The Oyez Project: Economic Activity Issues - State Tax Decisions

Alaska v. American Can Co.

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Alaska v. Arctic Maid

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Allegheny Pittsburgh Coal v. Webster County

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Allied Stores Of Ohio v. Bowers

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Allied-Signal, Inc., As Successor-In-Interest To Bendix Corp. v. Director, Division Of Taxation

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Amerada Hess Corp. v. N. J. Taxation Di

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American Bank & Trust Co. v. Dallas County

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American Motors Corp. v. Kenosha

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American Oil Co. v. Neill

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American Trucking Associations, Inc. v. Scheiner

Do flat state taxes on the use of a state's highways run afoul of the Commerce Clause by discriminating against interstate commerce?

Yes. In a 5-to-4 decision, the Court held that the flat taxes violated the basic principle that the Commerce Clause created an area of trade free from interference by the states. One problem with the flat taxes is that they do not pass the "internal consistency" test, which is to say that they could not be applied by every state without interfering with free trade. If many states adopted them, truckers would pay more to go through those states than to drive the same distance in only one state. This would disrupt the market for interstate transportation services. In addition, because the cost to out-of-state truckers is approximately five times as heavy per mile, the taxes have a discriminatory effect. It is no defense that Pennsylvania's registration fee is fairly high, conferring a competitive advantage to trucks based in other states; the solution to that problem is to lower the level of the registration fee. It is also no defense to describe the flat taxes as user fees because such fees are acceptable only insofar as they are neither discriminatory nor excessive. Finally, Pennsylvania cannot appeal to administrative convenience because it has shown itself capable of administering taxes that reflect the quantity of highway use.

American Trucking Associations v. Smith

(1) Does the Court's decision in Scheiner apply retroactively? (2) Even if the Scheiner decision does not apply retroactively, can the state keep taxes collected before the escrow account was established when those taxes are for the tax year July 1, 1987 to June 30, 1988, a period after Scheiner?

No and no. A plurality of the Court held that Scheiner did not apply retroactively, and that state collection of taxes for the tax year beginning July 1, 1987, before the establishment of the escrow account, was unconstitutional. Applying the test of non-retroactivity articulated in Chevron Oil v. Huson, 404 U.S. 97 (1971), the Court found that Scheiner clearly established a new principle of law; that the purpose of the Commerce Clause did not support retroactive application; and that equitable considerations weighed heavily against retroactivity. The Court went on to reverse the Arkansas Supreme Court's decision not to refund taxes already collected for the tax year beginning July 1, 1987, reasoning that the conduct to which Scheiner applied prospectively was the use of the highway, not the payment of money therefor. Justice Scalia concurred in the result, but disagreed with the plurality's retroactivity analysis. He found that the only reason to follow Scheiner, which he believed to be wrongly decided, was the doctrine of stare decisis, which only applies prospectively.

Arizona Public Service Co. v. Snead

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Arkansas Writers' Project, Inc. v. Ragland

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Armco Inc. v. Hardesty

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Asarco Inc. v. Idaho State Tax Comm'n

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Associated Industries of Missouri v. Lohman

Does Missouri's use tax violate the Commerce Clause by discriminating against interstate commerce in those localities where the use tax exceeds the local sales tax?

Yes. The Court held that the use tax was discriminatory in those localities where it exceeded the local sales tax. Such discrepancies, between certain localities' sales taxes and the state use tax, prevented the latter tax from being a valid "compensatory" tax, since it obviously did not impose a "substantially similar" burden on the interstate and intrastate commerce of such localities. The Court added that in those localities where the use tax did not exceed the local sales tax, no discriminatory treatment resulted and so the use tax's application would not be struck down in its entirety. Instead, the Court remanded the case back to Missouri for a decision on how to best correct certain of its localities' existing tax discrepancies.

Austin v. New Hampshire

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Bacchus Imports Ltd. v. Dias

Did Hawaii law violate the Import-Export Clause and the Commerce Clause of the Constitution?

The Court found that the Hawaii Liquor Tax violated the Constitution. Justice White reaffirmed what he called a "cardinal rule of Commerce Clause jurisprudence" in arguing that states are prohibited from imposing taxes which discriminate in the traffic of interstate commerce. Since the law was originally enacted to support local industries in Hawaii, and the alcoholic products which the law exempted competed with different beverages produced outside the state, Justice White concluded that there were clear constitutional violations in this case.

Barclays Bank Plc v. Franchise Tax Board Of California

1) Does a state violate the Due Process Clause by accepting "reasonable approximations" of financial data?

2) By requiring multinational corporations to provide exhaustive financial information to calculate taxes, does a State impose a disproportionately large compliance burden upon the corporation and thereby violate the anti-discrimination requirement of the Commerce Clause?

Justice Ruth Ginsburg wrote the opinion for a 7-2 Court. (1) The Court dismissed the alleged Due Process violation because a corporation could take action against the Tax Board if it felt the approximated amount was inaccurate. (2) Reasoning that the use of "reasonable approximations" minimized a multinational's compliance burden, the Court also dismissed the alleged Commerce Clause violation. The Court recognized that the "worldwide combined reporting" method carried a risk of double taxation by both the state and the federal government, but reasoned that this did not violate the Commerce Clause because every other method employed by the state to tax foreign commerce carried the same risk. Also, the Court found no "specific indications of congressional intent" to enforce uniformity in taxation of foreign commerce by preempting the California tax laws.

Boston Stock Exchange v. State Tax Comm'n

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Braniff Airways v. Nebraska Board

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Burlington No. R. Co. v. Okla. Tax Comm'n

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Camps Newfound/Owatonna v. Harrison

Did Maine's tax exemption statute violate the Commerce Clause?

Yes. In a 5-to-4 opinion, the Court held that Maine's tax exemption statute violated the dormant commerce clause since it selectively awarded greater tax benefits to those institutions which served mostly state residents, while penalizing institutions that conducted mostly interstate business. By imposing such selective benefits on a commercial activity in which it did not directly participate, the Court found Maine's governmental tax regulations to be an unconstitutional form of economic protectionism favoring local consumers and business providers.

Central R. Co. v. Pennsylvania

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Chemical Waste Management, Inc. v. Hunt, Governor Of Alabama

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City Of Detroit v. Murray Corp.

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Colonial Pipeline Co. v. Traigle

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Commonwealth Edison Co. v. Montana

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Complete Auto Transit Inc. v. Brady

Did the Mississippi tax violate the Commerce Clause because it placed a burden on an activity associated with interstate commerce?

A unanimous Court found the tax valid. Businesses involved in interstate commerce should assume a just share of the state tax burden. The Court's decision established four criteria to be met for a state tax to be valid and not an unreasonable burden on interstate commerce. The tax must be (1) on an activity connected to the state, (2) fairly apportioned to be based on intrastate commerce, (3) nondiscriminatory, and (4) related to state services provided. These criteria are only valid if Congress has not imposed conflicting regulations.

Container Corp. v. Franchise Tax Bd.

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Cory v. Western Oil & Gas Assn.

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D. H. Holmes Co. v. Mcnamara

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Department Of Revenue Of Oregon v. Acf Industries, Inc.

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Dunbar-Stanley Studios v. Alabama

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Evansville Airport v. Delta Airlines

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Evco v. Jones

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Exxon Corp. v. Eagerton

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Exxon Corp. v. Wisconsin Dept. Of Revenue

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F. W. Woolworth Co. v. Taxation & Revenue Dept.

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First Federal S. & L. v. Massachusetts Tax Comm'n

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First National Bank v. Bartow Cty. Tax Assessors

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Ford Motor Credit Co. v. Department Of Revenue, Florida

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Fulton Corporation v. Faulkner

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?

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.

Gen. Motors v. District Of Columbia

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General Motors Corp. v. Tracy

Does the State of Ohio's different tax treatment of sales of gas by domestic utilities subject to regulation and sales of gas by other entities violate the Commerce Clause or Equal Protection Clause?

No. In an 8-1 opinion delivered by Justice David H. Souter, the Court held that Ohio's differential tax treatment of natural gas sales by public utilities and independent marketers violated neither the Commerce Clause nor the Equal Protection Clause. After concluding that GMC had standing to raise a Commerce Clause challenge, Justice Souter wrote for the Court, "we conclude that Ohio's regulatory response to the needs of the local natural gas market has resulted in a noncompetitive bundled gas product that distinguishes its regulated sellers from independent marketers to the point that the enterprises should not be considered 'similarly situated' for purposes of a claim of facial discrimination under the Commerce Clause. GMC's argument that the State discriminates between regulated local gas utilities and unregulated marketers must therefore fail." Justice John Paul Stevens dissented.

General Motors v. Washington

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Goldberg v. Sweet

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Gurley v. Rhoden

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Halliburton Oil Well Co. v. Reily

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Heublein, Inc. v. South Carolina Tax Comm'n

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Hunt-Wesson, Inc. v. Franchise Tax Board of California

Does California's exception to its interest expense deduction, which it measures by the amount of nonunitary dividend and interest income that a nondomiciliary corporation has received, violate the Due Process and Commerce Clauses?

Yes. In a unanimous opinion delivered by Justice Stephen G. Breyer, the Court held that the provision violates the Due Process and Commerce Clauses. "California's statute does not directly impose a tax on nonunitary income. Rather, it simply denies the taxpayer use of a portion of a deduction from unitary income..., income which does bear a 'rational relationship' or 'nexus' to California," wrote Justice Breyer. "Because California's offset provision is not a reasonable allocation of expense deductions to the income that the expense generates, it constitutes impermissible taxation of income outside its jurisdictional reach," concluded Justice Breyer.

Int. Harvester Corp. v. Goodrich

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Itel Containers International Corp. v. Huddleston, Commissioner Of Revenue Of Tennessee

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Japan Line, Ltd. v. County Of Los Angeles

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Jefferson County v. Acker

May Jefferson County impose a "license or privilege tax" upon two U.S. District Judges? Was the dispute properly transferred to the federal district court under the federal officer removal statute? Does the Tax Injunction Act deprive the district court of jurisdiction to adjudicate the matter?

Yes, yes, and no. In an opinion delivered by Justice Ruth Bader Ginsburg, the Court held that Jefferson County may impose an occupation tax on the U.S. District Judges, for "Jefferson County's tax operates as a nondiscriminatory tax on the judges' compensation, to which the Public Salary Tax Act of 1939 consents when it allows States to tax the pay that federal employees receive if the taxation does not discriminate against [that] employee because of the source of the pay or compensation." Further, the Court held that the case was properly removed under the federal officer removal statute because the Jefferson County tax effects the judges' "performance of federal judicial duties in the county and risks interfering with the Federal Judiciary's operation in violation of the intergovernmental tax immunity doctrine." The Court also concluded that the Tax Injunction Act did not bar federal-court adjudication of the matter.

Kern-Limerick, Inc. v. Scurlock

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Kosydar v. National Cash Register Co.

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Kraft General Foods, Inc. v. Iowa Department Of Revenue And Finance

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Laurens F. S. & L. v. S. C. Tax Comm'n

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Lehnhausen v. Lake Shore Auto Parts Co.

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Limbach v. Hooven & Allison Co.

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Lunding v. New York Tax Appeals Tribunal

Does New York Tax Law section 631(b)(6), which effectively denies only nonresident taxpayers a state income tax deduction for alimony paid, violate the Privileges and Immunities Clause of the Constitution?

Yes. In a 6-3 opinion delivered by Justice Sandra Day O'Connor, the Court held that, in the absence of a substantial reason for the difference in treatment of nonresidents, section 631(b)(6) violates the Privileges and Immunities Clause by denying only nonresidents an income tax deduction for alimony payments. "The alimony obligation may be of a 'personal' nature, but it cannot be viewed as geographically fixed in the manner that other expenses, such as business losses, mortgage interest payments, or real estate taxes, might be," wrote Justice O'Connor. Justice Ruth Bader Ginsburg wrote a dissenting opinion, in which Chief Justice William H. Rehnquist and Justice Anthony M. Kennedy joined.

Maryland v. Louisiana

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McKesson Corp. v. Florida Alcohol & Tobacco Division

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Memphis Bank & Trust Co. v. Garner

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Metropolitan Life Ins. Co. v. Ward

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Michelin Tire Corporation v. Wages

Did the Gwinnett County tax violate the Import-Export Clause by taxing goods that maintained the character of imports?

The Court affirmed the decision of the Georgia Supreme Court, finding the tax to be valid. The Court stated that the Framers of the Constitution had adopted the Import-Export Clause to give the federal government a source of revenue and the superior position to regulate such foreign trade. This was to overcome the problems under the Articles of Confederation where states lacked uniformity in import regulation, burdening inter-state trade. The property tax was consistent with the Import-Export Clause because it did not (1) interfere with the Federal Government's regulation of foreign commerce (2) deprive the Federal Government of its exclusive right to revenues from imposts and duties on imports (3) interfere with the free flow of goods between the states. It taxed the use of the property and was not based on the origin of the goods.

Minn. Star & Trib. Co. v. MN Comm. of Rev.

Did the taxing scheme enacted by the Minnesota legislature violate the freedom of press guaranteed by the First Amendment?

The Court held that while the First Amendment did not prohibit all regulation of the press, Minnesota had "created a special tax that applie[d] only to certain publications protected by the First Amendment." Noting that there was "substantial evidence that differential taxation of the press would have troubled the Framers of the First Amendment," the Court held that when states single out the press "the threat of burdensome taxes becomes acute." The Court concluded that "recognizing a power in the State not only to single out the press but also to tailor the tax so that it singles out a few members of the press presents such a potential for abuse that no interest suggested by Minnesota can justify the scheme."

Missouri Director of Revenue v. CoBank ACB

Is the National Bank for Cooperatives, which Congress has designated as a federally chartered instrumentality of the United States, exempt from state income taxation?

No. In a unanimous opinion delivered by Justice Clarence Thomas, the Court held that banks for cooperatives are subject to taxation. Justice Thomas wrote for the Court that nothing in the 1985 amendments to the Farm Credit Act indicated a repeal of the previous express approval of state taxation and that the structure of the Act indicated by negative implication that banks for cooperatives were not entitled to immunity.

Mobil Oil Corp. v. Commissioner Of Taxes

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Montana v. United States

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Moorman Mfg. Co. v. Bair

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Moses Lake Homes v. Grant County

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National Bellas Hess, Inc. v. Department Of Revenue Of State Of

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National Geographic v. Cal. Equalization Bd.

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New Energy Company of Indiana v. Limbach

Did the law discriminate against interstate commerce and violate the Commerce Clause?

Yes. The unanimous Court held that the law's primary purpose was to confer favorable tax treatment on Ohio-produced ethanol which imposed "an economic disadvantage upon out-of-state sellers." Ohio was unable to advance a legitimate local purpose for the law

Newsweek, Inc. v. Florida Dep't of Revenue

Did the District Court of Appeal of Florida, First District, err in denying Newsweek access to Florida postpayment remedies for a refund of the taxes it paid under an unconstitutional sales tax scheme?

Yes. In a unanimous per curiam opinion, the Court held that "Newsweek is entitled to a clear and certain remedy and thus it can use [Florida] refund procedures to adjudicate the merits of its claim." The opinion stated that "[w]hile Florida may be free to require taxpayers to litigate first and pay later, due process prevents it from applying this requirement to taxpayers, like Newsweek, who reasonably relied on the apparent availability of a postpayment refund when paying the tax."

Nordlinger v. Hahn

Does Article XIIIA's "acquisition value provision," which created a dramatic disparity in the property taxes paid by long-term property owners as compared with new property owners, violate the Fourteenth Amendment's Equal Protection Clause by discriminating against new property owners?

The Court, through Justice Blackmun, held that California's new property tax system rationally and plausibly furthered legitimate state interests in restraining increasing property taxes and preserving local neighborhood stability. The discrepancy which Article XIIIA created between new and long time property owners is warranted, because the latter had a far greater reliance interest in their property than the former. Thus, long-time property owners deserved more protection from higher property taxes than new property owners. This demonstrated a significant difference between the two property owner types. In addition, both of Article XIIIA's exemptions rationally promoted a legitimate state interest. The first exemption did not discourage older people from moving to a smaller home that is likely to better suit their smaller family and income. The second exemption aimed at preserving family unity and neighborhood stability. Accordingly, the Court held that Article XIIIA did not violate the Fourteenth Amendment's Equal Protection Clause.

Norfolk & W. R. Co. v. Tax Comm'n.

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Northwestern Cement Co. v. Minn.

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Offutt Housing Co. v. Sarpy County

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Oklahoma Tax Commission v. Jefferson Lines, Inc.

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Oregon Waste Systems, Inc. v. Department Of Environmental Quality Of The State Of Oregon

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Pittsburgh v. Alco Parking Corp.

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Private Truck Council Of America, Inc. v. Quinn

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Quill Corp. v. North Dakota, By And Through Its Tax Commissioner, Heitkamp

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R. J. Reynolds Tobacco Co. v. Durham County

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Railway Express Agency v. Virginia

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Reich v. Collins, Revenue Commissioner Of Georgia

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Reserve Life Insurance Co. v. Bowers

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Rockford Life Ins. Co. v. Ill. Dept. Of Re

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Scripto v. Carson

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Society For Savings v. Bowers

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South Central Bell Telephone v. Alabama

Does Alabama's franchise tax discriminates against interstate commerce, in violation of the Commerce Clause? Did the Alabama Supreme Court's refusal to permit the South Central Bell Telephone Company and others to raise their constitutional claims because of res judicata deprive them of the due process of law guaranteed by the Fourteenth Amendment?

Yes and yes. In an opinion delivered by Justice Stephen G. Breyer, the Court held that the Alabama franchise tax was unconstitutional. Justice Breyer wrote for the Court that, "Alabama law gives domestic corporations the ability to reduce their franchise tax liability..., while it denies foreign corporations that same ability. And no one claims that the different tax rates for foreign and domestic corporations offset the difference in the tax base. The tax therefore facially discriminates against interstate commerce and is unconstitutional unless the State can offer a sufficient justification for it." The Court concluded the State could not justify the tax. The Court also held that the State Supreme Court's decision was inconsistent with the Fourteenth Amendment's due process guarantee because the South Central Bell case was unrelated to the court's prior judgement and thus could not be bound by it. Furthermore, the Court rejected the State's argument that the Court lacked appellate jurisdiction under the Eleventh Amendment.

Standard Steel Co. v. Wash. Revenue Dept.

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State Bd. Of Ins. v. Todd Shipyards

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Thomas v. Virginia

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Trinova Corp. v. Michigan Dept. Of Treasury

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Tyler Pipe Industries v. Dept. Of Revenue

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U.S. v. Township Of Muskegon

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United Air Lines v. Mahin

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United States v. City Of Detroit

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United States v. New Mexico

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Utah Tax Comm'n v. Pacific Pipe Co.

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Washington Rev. Dept. v. Stevedoring Assn.

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Washington v. United States

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Werner Co. v. Director Of Taxation

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West Point Grocery Co. v. Opelika

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Western & Southern L. I. Co. v. Bd. Of Equalization

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Western Air Lines v. Board Of Equalization

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Whyy v. Glassboro

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Williams v. Vermont

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Wisconsin Department Of Revenue v. William Wrigley, Jr., Co.

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Xerox Corp. v. County Of Harris

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Youngstown Co. v. Bowers

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