FULTON CORPORATION v. FAULKNER

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Case Basics
Docket No. 
94-1239
Petitioner 
Fulton Corporation
Respondent 
Faulkner
Advocates
(Argued the cause for the petitioner)
(Argued the cause for the respondent)
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Facts of the Case 

After North Carolina levied an "intangibles tax" on a fraction of the value of corporate stock owned by state residents inversely proportional to the corporation's exposure to the State's income tax, the Fulton Corporation, a North Carolina company, filed a state-court action against the State Secretary of Revenue, seeking judgment that the tax violated the Federal Commerce Clause by discriminating against interstate commerce. The trial court ruled for the Secretary, but North Carolina's Court of Appeals reversed, holding that the taxable percentage deduction violated the Commerce Clause. In reversing, the North Carolina Supreme Court found that the State's scheme imposed a valid compensatory tax and that the intangibles tax imposed less of a burden on interstate commerce than the corporate income tax placed on intrastate commerce.

Question 

Does North Carolina's "intangibles tax" on a fraction of the value of corporate stock owned by North Carolina residents inversely proportional to the corporation's exposure to the State's income tax violate the Federal Commerce Clause?

Conclusion 
Decision: 9 votes for Fulton Corporation, 0 vote(s) against
Legal provision: Article 1, Section 8, Paragraph 3: Interstate Commerce Clause

Yes. In a unanimous opinion delivered by Justice David H. Souter, the Court held that North Carolina's intangibles tax discriminates against interstate commerce in violation of the dormant Commerce Clause. Justice Souter reasoned that the tax discriminated on face against interstate commerce by taxing stock only to the extent that its issuing corporation participated in interstate commerce. "North Carolina's intangibles tax facially discriminates against interstate commerce, it fails justification as a valid compensatory tax, and, accordingly, it cannot stand," wrote Justice Souter. Chief Justice William H. Rehnquist wrote a concurring opinion.

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FULTON CORPORATION v. FAULKNER. The Oyez Project at IIT Chicago-Kent College of Law. 22 October 2014. <http://www.oyez.org/cases/1990-1999/1995/1995_94_1239>.
FULTON CORPORATION v. FAULKNER, The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/1990-1999/1995/1995_94_1239 (last visited October 22, 2014).
"FULTON CORPORATION v. FAULKNER," The Oyez Project at IIT Chicago-Kent College of Law, accessed October 22, 2014, http://www.oyez.org/cases/1990-1999/1995/1995_94_1239.