vermont don't pay Vermont anything?
Norman Charles Williams: A resident who purchases a car in another state and pays a tax to another state, like me, pays Vermont nothing because that resident gets the credit for the taxes paid in the other state which I do not get.
I'd also add that in 1980, until 1980, I would have been treated the same as a Vermont resident.
But in that year, the Vermont legislature repealed the exemption that would have applied to me, evidently in an effort to raise some funds.
There's no legislative history on the repeal at all, but that's what happened.
So I believe that the discrimination violates--
Unidentified Justice: Mr. Williams, let me try to clarify this thing in my own mind a little bit further.
If a Vermont resident obtained... bought a vehicle out of the State of Vermont and registered the vehicle in another state for the vehicle's first registration, is there a credit then if the Vermont resident later brings the vehicle into Vermont and registers it?
Norman Charles Williams: --The statute says... the statute plainly says that any Vermont resident who purchases a car in another state and pays a tax in another state is entitled to a credit.
So I think the answer to that is yes.
That's the way the Vermont Supreme Court has interpreted the statute, the Vermont Superior Court has interpreted the statute.
There is no suggestion anywhere that that isn't the case.
I think any time a Vermont resident pays a tax to another state he gets a credit, which isn't true when a nonresident does the same thing.
I think the tax violates the equal protection clause because it infringes the right to travel.
It sets up a barrier for people coming to Vermont.
It happens to be a tax on a car; it could be a tax on any other property.
The point is that it's a tax imposed on nonresidents that isn't imposed on residents in the same circumstances.
Unidentified Justice: Actually, the discrimination you complain of occurs after you're a resident of Vermont.
And so it's really a discrimination between two residents of Vermont.
Norman Charles Williams: Well, that's certainly one way to--
Unidentified Justice: Well, that's your basis for your equal protection argument.
Norman Charles Williams: --Right.
That is the basis for my equal protection.
Unidentified Justice: But there's no rational basis for differentiating between these two kinds of residents.
Norman Charles Williams: Right.
I would only point out that it is true that I was a resident at the time.
There's no requirement that I had to be a resident to register a car.
Anybody can register a car in Vermont without being a resident.
So that is the basis of my equal protection claim; correct.
Unidentified Justice: How likely is it that a nonresident would seek to register a car in New York... or in Vermont?
Norman Charles Williams: Well, I think that it does happen.
I think that especially because of different insurance rates, people in neighboring states often register their cars in Vermont.
Unidentified Justice: Rather than in their home state?
Norman Charles Williams: Yes.
I think it does happen and I--
Unidentified Justice: Well, that isn't your case, though?
Norman Charles Williams: --It's not my case at all; no.
I just note that it does go on.
I believe that there's no rational basis for that sort of discrimination.
However, I believe the strict scrutiny test is the test to apply because--
Unidentified Justice: Well, Mr. Williams, doesn't each state in which a vehicle is used have a legitimate interest in imposing taxes for the benefit of the roads in the state in which the vehicle is used?
Norman Charles Williams: --Absolutely, Your Honor.
But why should Vermont be able to charge me and not charge a resident for the use of the roads?
That is the problem that I have under the equal protection clause.
Unidentified Justice: Of course, even if you win, you may not win.
I mean the remedy for the equal protection violation might be to go back and charge all Vermonters.
Norman Charles Williams: Well, that would be one way to cure the equal protection claim.
I think that in order to do that, the legislature would have to face the entire constituency of Vermont.
It wouldn't be able to discriminate just against nonresidents who don't have a voice in the legislature.
However, they could certainly do that.
I think that would raise commerce clause questions, which I address in part three of the brief.
But I think that it would take care of the discrimination.
I also think this tax... the discrimination violates the privileges and immunities clause under cases like Zobel or cases like Austin v. New Hampshire and Justice O'Connor's concurrence in Zobel, not the main opinion in Zobel.
In Austin, this Court said clearly that a state cannot impose a higher tax burden on nonresidents than it does on residents in exactly the same circumstances.
That is one right that is protected by the privileges and immunities clause.
Unidentified Justice: Well, Mr. Williams, is it your claim that the vehicle that you purchased when you did not live in Vermont was never used outside the State of Vermont?
Norman Charles Williams: No.
That's not my contention.
Unidentified Justice: So the vehicle was used elsewhere?
Norman Charles Williams: --Yes, it was.
Unidentified Justice: And you think somehow it's wrong that each state can charge taxes for the use of the vehicle while in that state?
Norman Charles Williams: No.
I don't think it's wrong that Vermont should be able to charge me a tax.
I think it's wrong that Vermont should be able to charge me a tax but that it does not charge a tax to residents in the same circumstances.
I think it's wrong that I have to pay when a Vermont resident does not have to pay anything.
I don't object to paying it.
I just want to pay on the same basis as a Vermont resident in my situation.
I think it's clear that the privileges clause protects unequal taxation burdens, protects nonresidents against unequal taxation burdens, and--
Unidentified Justice: Maybe this is way out in left field, but how many people are in the same position you're in--
Norman Charles Williams: --I--
Unidentified Justice: --would you estimate?
Norman Charles Williams: --I checked the census, and it appears to me that about 14,000 people are moving to Vermont every year.
I don't know exactly what percentage of those people own cars.
Perhaps a third, a fourth of those people own cars.
The Attorney General has said that the tax brings in about a million dollars a year.
This... what I think is the illegal part of the tax brings in about a million dollars a year to the State of Vermont.
But, of course, none of this is in the record because this comes up on a motion to dismiss.
Once the privileges and immunities clause applies, then the Court is to look at whether nonresidents constitute a peculiar source of evil.
In this case I suppose, do nonresidents do a disproportionate share of road damage?
And I think it's obvious that they don't.
I think that residents who don't pay any tax probably do just as much damage, if not more damage, to roads.
Trucks just passing through do damage; recreational vehicles, trailers, all sorts of cars do road damage... people who don't pay taxes.
So there's no basis under the privileges and immunities clause for charging this discriminatory tax.
The final point--
Unidentified Justice: Mr. Williams, did you have to pay a sales tax in Illinois when you bought your car?
Norman Charles Williams: --Yes.
I paid a 7 percent tax.
Unidentified Justice: Would a Vermont resident buying a car in Illinois have to pay a sales tax?
Norman Charles Williams: Yes, if that Vermont resident stayed longer than the two or three-week minimum required by--
Unidentified Justice: Suppose he didn't.
Suppose he stayed there two weeks and bought a car in Illinois.
Norman Charles Williams: --Then he would have a choice.
Unidentified Justice: He would have a what?
Norman Charles Williams: He would have a choice, I think, about whether to pay Illinois or wait until he got back to Vermont.
Unidentified Justice: So he need not pay a sales tax?
Norman Charles Williams: That's right; if he left within two weeks he need not pay a sales tax.
In that connection, I point out what the Court said in Austin.
Unidentified Justice: Then the differentiation between the Illinois resident and the Vermont resident buying a car in Illinois is not so great after all.
Norman Charles Williams: Yes, that's right.
In that case, the Vermonter pays the exact same amount that I paid to Vermont.
But that Vermonter isn't in the same situation because I, like I suppose almost everyone who moves to Vermont, used my car in Illinois longer than two weeks after I bought it.
And any Vermonter in that same situation would also pay the tax.
Unidentified Justice: Well, suppose he didn't use it in Illinois at all.
He just knew a dealer and he gave him a good deal, and he bought it and shipped it right to Vermont.
He wasn't using Illinois roads, as you were.
Norman Charles Williams: That's right.
He wouldn't have to pay a tax to Illinois.
In fact, he could use Illinois roads for two weeks.
But the point is, I think, that someone in my situation that used the roads of Illinois for two months before moving to Vermont... let's say that I was a law clerk.
Someone down the hall is a Vermont law clerk; we're both in Chicago.
That person buys a car--
Unidentified Justice: Well, whatever you were, you were a resident of Illinois.
Norman Charles Williams: --I paid a tax to Illinois.
I'm not sure I was a resident of Illinois.
I paid a tax to Illinois when I bought my car.
I don't think that that point is in--
Unidentified Justice: Where did you live for the five years before you moved to Vermont?
Norman Charles Williams: --I lived in Paris, France.
Unidentified Justice: Where?
Norman Charles Williams: I lived in Paris, France.
Unidentified Justice: In where?
Norman Charles Williams: In France.
And I came back to Illinois and bought a car and moved to Vermont.
Unidentified Justice: Is this when you worked for Cudare Brothers?
Norman Charles Williams: That's right.
Unidentified Justice: What would have happened if the dealer in Illinois had arranged to have some person drive the car to Vermont and deliver it to you there?
What tax would have been due?
Norman Charles Williams: If I had lived in Vermont when I ordered the car?
I think that Illinois would not have required me to pay a tax if I ordered the car in Illinois.
And then I would have had to pay the 4 percent tax to Vermont.
I think, though, just to say it once more, people in the same situation, Vermont residents in the same situation that I was in in Illinois would pay the tax... would get a credit.
Unidentified Justice: I guess we have no way of finding out.
I'm curious to know just how many people would actually be in this situation of a Vermont resident who buys a car and Illinois and uses it for a couple of months in Illinois before bringing it back to Vermont.
I suppose just in the law of coincidences there may be some people that that happens to, but it would seem to me that it would be a fairly rare situation.
Norman Charles Williams: Well, as you say it's not... I the record I suggested some examples.
I don't think it would be all that rare.
I think any Vermonter who found himself in another state for a couple of months, especially a distant state, might well decide to buy a car, to use it while he was there in that other state.
Unidentified Justice: Apparently the legislature thought it happened often enough to provide for the exemption.
Norman Charles Williams: Right.
Unidentified Justice: For the deduction.
Norman Charles Williams: Right.
Unidentified Justice: Is it that group of people are the only ones who qualify for the exemption?
Norman Charles Williams: Any Vermont resident who pays a tax to another state qualifies for the exemption.
Unidentified Justice: So I mean the legislature apparently, as Justice White says, thought there were enough people in that category to justify creating a special exemption for them.
Norman Charles Williams: Exactly.
I think that even apart from the discrimination, the tax violates the commerce clause because even if, as Justice White suggested, the discrimination was removed and everyone who bought a car in another state had to pay a 4 percent tax to Vermont which is the case in four other states right now, in that case everyone would face a substantial incentive to buy their car in Vermont for tax reasons alone.
For example, if I was moving to Vermont and the prices of the cars were within a couple of percentage points of each other, it would be smarter for me, more economical for me to wait until I sell my car in Illinois, move to Vermont, and buy a car.
That way I would pay 4 percent.
Unidentified Justice: Well, but your incentive would perhaps still be to buy the car in Illinois because the Vermont tax is based on the used value rather than the sales value.
So what the incentive is for your commerce clause analysis, it seems to me, is just to delay the purchase a little bit until you've made the move, but it wouldn't influence where you made the purchase, I think, except perhaps to maybe slightly prefer to buy it out of state.
Norman Charles Williams: I'm not sure I agree with that.
I think that if I was in Illinois and I needed a car and it would be reasonable for me to buy one to move, it would be much better for me to wait.
If I bought it in Illinois, I would pay a 7 percent tax.
I would move to Vermont.
There might be some slight deterioration of the car that might be worth slightly less, but I would still pay 4 percent more.
So I would have a tax of 11 percent or almost 11 percent.
Unidentified Justice: Well, as long as there's a reciprocal arrangement, then for your commerce clause analysis it seems to me that the only incentive is just to delay the purchase until you've made your move.
Norman Charles Williams: That's right, and move--
Unidentified Justice: But it has nothing to do with where you make your purchase as long as there's this reciprocal arrangement.
Norman Charles Williams: --Well, that's right, except that it would certainly be convenient, once I had moved to Vermont, to buy in Vermont.
I take your point though.
Unidentified Justice: Mr. Williams, I guess it's 50 years ago now that in Silas Mason, Justice Cardozo said this: A state, for many purposes, is to be reckoned as a self-contained unit which may frame its own system of burdens and exceptions without heeding systems elsewhere.
If there are limits to that power, there is no need to mark them now.
There will be time enough to mark then when a taxpayer paying in the state of origin is compelled to pay again in the state of destination.
Is that this case?
Norman Charles Williams: That's certainly what happened to me.
Unidentified Justice: Well, I'm just wondering.
Has this issue been open for over 50 years now?
Norman Charles Williams: Yes.
That issue has never been decided.
I think what--
Unidentified Justice: What's the closest we've come to it?
Norman Charles Williams: --Well, I know that there are members of this Court who feel that Henneford may have even decided that issue, but I don't--
Unidentified Justice: That's what I was--
Norman Charles Williams: --I don't think so at least.
And I think that most of the members of this Court don't think that that issue was reached.
I think that the analysis under Henneford may have changed in the years... in the 50 years since it was decided.
I think that what has been decided since Henneford is that a state may charge a reasonable... for use of its own resources... in this case, roads... may charge a fairly apportioned fee or tax for that.
In this case, the fee isn't apportioned.
It is a one-time fee, a one-time tax that has very little, if anything, to do with actual use or actual damage to the roads.
And it's because it isn't apportioned that it calls into question the commerce clause under what I think is the modern analysis.
Because it isn't apportioned, it creates this incentive to change your purchasing decision based on the tax alone.
Unidentified Justice: --And that burdens commerce because it discourages buying in Illinois in favor of buying in Vermont?
Norman Charles Williams: Yes.
If all 50 states... I think under the modern analysis, the analysis in Arco v. Hardesty... if all 50 states had a tax like this, a person that was moving would wait, would always wait until they were in the state of destination.
A person who was already in a state wouldn't buy in another state because he'd have to pay tax twice.
And that's the kind of burden on interstate commerce that the commerce clause doesn't allow under the modern analysis.
If there's no further questions, I'd like to reserve the rest of my time.
Chief Justice Warren E. Burger: Mr. Eschen.
ORAL ARGUMENT OF ANDREW M. ESCHEN, ESQ. ON BEHALF OF THE APPELLEES
Andrew M. Eschen: Mr. Chief Justice and may it please the Court, in 1978 Susan Levine, one of the Appellants in this case, purchased a brand new 1979 Chrysler Horizon in New York State.
At the time of the purchase, she was a resident of New York.
Under New York law, she was obligated to pay that state's sales tax, and she paid that state sales tax.
If she wanted to use the car in New York, she was obligated to register the car, so she registered the car and she used the car there for over a year.
Then, in an act of her own free will, she decided to become a Vermont resident and she moved to Vermont and she engaged in employment in the state.
She's been in Vermont since 1979 and she's been using her vehicle in the state since 1979.
She registered her car in 1982, and at that time the State of Vermont simply asked if you are going to use your car on our highways, you should pay a fee; you should pay the same fee that we ask of any other individual who wants to use a car in the State of Vermont.
And the State of Vermont imposed a use tax, ad the use tax was based upon the value of the vehicle as of the time it was registered in the State of Vermont, as of the time she became a resident of the State of Vermont.
She had used the car for over three years.
The car had depreciated.
Accordingly, the use tax imposed by the State of Vermont was $110.
Unidentified Justice: Mr. Eschen, you refer to the tax as kind of a fee for the use of the roads.
But this is a one-time tax, isn't it?
Andrew M. Eschen: That's correct, Your--
Unidentified Justice: It's not like your yearly license renewal.
Andrew M. Eschen: --That's right, Your Honor.
Unlike several other... many other states... according to my research there are about 35 other states that impose an annual property tax or an annual excise tax on automobiles.
The only obligation in Vermont is to pay the purchase or use tax and then there's an annual $36 renewal on the registration.
Unidentified Justice: But the cars are not taxed as personal property?
Andrew M. Eschen: No, Your Honor.
Unidentified Justice: Mr. Eschen, when you recite the facts on the other Appellant's case, if you just had the same facts with respect to the purchase, the date of the purchase and the period of use and all the rest, but prior thereto she'd been a Vermont resident and she had a temporary job with an advertising agency in New York or something, knowing she'd come back to Vermont later, and she went there, bought the car at the same time, and then brought it back, would she have to pay the use tax?
Andrew M. Eschen: Your Honor, I'm not sure I understand your question.
If you're assuming that Ms. Levine was a resident of--
Unidentified Justice: Of Vermont, before she bought... at the time she bought the car, but she was temporarily employed in New York for a period of a year or two; she had bought it for the same price, everything else was exactly the same; would she pay the tax?
Andrew M. Eschen: --Your Honor, that brings into question the credit provision found in Section 8911.9 of Title 32 and how that applies.
The credit provision is available to a resident of Vermont who purchases a pleasure car in a reciprocal state and first registers it in the State of Vermont.
If she, as a resident of Vermont, had purchased the car in New York, had registered the car in New York and then later returned to Vermont, she would not receive credit from the State of Vermont.
She is still a legal resident of the State of Vermont and would still be obligated to register the car in Vermont if she wanted to use it in the state, and when she registered the car she would be obligated--
Unidentified Justice: What you're saying then is, there really is no discrimination at all.
Andrew M. Eschen: --You're absolutely correct, Your Honor.
Unidentified Justice: What's this case... this case is a non-case in your view then.
Is that it?
Andrew M. Eschen: That's correct, Your Honor.
Unidentified Justice: Now, finish your sentence.
She was a resident of Vermont in Justice Stevens' example.
She went to New York, bought a car, worked there for a year, came back, used the car, and then registered it in Vermont.
Now, when does the credit ever apply if it doesn't apply then?
Andrew M. Eschen: The only situation, Your Honor, in which the credit is available is when a resident of Vermont purchases the car in a reciprocal state and first registers the car in the State of Vermont.
The legislature, when it enacted Section 8911.6--
Unidentified Justice: When it first registers?
You mean it doesn't register it in the--
Andrew M. Eschen: --That's correct.
It was observed in a West Virginia Supreme Court--
Unidentified Justice: --The person had to pay a tax in the reciprocal state, but... right?
Otherwise, there wouldn't be any occasion for a credit.
Andrew M. Eschen: --That's true.
In some... from my research I found three states... there are only three states that I have been able to locate which actually impose a sales tax on nonresidents, period.
Every other state pretty much provides that if a nonresident purchases a car in that state, provided that the nonresident does not register--
Unidentified Justice: Is this construction that you suggested here of your exemption provision, is that plain enough from the opinion below?
Andrew M. Eschen: --I would have to say that it is not.
Unidentified Justice: As the case comes to us, it sounds to me like the case is as your colleague on the other side describes it.
That's the way... at least that's what the lower court, the court below upheld.
Isn't that right?
Andrew M. Eschen: --No, Your Honor.
I agree with Your Honor that the decision does not specifically say what I have just said.
I argued the case before the Vermont Supreme Court and--
Unidentified Justice: In these same terms?
Andrew M. Eschen: --Yes, Your Honor.
In fact, if I may, I'd like to give to this Court the same examples that I used before the Vermont Supreme Court to explain how the tax scheme operates.
Using Ms. Levine as an example, she was liable to Vermont for $110 when she became a resident and registered the vehicle in the state.
The tax was based upon a 1979 Chrysler Horizon, registered in the state as of 1982 when she became a resident.
If a resident, at the same time that she registered her car in Vermont, had purchased the identical Chrysler Horizon, 1979 model, had purchased it in Vermont, he would have paid to Vermont a purchase tax of 4 percent or $110, the same amount that was requested of Ms. Levine.
Unidentified Justice: Let me interrupt you if I may.
I don't think you should be giving us examples of purchases in Vermont because nobody claims any discrimination based on... aren't they just based on purchases either in New York or Illinois or out of state?
Andrew M. Eschen: Well, Your Honor, even using the examples of purchases out of state, I'd still--
Unidentified Justice: And isn't that all that the Supreme Court dealt with was purchases out of state?
I mean as I understand it, that's the claimed discrimination.
And you're saying there is no such discrimination, and then you give us an example of a purchase in Vermont, which just confuses the issue as far as I'm concerned.
Andrew M. Eschen: --Well, the point I'm trying to make, Your Honor--
Unidentified Justice: I'm sorry.
Andrew M. Eschen: --is that any individual who is registering that same car in Vermont, regardless of where the vehicle may have been purchased, is going to pay $110.
The resident who buys it in Vermont pays $110.
Unidentified Justice: But Mr. Eschen, the complaint, as I understand it, is that the nonresident of Vermont is paying two taxes.
It isn't the discrimination on the tax in Vermont; it's the fact that the other state, Illinois or New York or whatever it is, also extracted a tax and they're complaining about the second tax.
And when I asked Mr. Williams the same question that Justice Stevens asked you about the resident of Vermont who first registers a car out of state, he gave the opposite answer--
Andrew M. Eschen: --I realize that.
Unidentified Justice: --and disagrees with you.
Andrew M. Eschen: I realize that, Your Honor.
Unidentified Justice: Now, how are we supposed to resolve that?
What... do you have some definitive holding in the State of Vermont that back up your claim as to what the law is?
How do we know?
Andrew M. Eschen: Well, Your Honor, I admit that it is a difficulty in this case because the decision of the Vermont Supreme Court does not specifically address the first registration principle that I've discussed.
However, it was discussed, it was brought to the Court's attention, and the Court concluded that there was no discrimination.
The Commissioner of Motor Vehicles of the State of Vermont is empowered to administer the Act.
Section 8911.9 has an ambiguity in it in the form of the word "acquired".
In contrast to other credit provisions in section 8911, the legislature has chosen to use the word "acquired" rather than "owned" or "purchased" or "used".
This, we submit, created an ambiguity in the statute as to when the credit provision should be applied.
However, the legislature has specifically stated in section 8901 that the purpose of the tax was to raise revenue for the maintenance and improvement of the state highway system.
The tax is imposed on users.
Anybody who is going to use the state highways, who is a resident--
Unidentified Justice: Well, there's no argument from the other side that there shouldn't be a... that people who use the roads shouldn't pay.
It's the discrimination, the claimed discrimination.
Let me ask you while I've interrupted you, suppose the tax operated in the way that you would think it operated from reading the opinion of the Supreme Court or, even more specifically, the way it operated, the way your colleague on the other side states the case.
What if he were right in answering Justice O'Connor's question the way he did?
And in Justice Stevens' example, the lady, the Vermont resident, who goes to New York, works for a year, buys a car and comes back to Vermont... suppose that she would get the credit, but that a New York resident who moved up there the same day would or wouldn't.
Now, suppose that were the way the law operated.
What do you think?
Would you be in constitutional trouble?
Andrew M. Eschen: --I don't believe so, Your Honor.
Unidentified Justice: Why not?
Andrew M. Eschen: The credit provision, even if the Court were to resume Mr. Williams' application, the credit provision is available to a resident of Vermont.
There is no durational requirement.
Anybody who is a resident of Vermont who subsequently purchases an automobile is entitled to the credit.
It is a tax expenditure by the State of Vermont.
Unidentified Justice: Yes, but a newly arrived resident who wasn't a resident when he bought his car doesn't get the credit under his version.
Andrew M. Eschen: --That's correct.
The reason, Your Honor, I think is plain.
In Mr. Williams' example, in Ms. Levine's case, they had purchased their cars as residents of those states and they wanted to use their cars in those states, and they used their cars in those states.
Ms. Levine used her car in New York for over a year.
Mr. Williams used his car in Illinois for over two months.
Unidentified Justice: Were both of them residents of the other state when they purchased the car?
Andrew M. Eschen: Were both of them residents?
Unidentified Justice: Yes.
Andrew M. Eschen: Your Honor, I don't know.
The complaint in the case--
Unidentified Justice: My problem is that if you pay a tax in a state and then you move to another state and you have a personal property tax, automatically you are subject to that tax.
Andrew M. Eschen: --Your Honor, this is no personal--
Unidentified Justice: Is that right or wrong?
Andrew M. Eschen: --This is not a personal property tax.
Unidentified Justice: I know that.
But isn't that true in the personal property tax states?
Andrew M. Eschen: That if the item comes to rest in the other state and it becomes a part of the--
Unidentified Justice: Well, isn't this the same?
Wouldn't this be governed by the same rule as the personal property tax would?
Andrew M. Eschen: --I would think that it would.
I would think that it would.
Unidentified Justice: Can you think of any reason why it shouldn't be?
I mean when these people buy a car in another state and abide by all the rules of that state which uses the money to keep its roads, then it moves to another state, I think your argument, is it, so to abide by those rules.
Andrew M. Eschen: That's true, Your Honor.
That was one of my arguments under--
Unidentified Justice: But he says that if you were a resident of the state when you bought the car in the other state, then you get a credit.
Andrew M. Eschen: --Your Honor, if you were a resident of the State of Vermont and you purchased the car in a reciprocal state and did not register the car in that state and brought it back to Vermont and first used it in Vermont, you would get the credit.
But the situation in that case in that--
Unidentified Justice: The registry is what... the registering is what starts it.
Andrew M. Eschen: --The registration--
Unidentified Justice: What causes it.
Andrew M. Eschen: --Triggers the tax.
Unidentified Justice: To register in another state.
If they hadn't registered, they'd get a credit.
Andrew M. Eschen: No.
If the Appellants, as residents of their prior--
Unidentified Justice: All right.
The Appellant in this case buys a car in New York, registers it in New York, and lets it sit in the garage for three months, and then brings it to Vermont, what happens?
Andrew M. Eschen: --That individual would be liable to the state for a use tax based upon the value of the tax... based upon the value of the vehicle as of the time of registration.
Unidentified Justice: I didn't say they registered it.
They didn't register it in New York.
Andrew M. Eschen: That's what I'm saying.
If he did not--
Unidentified Justice: If he kept it in the garage for three months and brought it into Vermont, they'd get the benefit of this tax, if they didn't register.
Andrew M. Eschen: --But they did register it in Vermont.
Unidentified Justice: They didn't register in New York for three months.
Andrew M. Eschen: Right.
Unidentified Justice: And then they brought it to Vermont and registered it, they would have the benefit of that deduction.
Andrew M. Eschen: No, they would not, Your Honor.
Unidentified Justice: I thought you said the registering is what triggered it.
Andrew M. Eschen: The registration in Vermont triggers the tax liability in Vermont.
Prior to the time a person becomes a resident, he has no obligation to register the vehicle.
Once he becomes a resident, he's obligated to register the vehicle, at which point the tax is imposed.
In the situation where a nonresident purchases a car in his own state and then brings it to Vermont and registers it in Vermont, he will not receive a credit.
The credit is available to a resident of Vermont who subsequently acquires the motor vehicle and first registers it in the State of Vermont.
If he first registers it outside the State of Vermont and brings it back to Vermont and registers it in Vermont, he will be denied the credit.
The reasoning is, the purpose of the credit provision was simply to enable Vermonters to take advantage of the extensive, relatively extensive automobile markets that are located outside the State.
Vermont is a very small state, but at the same time we're surrounded by New Hampshire, Massachusetts, and New York, all of which have considerably larger and accessible automobile markets.
What the legislature intended to do was simply to give the Vermonter the option of exploring automobile markets in other states.
The credit is available only if the car is purchased in a reciprocal state.
Unidentified Justice: May I interrupt again?
I really am getting in trouble here.
Are you telling us that in our hypothetical examples, if the Vermont resident that registered the car in New York, that he would be denied the exemption?
Andrew M. Eschen: That's right, Your Honor.
Unidentified Justice: But the Supreme Court says the contrary in its opinion.
"Residents who purchase pleasure cars outside the state and pay a sales or use tax to another state are exempt from paying a use tax to the State of Vermont. "
You're disagreeing with that.
That's page 21 and 22A of the... if I understand your argument.
Andrew M. Eschen: Your Honor, I--
Unidentified Justice: Do you agree or disagree with the Vermont Supreme Court statement that I just read?
Andrew M. Eschen: --I'd ask the Court's... an apology--
Unidentified Justice: The statement says:
"Residents who purchase pleasure cars outside the state. "
--this is somebody in New York now--
Andrew M. Eschen: --Right.
Unidentified Justice: "# and pay a sales or use tax to another state. "
--to New York--
Andrew M. Eschen: Right.
Unidentified Justice: "# are exempt from paying a use tax to the State of Vermont. "
Is that true or... it goes and says,
"at least to the extent of the tax provided there is a reciprocal arrangement. "
And I assume all of that is complied with.
Andrew M. Eschen: That's... yeah.
When you read the rest of the sentence, that is true; at least to the extent of the tax paid to the other state, providing the state is a reciprocal state.
Unidentified Justice: Well, is Vermont... is New York a reciprocal state?
Andrew M. Eschen: Yes.
New York and--
Unidentified Justice: So then it is exempt here, even if it's not registered... there is no reference to registration in the state.
Andrew M. Eschen: --But, Your Honor, as we argued to the Vermont Supreme Court, section 89--
Unidentified Justice: Do you agree or disagree that that's a correct statement of the law of Vermont?
Andrew M. Eschen: --Your Honor, I believe it is a correct statement as far as it goes.
It doesn't except the administration, the actual administration of the tax.
The tax is administered by the Commissioner of Motor Vehicles.
And the problem in this case is that section 8911(9) talks about the credit being available to a resident and upon the application for registration, which brings into question, or brings into the case the other statutes which are in pari materia, the state's registration statutes and the state's residency laws.
And when the statutes are put together, as the Commissioner has interpreted and as it has been argued to the Vermont Supreme Court, the credit is only available if the resident first registers the car in the State of Vermont.
And I think the logic is plain because if the resident, if the purpose of the credit provision is simply to enable the Vermonter to make a quick trip to another state to make a purchase and to return to Vermont to use the car in Vermont, as the Court pointed out before, it's unlikely that a resident of Vermont is going to make a shopping trip in another state and then actually register the car in the state in which it is purchased.
Unidentified Justice: Well, Mr. Eschen, I asked you some time ago what we could look to know if you're correct on your interpretation.
You didn't answer the question.
Is there another Vermont Supreme Court decision to cite to us?
Andrew M. Eschen: No, Your Honor.
Unidentified Justice: It's just your version against Mr. Williams' version.
Andrew M. Eschen: It is... that's correct, Your Honor.
Unidentified Justice: Does the... who enforces this tax?
Andrew M. Eschen: --It is administered by the Commissioner of Motor Vehicles.
Unidentified Justice: And are there regulations issued with respect to this?
Andrew M. Eschen: There are no formal regulations, Your Honor.
I have discussed with the Commissioner what are the various scenarios, and this is the representation--
Unidentified Justice: Well, you'd never gather your... I'll say again, you would never gather your interpretation from what you can read in the--
Andrew M. Eschen: --I'm not disagreeing with you, Your Honor.
I'm not disagreeing with you.
But I'm submitting that the interpretation that we advance--
Unidentified Justice: --You didn't file a response to the... you didn't file a motion to dismiss to the jurisdictional state, did you?
Andrew M. Eschen: --That raises another complicated question, and that is--
Unidentified Justice: You waived it.
Andrew M. Eschen: --We waived it because this case, Williams, was based upon the decision of the Vermont Supreme Court in Leverson.
And in Leverson, which is actually the decision that's before the Court, we did submit a motion to dismiss or affirm.
So when I received the jurisdictional statement, I did send a letter to the Court indicating that we were waiving the motion to dismiss because, as I said, the case was decided on the basis of Leverson and we already submitted a motion to dismiss in that case.
The... under the examples that I said before, everybody who registers that car at the same time would be paying the same amount of tax.
The resident who purchased the car in a reciprocal state and first registered it in Vermont would pay $110.
It would be kept by the reciprocal state, but that individual has only acquired a singular privilege of driving in Vermont.
By not registering the car in that other state, he has acquired no privileges in that state, except perhaps the temporary privileges that may attend the intransit registration.
Just about all states provide that a nonresident can avoid paying the sales tax on an automobile purchase if he or she obtains an in-transit registration rather than a permanent registration.
And that's what the legislature was envisioning when it enacted this credit provision, to simply enable the Vermonter to make the quick trip, come back to Vermont, and register the car in Vermont.
In the case where the resident first registers the vehicle in the other state and then returns to Vermont and registers the car in Vermont, he is not extended a credit, and justifiably.
In that situation, the individual has acquired the privilege of using the vehicle in several states, in two states.
And it's only fair that if he is going to use... or if he's obtained this privilege, that he should pay each state.
The Court has long recognized that the use tax is a legitimate means of raising revenue.
And the State of Vermont is certainly within its authority to ask the Appellants in this case, once they become residents of the state, to pay the use tax.
Similarly, the states are within their authority to impose a sales tax.
I find it ironic that Mr. Williams is complaining that the one-time fee imposed by the State of Vermont in the amount of 4 percent of the value of a vehicle as of the time it is registered in Vermont is unfair, yet he's not complaining about the one-time fee that he had to pay to Illinois when he purchased the car there.
I think really what the situation presents--
Unidentified Justice: Anybody who is... any Vermont resident who is entitled to the credit, whatever that condition might be, doesn't pay for the use of the Vermont roads.
Andrew M. Eschen: --Well, Your Honor, he does.
Unidentified Justice: Well, you mean because he's paid it to the other state and the state is a reciprocal state?
Andrew M. Eschen: That's correct, Your Honor.
Unidentified Justice: Well, it doesn't help him much.
I mean it helps him a lot, I guess, but it doesn't help people who don't get the credit.
Andrew M. Eschen: Well, that's right, Your Honor, but there's a reason why Mr. Williams should not get the credit.
If Mr. Williams gets the credit in this case, it means that Mr. Williams will have paid to the State of Vermont absolutely nothing.
He will acquire the same privilege of using the car in Vermont that any other individual would have to pay for.
Unidentified Justice: Well, you're saying because of reciprocity, the Vermont resident who gets the credit is really paying for the use of the roads, of the Vermont roads, because he paid some money to New York.
Andrew M. Eschen: --Because, for the same reasoning, the New Yorker who buys a car in Vermont and goes back to New York.
It's a reciprocal arrangement.
Unidentified Justice: So why doesn't that apply to him, too?
Andrew M. Eschen: Well, because, Your Honor--
Unidentified Justice: I don't follow that.
Andrew M. Eschen: --Well, Your Honor, the Appellant purchased his car, presumably, while he was a resident of that state.
As a resident of that state... and he wanted to use his car in his own state.
And he was liable if he wanted--
Unidentified Justice: Your other hypothetical, we have this woman who goes to New York and lives for a year and works for an advertising agency, wants to work there for a year in New York, but she doesn't have to pay the tax, if I understand your--
Andrew M. Eschen: --She would if she registered the vehicle in New York.
If she is a resident of... a legal resident of Vermont who accepted employment in New York and because of her... whatever contacts in New York and the laws dealing with residency in New York for motor vehicle purposes, she is required to register her car there, and she registers her car there.
Unidentified Justice: --This is based on... anyway, that's what you say the law is, although--
Andrew M. Eschen: That's correct, Your Honor.
The Appellants' privileges and immunity--
Unidentified Justice: --Well, how are we supposed to resolve this question of what the law... should we certify a question to the Vermont Supreme Court and say did you really mean what you said?
How do we do this?
We've got to decide a case here.
Andrew M. Eschen: --Well, Your Honor, I--
Unidentified Justice: I never have seen one like this before where the opinion is perfectly clear, and then the Attorney General of the state comes up and says the Supreme Court of the state didn't know what it was talking about.
Andrew M. Eschen: --Well, Your Honor, the facts of the case were presented to the Vermont Supreme Court and the Vermont Supreme Court concluded that there was no discrimination.
The examples that I have given to this Court were the same examples that I gave to the Vermont Supreme Court.
Now, I'm really... I'm not disagreeing with Your Honor.
The decision is not clear.
Unidentified Justice: To say the least.
Andrew M. Eschen: But I submit that the decision has been made by the court, and that under Vermont law the Commissioner's interpretation has been accepted.
The privileges and immunities challenge, I believe, is also without merit.
Again, the tax was imposed only after the Appellants became residents of the State of Vermont.
The interesting issue in this case is simply the right to register a motor vehicle or the access to registering a motor vehicle.
They are in essence challenging the laws of their own state.
Prior to becoming residents, they did not have any obligation to pay the tax.
The tax was incurred only when they became residents.
So I would submit that there is a question of standing as to whether they could challenge it under the privileges and immunities clause.
But even if they could, again the interest in this case is certainly not an interest of the same caliber as the Court has recognized in other privileges and immunities cases... Hicklin... we're not dealing with a right to seek employment; we're not dealing with a fundamental right to vote.
This is simply the right to register an automobile.
And I think the case of Baldwin v. Fish and Game Commission of Montana would be dispositive of that point.
The commerce clause issue I submit is also with merit.
The Appellants contend that there is a requirement of apportionment; yet, they hardly define what they mean by apportionment.
To the extent that they disagree with a tax based upon the value of a vehicle, the decision of the court in Capital Greyhound Lines v. Brice is dispositive of that contention.
To the extent that they claim that apportionment is required to reflect prior use in the other state, I submit that the Vermont tax scheme whereby the vehicle is taxed on the value as of the time it is used in the State of Vermont, registered in the State of Vermont, would satisfy the requirement of apportionment.
It is a reasonable way of dealing with the situation where a vehicle has been used outside the state.
I would conclude, Your Honors, by saying that the statute is unclear and it was for that reason that it was submitted to the Vermont Supreme Court.
The Vermont Supreme Court concluded that there was no discrimination.
I have made representations to the Court as to how this statute and the tax provisions are administered.
Those are based upon my discussions with the Commissioner of Motor Vehicles and other officials in the department.
That is their representation of how it is administered.
I have no reason to disagree with that.
I can very well appreciate the Court's concern about the Vermont Supreme Court's decision in not specifically addressing the scenarios that I have addressed to the Court today, but I would nevertheless submit that the interpretation that we have advanced is an interpretation that would show that there is equality of treatment by the State of Vermont.
Chief Justice Warren E. Burger: Do you have anything further, Mr. Williams?
Norman Charles Williams: --If the Court has no questions, I have nothing further.
Chief Justice Warren E. Burger: Very well.
Thank you, gentlemen.
The case is submitted.