[J-5A-B-2023]

IN THE SUPREME COURT OF PENNSYLVANIA

EASTERN DISTRICT

TODD, C.J., DONOHUE, DOUGHERTY, WECHT, MUNDY, BROBSON, JJ.

DIANE ZILKA,

Appellant

v.

TAX REVIEW BOARD CITY OF 

PHILADELPHIA,

Appellee

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No. 20 EAP 2022

Appeal from the Order of the 

Commonwealth Court entered on 

January 7, 2022, at No. 1063 CD 

2019 affirming the Order entered on 

June 26, 2019, in the Court of 

Common Pleas, Philadelphia 

County, Civil Division at Nos. 02438 

and 02439, October Term 2018.

ARGUED: March 7, 2023

DIANE ZILKA,

Appellant

v.

TAX REVIEW BOARD CITY OF 

PHILADELPHIA,

Appellee

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No. 21 EAP 2022

Appeal from the Order of the 

Commonwealth Court entered on 

January 7, 2022, at No. 1064 CD 

2019 affirming the Order entered on 

June 26, 2019, in the Court of 

Common Pleas, Philadelphia 

County, Civil Division at Nos. 02438 

and 02439, October Term 2018.

ARGUED: March 7, 2023

OPINION

CHIEF JUSTICE TODD DECIDED: NOVEMBER 22, 2023

In this appeal by allowance, we consider whether the City of Philadelphia (the 

“City” or “Philadelphia”) unconstitutionally discriminated against interstate commerce by 

subjecting a Philadelphia resident who worked exclusively out of state to its wage tax (the 

“Philadelphia Tax”), and allowing her credit against that tax only for the local income tax 
[J-5A-B-2023] - 2

she paid to another jurisdiction, while declining to afford her additional credit for the outof-state income tax she paid. In conjunction with this overarching issue, we must 

determine whether, for purposes of the dormant Commerce Clause analysis implicated 

herein, state and local taxes must be considered in the aggregate. For the reasons that 

follow, we conclude that state and local taxes need not be aggregated in conducting a 

dormant Commerce Clause analysis, and that, ultimately, the City’s tax scheme does not 

discriminate against interstate commerce. Accordingly, we affirm the order of the 

Commonwealth Court.

I. Introduction: The Commerce Clause

By way of background, the Commerce Clause provides that “Congress shall have 

Power . . . To regulate Commerce . . . among the several States.” U.S. Const. art. 1, § 8, 

cl. 3 (first ellipses original). While the Commerce Clause is an express grant of power to 

Congress, the United States Supreme Court has consistently held that the language also 

contains a “negative command, known as the dormant Commerce Clause,” which 

prohibits “certain state taxation even when Congress has failed to legislate on the 

subject.” Comptroller of Treasury of Md. v. Wynne, 575 U.S. 542, 549 (2015) (quoting 

Okla. Tax Comm’n v. Jefferson Lines, Inc., 514 U.S. 175, 179 (1995)). Notably, the high 

Court has explained that the crux of the dormant Commerce Clause is that a state “may 

not tax a transaction or incident more heavily when it crosses state lines than when it 

occurs entirely within the State,” id. (quoting Armco Inc. v. Hardesty, 467 U.S. 638, 642 

(1984)), nor may it “impose a tax which discriminates against interstate commerce either 

by providing a direct commercial advantage to local business, or by subjecting interstate 

commerce to the burden of ‘multiple taxation,’” id. at 549-50 (quoting Nw. States Portland 

Cement Co. v. Minnesota, 358 U.S. 450, 458 (1959)). However, where alleged taxation 

disparities stem from the combined effect of two otherwise lawful income tax schemes, 
[J-5A-B-2023] - 3

the Court has manifestly determined that there is no discrimination against interstate 

commerce. See Moorman Mfg. Co. v. Bair, 437 U.S. 267, 279 (1978) (observing that 

“[t]he prevention of duplicative taxation[] . . . would require national uniform rules for the 

division of income,” which is a task solely in the province of Congress). 

Significantly, in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977), the high 

Court crafted a four-part test for determining whether a state or local tax unconstitutionally 

burdens interstate commerce. Under this test, a tax does not violate the dormant 

Commerce Clause if it: (1) is applied to an activity with a substantial nexus to the taxing 

state; (2) is fairly apportioned; (3) does not discriminate against interstate commerce; and 

(4) is fairly related to the services provided by the state.1 Id. at 279. Relevant to the 

instant appeal, to determine whether a tax is fairly apportioned, a court must assess 

whether the tax is internally and externally consistent. The high Court has explained that 

internal consistency is met “when the imposition of a tax identical to the one in question 

by every other State would add no burden to interstate commerce that intrastate 

commerce would not also bear.” Jefferson Lines, 514 U.S. at 185. Conversely, an 

internally inconsistent tax demonstrates that a state “is attempting to take more than its 

fair share of taxes from the interstate transaction, since allowing such a tax in one State 

would place interstate commerce at the mercy of those remaining States that might

impose an identical tax.” Id. (citation omitted). As for external consistency, a court must 

examine “the economic justification for the State’s claim upon the value taxed, to discover 

whether a State’s tax reaches beyond that portion of value that is fairly attributable to 

economic activity within the taxing State.” Id. (citation omitted). 

1 Presently, Appellant contends that the Philadelphia Tax violates the fair apportionment 

and discrimination prongs of the Complete Auto test.
[J-5A-B-2023] - 4

Relevant to the instant appeal, in 2015, the high Court grappled with these issues

in Wynne, supra. Therein, the Court examined Maryland’s tax scheme, under which 

Maryland required its residents to pay a “state” income tax which was set at a graduated 

rate, and a “county” income tax, the rate of which varied by county for wages earned both 

in and out of state, and additionally imposed upon nonresidents a “special nonresident” 

tax on their income earned in Maryland. Wynne, 575 U.S. at 545-46. While Maryland 

allowed residents who earned income out of state a credit against the state tax, it did not 

permit them any credit against the county tax. Id. at 546. Critically, the high Court 

determined that, “[d]espite the names that Maryland ha[d] assigned to these taxes, both 

[were] State taxes,” noting that “both [were] collected by the State’s Comptroller of the 

Treasury.” Id. (citation omitted). 

Turning to Complete Auto, the Wynne Court observed that the internal consistency 

test “allows courts to isolate the effect of a defendant State’s tax scheme” by 

“hypothetically assuming that every State has the same tax structure.” Wynne, 575 U.S. 

at 562. In this vein, the Court explained that the internal consistency test permits courts 

to distinguish between “tax schemes that inherently discriminate against interstate 

commerce without regard to the tax policies of other States,” and “tax schemes that create 

disparate incentives to engage in interstate commerce (and sometimes result in double 

taxation) only as a result of the interaction of two different but nondiscriminatory and 

internally consistent schemes,” emphasizing that the former category of taxes are 

generally unconstitutional, while the latter are not. Id. (citing, inter alia, Armco Inc., 467 

U.S. at 645-46; Moorman Mfg. Co., 437 U.S. at 277 n.12). 

Ultimately, bearing in mind these principles, the Court found that Maryland’s county 

tax was unconstitutional because Maryland failed to permit residents a credit for similar 

taxes paid to out-of-state jurisdictions, thus resulting in double taxation on a portion of 
[J-5A-B-2023] - 5

residents’ income. Indeed, applying the internal consistency test to Maryland’s tax 

scheme, the Court assumed that all states adopted the following taxes, consistent with 

Maryland’s county and special nonresident taxes: “(1) a 1.25% tax on income that 

residents earn in State, (2) a 1.25% tax on income that residents earn in other 

jurisdictions, and (3) a 1.25% tax on income that nonresidents earn in State.”

2

 Id. at 564-

65. The Court observed that, under this scenario, an in-state resident and an out-of-state 

resident would incur disparate tax obligations:

Assume . . . that two taxpayers, April and Bob, both live in 

State A, but that April earns her income in State A whereas 

Bob earns his income in State B. In this circumstance, Bob 

will pay more income tax than April solely because he earns 

income interstate. Specifically, April will have to pay a 1.25% 

tax only once, to State A. But Bob will have to pay a 1.25% 

tax twice: once to State A, where he resides, and once to 

State B, where he earns the income.

Id. at 565. Based on this analysis, the Court concluded that Maryland’s tax scheme was 

unconstitutional, as the disparate treatment of interstate commerce emanating therefrom 

was “not simply the result of [the tax scheme’s] interaction with the taxing schemes of 

other States,” but, rather, stemmed from inherent discrimination contained within the 

scheme. Id. (citations omitted). 

Aptly, the Court stressed that “Maryland could remedy the infirmity in its tax 

scheme by offering, as most States do, a credit against income taxes paid to other 

States,” which would vindicate the tax scheme under the internal consistency test. Id. at 

568 (citation omitted). Illustrating this point, the Court tweaked the above hypothetical 

scenario to assume that all states impose those same taxes but also allow a credit against 

income taxes paid by residents to other jurisdictions. Under such circumstances, the 

2 The Court appears to have used the 1.25% rate for all three taxes simply for ease of 

applying the internal consistency test, as the rate is not reflective of the actual rates of 

Maryland’s relevant taxes.
[J-5A-B-2023] - 6

Court noted that “April (who lives and works in State A) and Bob (who lives in State A but 

works in State B) would pay the same tax,” observing that “April would pay a 1.25% tax 

only once (to State A), and Bob would pay a 1.25% tax only once (to State B, because 

State A would give him a credit against the tax he paid to State B).” Id. However, as 

Maryland offered no such credit against its county tax, the Court declared the tax scheme 

unconstitutional.

II. Factual and Procedural Background

With that backdrop, we now turn to the facts of this appeal. In April 2017 and June 

2017, Appellant Diane Zilka filed petitions with the City’s Department of Revenue (the 

“Department”), seeking refunds for the Philadelphia Tax she paid from 2013 to 2015, and 

in 2016, respectively.3 During the relevant tax years, Appellant resided in the City, but 

worked exclusively in Wilmington, Delaware. Thus, she was subject to four income taxes 

(and tax rates) during that time: the Philadelphia Tax (3.922%); the Pennsylvania Income 

Tax (“PIT”) (3.07%); the Wilmington Earned Income Tax (“Wilmington Tax”) (1.25%); and 

the Delaware Income Tax (“DIT”) (5%).

4

 The Commonwealth granted Appellant credit for 

her DIT liability to completely offset the PIT she paid for the tax years 2013 through 2016; 

because of the respective tax rates in our Commonwealth versus the State of Delaware, 

after this offsetting, Appellant paid the remaining 1.93% in DIT. Although the City similarly 

credited against Appellant’s Philadelphia Tax liability the amount she paid in the 

Wilmington Tax — specifically, the City credited Appellant 1.25% against her Philadelphia 

Tax liability of 3.922%, leaving her with a remainder of 2.672% owed to the City —

3 While Appellant filed two separate refund petitions, for ease of reference, we will simply 

refer to her request for refunds singularly, as the resolution of each petition hinges upon

the same issue.

4 Herein, we will employ the figures utilized by the Commonwealth Court below, which 

represent the tax rates of the 2014 tax year.
[J-5A-B-2023] - 7

Appellant claimed that the City was required to afford her an additional credit of 1.93% 

against the Philadelphia Tax, representing the remainder of the DIT she owed after the 

Commonwealth credited Appellant for her PIT.

After the City refused to permit her this credit against her Philadelphia Tax liability, 

Appellant appealed to the City’s Tax Review Board (the “Board”). Following two hearings 

on the matter, the Board denied Appellant’s refund request. Appellant then appealed to 

the trial court, which affirmed the decision of the Board without taking additional evidence. 

Thereafter, Appellant appealed to the Commonwealth Court, renewing her claim 

that she was owed a credit against the Philadelphia Tax for the portion of her DIT liability

which was not offset/credited against her PIT. Appellant suggested that the failure to 

grant her this credit amounted to double taxation in violation of the Commerce Clause. 

More specifically, Appellant asserted that, because the City failed to offset her 

Philadelphia Tax with the remainder of her DIT liability, the tax scheme failed the 

Complete Auto test. In that regard, Appellant contended that: (1) the tax is not fairly 

apportioned, as it lacks a mechanism to mitigate the risk of duplicative taxation for income 

earned from interstate commerce, thus failing to meet the internal and external 

consistency tests; and (2) the City’s partial credit practice discriminatorily forces her to 

pay more in taxes than her intrastate counterparts. Notably, in support of her claim, 

Appellant relied heavily on Wynne, supra, contending that the high Court’s decision 

requires state and local taxes to be considered as one. 

In a unanimous, unpublished memorandum opinion authored by Judge Michael H. 

Wojcik, the Commonwealth Court affirmed. Zilka v. Tax Rev. Bd. City of Phila., 1063-

1064 C.D. 2019 (Pa. Cmwlth. filed Jan. 7, 2022) (en banc). In so doing, the court 

concluded that Appellant was not subject to double taxation in violation of the Commerce 

Clause, as she never paid more than one local and one state tax at a time. From the 
[J-5A-B-2023] - 8

court’s perspective, the City taxed Appellant at the same rate (3.922%) as it taxed other 

residents who worked in Pennsylvania, and she paid 1.93% more in taxes than her 

intrastate counterparts only because she chose to work in Delaware, which charges a 

higher income tax than Pennsylvania. Indeed, the court highlighted that the City credited 

Appellant the full amount of her Wilmington Tax liability to offset the Philadelphia Tax she 

incurred, while declining to apply tax credit for the balance of the DIT which remained 

“unused” after offsetting the PIT (namely, 1.93%). The court emphasized that, in its view,

the City’s decision not to apply the remainder of Appellant’s DIT to offset her Philadelphia 

Tax simply did not amount to double taxation.

Nevertheless, assuming that there was a risk of double taxation, the court analyzed 

the City’s taxation scheme under the Complete Auto test. First, focusing on the “fair 

apportionment” prong of the test, the court determined that the Philadelphia Tax is 

internally consistent, as “all individuals earning income outside of their home locality 

would receive a credit for income taxes paid to the foreign locality and would pay no more 

than their intrastate counterpart” if the wage tax were imposed in every jurisdiction. Id. at 

8. Likewise, the court found that the Philadelphia Tax meets the external consistency 

test, explaining that the tax “reasonably reflects how and where [Appellant’s] income is 

generated,” and “is not taxing all of [Appellant’s] income regardless of source.” Id. at 9. 

In that vein, the court opined that the City “fairly apportions the tax according to its relation 

to the income by providing a credit for the tax owed to Wilmington,” such that the City 

never taxed more than its fair share of Appellant’s wages. Id. Relatedly, the court 

reasoned that “Philadelphia’s provision of municipal benefits and services to its residents 

provides sufficient economic justification for the imposition of [the Philadelphia Tax].” Id.

(citing Lawrence v. State Tax Comm’n of Miss., 286 U.S. 276, 279 (1932) (observing that 

“domicile in itself establishes a basis for taxation,” as “[e]njoyment of the privileges of 
[J-5A-B-2023] - 9

residence within the state, and the attendant right to invoke the protection of its laws, are 

inseparable from the responsibility for sharing the costs of government”)). 

Next, turning to the “discrimination” prong of the Complete Auto test, the court 

highlighted that the City taxes all of its residents’ income at the rate of 3.922% and fully

credits any similar taxes a resident paid to another jurisdiction. To that end, the court 

noted that, here, because Appellant’s income was taxed at 1.25% by Wilmington, the City 

applied 1.25% credit toward her Philadelphia Tax. Thus, the court found that Appellant 

did not pay double taxes on her income; instead, the court determined, she paid the same 

3.922% rate as all of the City’s residents, with the only difference being that the City 

“receiv[ed] only 2.67%, while Wilmington . . . receiv[ed] 1.25%.” Id. at 10. 

Finally, the court found that “Wynne does not compel Philadelphia to apply an 

additional credit for any dissimilar taxes, such as the [DIT]. . . .” Id. at 13. From the court’s 

perspective, “[a]lthough the Wynne Court held that Maryland was required to offset its socalled ‘county’ tax against other ‘state’ taxes, the ‘county’ tax was actually a state tax 

because it was administered, adopted, mandated, and collected by the state.” Id. 

Conversely, the court emphasized that, here, “both the [Philadelphia Tax] and Wilmington 

Tax are municipal taxes.” Id. On that basis, the court opined that Appellant’s taxes were 

appropriately credited in an “apples to apples” manner — with Delaware’s state tax 

offsetting Pennsylvania’s state tax and Wilmington’s municipal tax offsetting the City’s

municipal tax. This approach, in the court’s view, comported with the high Court’s holding 

in Wynne, and, moreover, passed constitutional muster. Thus, reiterating that the 

taxation of Appellant’s income in excess of the taxation of her intrastate cohorts stemmed

solely from her decision to work in Delaware, which has a higher rate of taxation than 

Pennsylvania — and not from the City’s tax scheme — the court found that Appellant was 

not subject to double taxation. Accordingly, the court affirmed the trial court’s decision.
[J-5A-B-2023] - 10

Appellant subsequently filed a petition for allowance of appeal with our Court, and 

we granted review to consider whether the City, in declining to apply the remainder of 

Appellant’s DIT liability to offset her Philadelphia Tax liability, discriminated against 

interstate commerce in violation of the dormant Commerce Clause.

5

 As illuminated by 

the parties’ arguments, this question necessarily requires us to determine whether state 

and local taxes are indistinguishable when analyzing a challenged tax scheme under the 

dormant Commerce Clause.

III. Arguments

Regarding that prefatory issue, Appellant initially contends that state and local 

income tax burdens must be aggregated in reviewing a dormant Commerce Clause

challenge, in essence, maintaining that local or municipal taxes, such as the Philadelphia 

Tax, are indistinguishable from state taxes because political subdivisions are creatures 

of the state. According to Appellant, in Associated Industries of Missouri v. Lohman, 511 

5 The question, as phrased by Appellant, reads:

[Appellant], a Philadelphia resident who worked in 

Wilmington, Delaware, was subject to [the PIT, the 

Philadelphia Tax, the DIT, and the Wilmington Tax]. 

Pennsylvania allowed [Appellant] to credit [the] DIT paid 

against her PIT liability. The City . . . allowed [Appellant] to 

credit [the] Wilmington Tax paid against her [Philadelphia Tax]

liability. [The] DIT [which Appellant] paid exceeded the PIT 

credit she was allowed (“Unapplied Credit”). The City did not 

allow [Appellant] to apply the Unapplied Credit against the 

[Philadelphia] Tax. The U.S. Supreme Court held the 

Commerce Clause of the U.S. Constitution dictates that taxing 

jurisdictions must grant their residents a credit for state and 

local income taxes paid to other state and local taxing 

jurisdictions. [Wynne, supra]. Did the Commonwealth Court 

err, as a matter of law, where it held it was constitutional for 

the City not to apply [Appellant’s] Unapplied Credit against her 

[Philadelphia] Tax liability?

Zilka v. Tax Rev. Bd. City of Phila., 281 A.3d 1029 (Pa. 2022) (order).
[J-5A-B-2023] - 11

U.S. 641 (1994) (holding that Missouri’s use tax scheme impermissibly discriminated 

against interstate commerce in certain localities in which the use tax exceeded the sales 

tax), the United States Supreme Court endorsed the notion that federal constitutional 

restraints on state and local taxation of cross-border economic activity must be evaluated 

in light of the state’s tax scheme in its entirety. Appellant asserts that, more recently, in 

Wynne, the high Court made no distinction between state and local taxes, as it determined 

that, “[i]n applying the dormant Commerce Clause, they must be considered as one.” 

Appellant’s Brief at 13 (emphasis omitted) (quoting Wynne, 575 U.S. at 564 n.8). 

Relatedly, Appellant proffers that appellate courts in West Virginia, Colorado, and 

Arizona have found that state and local tax schemes must be considered in tandem under 

the Commerce Clause. Appellant notes that the West Virginia Supreme Court invalidated 

a tax scheme in which the state failed to grant credit against its state-level use tax for 

local sales taxes paid out of state. See Matkovich v. CSX Transp. Inc., 793 S.E.2d 888 

(W. Va. 2016). Appellant highlights that, in doing so, the Matkovich court “evaluated all 

of the taxes at issue at the state level – regardless of whether they were imposed by a 

state or locality.” Appellant’s Brief at 14. Similarly, Appellant posits that, in General

Motors Corp. v. City & County of Denver, 990 P.2d 59 (Colo. 1999), the Colorado 

Supreme Court invalidated a Denver tax scheme which did not provide credit for sales 

and use taxes paid to other states and their subdivisions. Appellant stresses that, in 

deeming the tax scheme unconstitutional, the General Motors court explained: “Internal 

consistency requires that states impose identical taxes when viewed in the aggregate –

as a collection of the state and sub-state taxing jurisdictions. In other words, the interstate 

taxpayers should never pay more sales or use tax than the intrastate taxpayer.” Id. at 69. 

Appellant also suggests that Arizona Department of Revenue v. Arizona Public Service

Co., 934 P.2d 796 (Ariz. Ct. App. 1997), supports her position that state and local taxes 
[J-5A-B-2023] - 12

must be considered together, as, therein, the Arizona Court of Appeals held that “[t]he 

derivative relationship between a state and its counties means that when a county 

imposes a tax, it does so pursuant to a delegation of state tax authority.” Id. at 799.

Moreover, Appellant submits that our Court’s jurisprudence supports her 

construction of the dormant Commerce Clause and the need to aggregate state and local 

taxes thereunder. In that regard, Appellant cites to Philadelphia Eagles Football Club, 

Inc. v. City of Philadelphia, 823 A.2d 108 (Pa. 2003) (OAJC) (“Philadelphia Eagles”), and, 

with little additional analysis, claims that, in that case, we required “[a]pportionment of a 

local tax . . . as a result of the state taxes in the other states to which the [Philadelphia 

Eagles] [t]eam was subject.” Appellant’s Brief at 16 (emphasis omitted). Appellant 

similarly avers that, in Northwood Construction Co. v. Township of Upper Moreland, 856 

A.2d 789 (Pa. 2004), we “held that the Commerce Clause mandated that the Township 

of Upper Moreland . . . apportion the taxpayer’s receipts derived from its Maryland, 

Delaware, and New Jersey construction activities,” requiring apportionment for “state 

taxes, not any local tax.” Appellant’s Brief at 16-17. Additionally, Appellant contends that 

the Commonwealth Court endorsed an analysis which relates local tax to state tax in 

Upper Moreland Township v. 7-Eleven, Inc., 160 A.3d 921 (Pa. Cmwlth. 2017), wherein 

the intermediate court “held that the Commerce Clause mandated that the [t]ownship 

apportion the taxpayer’s receipts derived from its Pennsylvania franchisees because 

much of the activities supporting the Pennsylvania franchisees were performed in Texas, 

the company’s headquarters, or elsewhere outside of Pennsylvania.” Appellant’s Brief at 

17. According to Appellant, these three cases demonstrate that our Court and the lower 

court “have consistently recognized that a Commerce Clause analysis must examine the 

local tax as it relates to the state tax.” Id. at 17 (emphasis original). 
[J-5A-B-2023] - 13

Appellant next argues that “Philadelphia is part of Pennsylvania and is subject to 

the laws and restrictions imposed upon it by Pennsylvania.” Id. at 19. To that end, 

Appellant observes that, “unless authorized by state statute, Philadelphia does not have 

the power to impose any tax.” Id. (emphasis omitted). Indeed, Appellant asserts that,

because the City derives its authority to impose taxes by way of state statute,6its “ability 

to assess and collect any tax, including the [Philadelphia] Tax, is at the absolute behest 

of Pennsylvania.” Id. at 20. Thus, Appellant insists that we must examine the state and 

6 Appellant notes that the City obtained its right to self-governance via the First Class City 

Home Rule Act, 53 P.S. § 13101 et seq., which precludes the City from enacting taxes 

without an express grant of authority from the General Assembly, see id. § 13133(a)(8). 

Appellant further explains that the City procured the right to impose the Philadelphia Tax 

by way of the Sterling Act, id. § 15971, which provides, in relevant part:

From and after the effective date of this act, the council of any 

city of the first class shall have the authority by ordinance, for 

general revenue purposes, to levy, assess and collect, or 

provide for the levying, assessment and collection of, such 

taxes on persons, transactions, occupations, privileges, 

subjects and personal property, within the limits of such city 

of the first class, as it shall determine, except that such council 

shall not have authority to levy, assess and collect, or provide 

for the levying, assessment and collection of, any tax on a 

privilege, transaction, subject or occupation, or on personal 

property, which is now or may hereafter become subject to a 

State tax or license fee.

Id. Appellant also highlights that the General Assembly carved out a savings clause in 

the PIT, expressly permitting the City to impose the Philadelphia Tax: 

Notwithstanding anything contained in any law to the contrary, 

including but not limited to the provisions of . . . the Sterling 

Act, the validity of any ordinance or part of any ordinance or 

any resolution or part of any resolution, and any amendments 

or supplements thereto now or hereafter enacted or adopted 

by any political subdivision of this Commonwealth for or 

relating to the imposition, levy or collection of any tax, shall 

not be affected or impaired by anything contained in this 

article. . . .

72 P.S. § 7359(a) (internal footnote omitted). 
[J-5A-B-2023] - 14

local tax burdens placed upon her simultaneously to determine whether the City violated 

the dormant Commerce Clause in imposing upon her the Philadelphia Tax, while 

declining to afford her credit against that tax for her DIT liability.

Pivoting to the Complete Auto test, Appellant avers that the City’s tax practice 

discriminates against interstate commerce, renewing her contention that she has been 

subject to double taxation, as her tax burden was 1.93% higher than her intrastate 

counterparts. Appellant argues that the City’s “partial-credit practice,” as she phrases it,

discriminates against interstate commerce by imposing a tax burden on cross-border 

activity which “exceeds the tax burden that [the City] imposes upon commercial activity 

that takes place solely within Pennsylvania.” Id. at 30-31. In Appellant’s view, it matters 

not that she chose to work in Delaware, rather than Pennsylvania, because taxpayers 

who choose to work in Pennsylvania received a lower tax rate than she did. In this vein, 

Appellant concludes that “any tax scheme which encourages a taxpayer to conduct 

intrastate activities instead of interstate activities unconstitutionally burdens interstate 

commerce.” Id. at 31 (citations omitted). 

With respect to the fair apportionment prong of the Complete Auto test, Appellant 

contends that the City’s tax practice fails “because it does not provide a mechanism to 

mitigate the risk of duplicative taxation for income earned from interstate commerce,” thus 

flouting “the constitutional restriction limiting a [state’s] taxing powers.” Id. at 33 (citation 

omitted). In this regard, Appellant correctly acknowledges that, under the internal 

consistency test, we must “assume that every state/local government enacts the same 

tax regime,” and determine “whether such hypothetical harmonization imposes a greater 

burden upon interstate commerce than is imposed upon intrastate commerce.” Id. at 36 

(citing Goldberg v. Sweet, 488 U.S. 252, 261 (1989)). Nevertheless, instead of applying 

the internal consistency test in this manner — i.e., assuming that all states and local 
[J-5A-B-2023] - 15

jurisdictions adopt the same tax rates and tax crediting systems as the Commonwealth 

and the City — Appellant merely hypothesizes that the taxing jurisdictions adopt the same 

systems of providing credit, but maintain their own differing tax rates. In so doing, 

Appellant opines that the City’s taxation scheme is internally inconsistent, proclaiming: “if 

every [s]tate or locality adopted [the City’s] tax practice, interstate income would be 

subjected to multiple taxation nationwide.” Id. at 38. 

Appellant likewise avers that the City’s tax scheme is not externally consistent, as 

the City taxed her income generated in Wilmington, despite the fact that she had

conducted no business in Philadelphia. In essence, Appellant asserts that she was taxed 

merely because she lived in the City, with no legitimate nexus between her economic 

activity conducted in Wilmington and the City to justify imposition of the Philadelphia Tax. 

According to Appellant, “[i]t is clear that taxing Appellant’s income, where none of it is 

earned in Philadelphia, is disproportionate to the business (or lack thereof) transacted by 

Appellant in Philadelphia.” Id. at 40. Appellant suggests that Philadelphia Eagles, 

Northwood Construction, and 7-Eleven establish that a locality may not impose a tax upon 

100% of a taxpayer’s activity when such activity did not occur in that locality. While she 

acknowledges that, here, the City granted a tax credit representing the Wilmington Tax, 

Appellant contends that the City nonetheless “subject[ed] 69% of [her] income to [the 

Philadelphia] Tax for work performed entirely outside of the state.” Id. at 43 (emphasis 

omitted). Finally, Appellant discounts the Commonwealth Court’s conclusion that her 

residency in the City is reason enough to justify imposition of the Philadelphia Tax, 

arguing:

All states and localities, including Philadelphia, can meet the 

fair apportionment requirement by imposing taxes upon their 

residents the same way they tax their non-residents – by 

taxing only income generated in Philadelphia, and allowing 

other jurisdictions to impose their own taxes upon income 

generated elsewhere. Alternatively, states and localities can 
[J-5A-B-2023] - 16

choose to tax all of their residents’ income regardless of where 

earned, but provide credits for income taxes paid elsewhere. 

But whichever system is chosen, it must be fair, and it must 

attempt to allocate the tax based upon where the economic 

activity occurs, [i.e.,] where the income is generated. [The 

City’s] practice makes no such effort.

Id. at 45-46 (emphasis original). Appellant, thus, concludes that, “[w]hile [the City] may 

have the jurisdiction to tax all of Appellant’s income, that does not mean its ability to do 

so does not violate the Commerce Clause.” Id. at 47.7

The City counters by first emphasizing that, contrary to Appellant’s assertions, our

Court has, in the past, distinguished state taxes from local taxes. See McClelland v. City 

of Pittsburgh, 57 A.2d 846, 848 (Pa. 1948) (“State taxes stand on a different basis from 

local levies; the former are essential to the very ‘preservation’ of the state itself, while the 

latter are authorized or permitted by the state, not for its actual preservation, but merely 

to maintain the machinery of local government.” (citation and internal citation omitted)); 

Nat’l Biscuit v. City of Phila., 98 A.2d 182, 186-87 (Pa. 1953) (finding that a tax 

administered entirely for the benefit of a municipality was not a state tax, but a local tax); 

7 The American College of Tax Counsel (“ACTC”) submitted an amicus brief in support of 

Appellant, agreeing with her position that, by refusing to grant her full credit for her DIT 

liability, the City is taxing Appellant at a higher rate than it would if she was a Philadelphia 

resident working entirely in Philadelphia, thus burdening her participation in interstate 

commerce. In so reasoning, ACTC proffers that, under Wynne, the City was required to 

give Appellant a credit for her excess DIT to offset the Philadelphia Tax, claiming that the 

Philadelphia Tax is indistinguishable from the “county” tax which was at issue in Wynne, 

given that municipal governments are “nothing more than creatures of the state.” ACTC’s 

Brief at 9. Relatedly, ACTC proffers that, because state and local taxes must, in its view,

be considered as one, the lower court erred in finding that Appellant was subjected to a 

higher tax rate simply as a result of her choice to work in Delaware, which has a higher 

state tax rate. According to ACTC, “it is not Delaware’s responsibility to provide a credit, 

but rather Pennsylvania and Philadelphia, who are imposing a tax upon income earned 

elsewhere by their residents.” Id. at 11. ACTC argues that, here, the City should have 

credited the Wilmington Tax and the remainder of the DIT which did not offset the PIT

against Appellant’s Philadelphia Tax liability, in order to place Appellant on “the same tax 

liability as . . . a Pennsylvania resident with the same income who worked solely in 

Philadelphia.” Id. at 13.
[J-5A-B-2023] - 17

F. J. Busse Co. v. City of Pittsburgh, 279 A.2d 14, 18 (Pa. 1971) (determining that a local 

tax was not duplicative of the state tax). The City asks our Court to uphold this view, 

stressing that the Philadelphia Tax is a local tax which was enacted via an ordinance 

passed by Philadelphia’s City Council, and is administered, collected, and distributed by 

the Department solely for the benefit of the City and its citizenry. Indeed, the City argues 

that a municipality’s status as a creature of the state — and its attendant authority to 

impose only such taxes as are permitted by the Commonwealth — “in no way converts a 

purely local tax into a state tax.” City’s Brief at 14. In the City’s summation, “the [d]ormant 

Commerce Clause does not require the City of Philadelphia to subsidize Delaware’s 

decision to impose a higher tax rate on [Appellant] than the Commonwealth of 

Pennsylvania.” Id. at 17. 

Critically, the City contends that Appellant has failed to provide any case law which 

actually supports her argument that state and local taxes must be assessed unitarily for 

dormant Commerce Clause purposes. In that regard, the City maintains that Appellant 

misconstrues Philadelphia Eagles, Northwood Construction, and 7-Eleven, as, according 

to the City, those decisions merely affirmed that localities imposing taxes must satisfy the 

requirements of the dormant Commerce Clause, including by providing credit for taxable 

activity which occurred outside of the taxing jurisdiction, which the City stresses that it did 

here. The City expounds that, in that trio of cases, this Court and the Commonwealth 

Court “did not address whether local taxes and state taxes must be aggregated because 

that question was not before any of the Courts.” City’s Brief at 18 (emphasis omitted). 

Moreover, the City asserts that Appellant persistently misinterprets Wynne, as, 

therein, the high Court did not find Maryland’s tax scheme unconstitutional on the basis 

that state and local taxes must be considered in tandem, but, rather, it condemned 

Maryland’s tax scheme because Maryland’s “county” tax was actually a duplicative state 
[J-5A-B-2023] - 18

tax against which the state refused to offer credit for out-of-state taxes paid. The City, 

thus, maintains that the manner in which the “county” tax functioned (i.e., it was enacted 

by the state legislature and administered, collected, and distributed by Maryland’s 

Comptroller) rendered it a state tax in disguise, whereas the Philadelphia Tax is a purely 

local tax which is administered, collected, and distributed by the Department, and was 

enacted by the Philadelphia City Council.

Contemplating Appellant’s claim that she was subjected to double taxation, the 

City argues that the Department provided Appellant a full credit for income taxes paid to 

Wilmington, leading her to incur only the same 3.922% Philadelphia Tax rate as a 

Philadelphia resident working entirely in Philadelphia. From the City’s perspective, the 

flaw in Appellant’s double taxation claim is palpable “when you consider what the outcome 

would be if neither Wilmington nor Philadelphia had an income tax and [Appellant] was 

only subject to Delaware and Pennsylvania income taxes.” Id. at 22. Specifically, the 

City points out that, under such circumstances, Appellant would be taxed at Delaware’s 

rate of 5% and would receive a credit from Pennsylvania equal to its tax rate of 3.07%, 

such that Appellant would still incur a tax rate that is 1.93% higher than her in-state 

cohorts (namely, Delaware’s full 5%). The City emphasizes that this scenario would 

present no dormant Commerce Clause violation, as Pennsylvania would not be expected 

to issue a further refund to account for Delaware’s higher tax rate. In the City’s view, 

then, “[t]he Commonwealth Court correctly applied the same logic to the instant matter 

and found that there was no double taxation because ‘[Appellant] never pays more than 

one local tax or more than one state tax.’” Id. at 23 (quoting Zilka, 1063-1064 C.D. 2019, 

at 5). 

The City next addresses the Complete Auto test, preliminarily suggesting that the 

two prongs thereof which are relevant in this case (specifically, the discrimination and fair 
[J-5A-B-2023] - 19

apportionment prongs) address the same issue — the risk of double taxation. To that 

end, the City asserts that the discrimination prong of the test is subsumed by the fair 

apportionment prong, as the former prevents states from “discriminat[ing] against 

interstate commerce either by providing a direct commercial advantage to local business, 

or by subjecting interstate commerce to the burden of ‘multiple taxation,’” Nw. States 

Portland Cement Co., 358 U.S. at 458 (citations and internal citations omitted), while the 

latter ensures that “there is no danger of interstate commerce being smothered by 

cumulative taxes of several states,” Complete Auto, 430 U.S. at 277. The City contends 

that, here, there is no risk of double taxation, as the Philadelphia Tax meets both the 

internal and external consistency tests of the fair apportionment prong of Complete Auto. 

Maintaining that the Philadelphia Tax is internally consistent, the City reasons that

all taxpayers would face the same local income tax rate of 3.922% if every local taxing 

authority in the nation imposed Philadelphia’s taxation scheme — collecting wage taxes 

on income earned by residents within the jurisdiction and on income earned by residents 

working outside of that taxing authority’s jurisdiction, but allowing the latter a credit against 

their local wage taxes for wage taxes paid to out-of-state local taxing authorities. 

Furthermore, the City argues that the result remains the same when the analysis is 

expanded to assume that all states adopt Pennsylvania’s state income tax rate of 3.07%, 

as well as its practice of providing credit against an individual’s income tax liability for 

income taxes paid out-of-state. Critically, the City contends that Appellant “continues to 

offer a distorted version of the internal consistency test” in reaching her conclusion that 

the Philadelphia Tax is unconstitutional, City’s Brief at 28, as she utilized a hypothetical 

scenario in which every taxing jurisdiction adopts a different tax rate, as opposed to the 

correct hypothetical in which every taxing jurisdiction adopts the same practice and the 

same tax rate, id. at 32. Thus, according to the City, “[w]hen the internal consistency test 
[J-5A-B-2023] - 20

is applied correctly – using identical tax rates – Philadelphia’s (and Pennsylvania’s) 

[income tax] schemes satisfy the internal consistency test.” Id.

Likewise, the City claims that its tax scheme is externally consistent, as the City

has authority to tax all of Appellant’s income, wherever earned, based on her domicile in 

Philadelphia. See Okla. Tax. Cmm’n v. Chickasaw Nation, 515 U.S. 450, 463 (1995) 

(“Domicile itself affords a basis for . . . taxation.”). In any event, the City asserts that it 

“negates any claim of unfair apportionment or double taxation” by “provid[ing] a credit for 

a resident’s out-of-state activity.” City’s Brief at 33 (citing, inter alia, House of Lloyd v. 

Commonwealth, 684 A.2d 213, 217 (Pa. Cmwlth. 1996) (“The Commonwealth’s use tax 

is fairly apportioned in that it includes the customary provisions against duplication, 

including a credit for sales tax paid to another state.”); Goldberg, 488 U.S. at 264 (“The . 

. . taxing scheme is fairly apportioned, for it provides a credit against its use tax for sales 

taxes that have been paid in other States.” (ellipses original))). Lastly, the City maintains

that Philadelphia Eagles, Northwood Construction, and 7-Eleven do not support 

Appellant’s argument that the full credit she received for her Wilmington Tax is insufficient 

to satisfy the external consistency test. Indeed, the City contends that this trio of cases 

is distinguishable from the instant matter because, in each of those cases, “the offending 

jurisdiction failed to give any credit for taxes paid to another jurisdiction,” id. at 34,

whereas, here, “the City provided full credit for any out-of-jurisdiction activity, satisfying 

the external consistency test,” id. at 35. Accordingly, in light of the foregoing, the City 

asks our Court to affirm the decision of the court below.8

8 The Pennsylvania Department of Revenue (“PDOR”) submitted an amicus brief in 

support of the City. Therein, PDOR avers that the Commonwealth Court properly applied 

the Complete Auto test and found this matter distinguishable from Wynne. Countering 

Appellant’s Complete Auto assessment, PDOR argues that the City’s tax scheme meets 

the internal consistency test because, unlike the Maryland tax scheme in Wynne, the City 

offsets the Philadelphia Tax by granting residents credit for taxes paid to other local 

(continued...)
[J-5A-B-2023] - 21

jurisdictions, such as Wilmington. In that regard, PDOR emphasizes that, if the 

Philadelphia/Pennsylvania tax scheme was applied in every jurisdiction, no resident 

would ever be subject to double taxation, thus demonstrating internal consistency. PDOR 

explains that any heightened tax burden on Appellant versus that incurred by her 

intrastate peers stems from the interaction of two different — but nondiscriminatory — tax 

schemes, which is permissible under the dormant Commerce Clause. 

PDOR next highlights that, while the external consistency test has been employed by the 

high Court in corporate tax cases and sales tax cases, Wynne presented the Court with 

the first opportunity to apply the test in the context of a resident-based individual income 

tax, but the Court declined to do so, finding that the tax in question failed the internal 

consistency test. Moreover, PDOR notes that the Wynne Court “endorse[d] the ability of 

a resident state to tax all of its resident’s income, so long as it does not run afoul of the 

internal consistency test.” PDOR’s Brief at 14 (emphasis omitted) (citing Wynne, 575 

U.S. at 566-68). Hence, PDOR concludes that “there is no clear holding in Wynne that a 

residence-based income tax must be externally consistent.” Id. at 15. 

PDOR additionally directs our Court to Justice Ginsburg’s dissenting opinion in Wynne, 

and the hypothetical “fix” she offered — specifically, Justice Ginsburg suggested that 

Maryland could amend its tax code to eliminate the special non-resident tax and simply 

continue taxing all residents’ income regardless of source, Wynne, 575 U.S. at 582 

(Ginsburg, J., dissenting) — with which the Wynne majority ultimately acquiesced, see id.

at 568-69 (majority opinion). PDOR explains that, in its view, the Wynne Court could not 

have envisioned applying the external consistency test in the context of a resident-based 

individual income tax, as this “fix” would indubitably fail the test. PDOR submits that a 

recent Utah Supreme Court decision, Steiner v. Utah State Tax Comm’n, 449 P.3d 189, 

197 (Utah 2019) (opining that the Wynne Court “strongly implied that tax systems that fail 

external consistency would nonetheless pass constitutional muster”), underscores its 

reasoning in this regard. 

In any event, PDOR agrees with the Commonwealth Court’s determination that the 

Philadelphia Tax is externally consistent because the City provides its residents with tax 

credit for wage taxes paid to outside jurisdictions and, in so doing, does not tax more than 

its fair share of residents’ income. In PDOR’s view, the City “is economically justified [in]

taxing a resident on all of his income because residents receive all of the protections and 

benefits afforded by the resident jurisdiction, e.g., fire, police, public utilities.” PDOR’s 

Brief at 18. 

Lastly, PDOR avers that our Court’s adoption of Appellant’s argument would detrimentally 

impact state and local tax revenues “without any clear indication from the U.S. Supreme 

Court that such a result is mandated.” Id. at 19. PDOR submits that Appellant’s 

argument, if adopted, would require “the Commonwealth and its political subdivisions, 

which have lower tax rates, to export their tax revenues to bordering states and 

jurisdictions with higher tax rates,” thus threatening “the Commonwealth’s ‘fiscal wellbeing’” and encouraging our government “to increase its tax rates to keep from losing 

(continued...)
[J-5A-B-2023] - 22

IV. Analysis

As an initial matter, we emphasize that the question of aggregation for purposes 

of a dormant Commerce Clause analysis is a matter of first impression for this Court. To 

that end, we reject Appellant’s assertion that Philadelphia Eagles, Northwood 

Construction, and 7-Eleven demonstrate that this Court and the Commonwealth Court 

“have consistently recognized that a Commerce Clause analysis must examine the local 

tax as it relates to the state tax.” Appellant’s Brief at 17 (emphasis original). In this trio 

of cases, neither our Court nor the lower court pronounced that local and state taxes must 

be aggregated in conducting a Complete Auto analysis under the dormant Commerce 

Clause; thus, these cases do not control our initial query.

9

 Instead, we place paramount 

importance on the high Court’s decision in Wynne, which we find to be instructive on the 

question of aggregation. Based thereon, we find that, in addressing Appellant’s dormant 

Commerce Clause challenge, we must examine the circumstances surrounding the 

Philadelphia Tax in order to determine whether it is truly a local tax or is, instead, a state 

tax masquerading as a local tax. 

As noted, in Wynne, the high Court found that Maryland’s “county” tax was 

essentially little more than a state tax masquerading as a local tax, given that the state 

imposed the tax via state legislation and the state’s comptroller collected the tax. See 

Wynne, 575 U.S. at 546. In our view, the Court’s logic and characterization of the county 

tax as a state tax based on the circumstances underlying its creation and the manner of 

its collection via the state’s comptroller reveal that state and local taxes need not be 

revenue to other states.” Id. at 21. Accordingly, PDOR urges our Court to affirm the 

decision of the Commonwealth Court.

9 We similarly find that Lohman, supra, is not relevant to our consideration of this issue, 

as it does not address the need, vel non, to aggregate state and local taxes in a dormant 

Commerce Clause analysis.
[J-5A-B-2023] - 23

aggregated for purposes of a dormant Commerce Clause analysis, as Appellant 

contends. Indeed, nowhere in its comprehensive opinion did the Wynne Court endorse

the notion that local taxes are essentially a legal fiction, indistinguishable from state taxes. 

Rather, in our view, the Court sanctioned an ad hoc approach, under which a “local” 

income tax may be deemed indistinguishable from the corresponding state’s income tax 

only if, like Maryland’s “county” tax, it is actually a duplicative state tax in disguise. 

Here, the Philadelphia Tax is readily distinguishable from the county tax at issue 

in Wynne, as the latter was enacted by the State of Maryland and collected by Maryland’s 

comptroller, whereas the Philadelphia Tax was enacted by Philadelphia’s City Council 

and is collected by the City’s Department of Revenue solely for the benefit of the City and 

its citizenry. In light of this stark contrast, we reject Appellant’s argument that Wynne

mandates that we aggregate the Philadelphia Tax with the PIT in discerning whether it 

violates the dormant Commerce Clause, as her view in that regard is contrary to the high 

Court’s teachings in Wynne. 

We likewise reject Appellant’s claim that the City was required to aggregate the 

Philadelphia Tax and the PIT because local governments, such as the City, are creatures 

of statute, which derive taxation authority solely from the legislative enactments of our 

General Assembly. It is axiomatic that “[t]he validity of the taxing ordinance does not 

depend upon whether the tax is regarded in a legal sense as a state or local tax,” given 

that “[a]ll taxes in Pennsylvania levied by municipal and quasi municipal corporations 

must, of course, be authorized by the legislature.” McClelland, 57 A.2d at 848. Indeed, 

our Court has recognized that, “[i]n that sense, therefore, all [taxes] may be considered 

state taxes.” Id. (emphasis original). Nevertheless, although our Court has 

acknowledged that, in a sense, state and local taxes are indistinguishable, as both are 

authorized by state legislation, we have also stressed that “[s]tate taxes stand on a 
[J-5A-B-2023] - 24

different basis from local levies.” Id. In that vein, we have highlighted that state taxes 

“are essential to the very ‘preservation’ of the state itself,” whereas local taxes “are 

authorized or permitted by the state, not for its actual preservation, but merely to maintain 

the machinery of local government.” Id. (internal citations omitted); see Nat’l Biscuit, 98 

A.2d at 186 (observing that, in McClelland, we concluded that “a tax imposed for the 

benefit merely of a local political subdivision, and not for general State purposes, is not 

to be regarded as a State tax”). Thus, nothing in the high Court’s teachings, nor in our 

own jurisprudence, stands for the premise that state and local taxes are broadly 

indistinguishable, much less supports Appellant’s conclusion that state and local taxes 

must be aggregated for purposes of a dormant Commerce Clause analysis. 

Aside from her reliance on Wynne, which, as explained above, undermines her 

argument in favor of aggregation, and Philadelphia Eagles, Northwood Construction, and 

7-Eleven, which are inapposite to the issue, Appellant provides little else to justify her 

view that we must consider the Philadelphia Tax in tandem with the PIT in addressing her 

dormant Commerce Clause challenge. In her final effort to sway this Court with respect 

to the question of aggregation, Appellant proffers three out-of-state cases — Arizona 

Public Service, supra; General Motors, supra; and Matkovich, supra. In the first of these 

cases, an Arizona court of appeals held that an Arizona public utility company which 

purchased coal from a mine located in McKinley County, New Mexico, was entitled to tax 

credits, against the amount it paid in Arizona’s use tax, for gross receipts taxes which the 

company paid to both New Mexico and McKinley County. In so concluding, the Arizona 

court of appeals examined A.R.S. § 42-1409,10 which governed the state’s use tax and 

provided an express exemption whereby the use tax did not apply to “[t]angible personal 

10 Section 42-1409 was renumbered following the court’s decision in Arizona Public 

Service.
[J-5A-B-2023] - 25

property the sale or use of which has already been subjected to an excise tax at a rate 

equal to or exceeding the tax imposed by this article under the laws of another state of 

the United States.” Id. § 42-1409(A)(2). The provision further provided that, “[i]f the 

excise tax imposed by the other state is at a rate less than the tax imposed by this article, 

the tax imposed by this article is reduced by the amount of the tax already imposed by 

the other state.” Id. The court found that the plain language of the statute — crediting a 

taxpayer for excise taxes paid on personal property “under the laws of another state” to 

offset Arizona’s use tax — required it to exempt the utility company from the use tax for 

the gross receipts taxes paid to both the State of New Mexico and McKinley County. With 

respect to the latter taxing authority, the court observed that the county was entitled to 

impose its gross receipts tax on taxpayers solely by virtue of its “derivative relationship” 

with the state, and, more precisely, from the state’s enabling statutes. Ariz. Pub. Serv. 

Co., 934 P.2d at 799. Tellingly, however, the court concluded that this relationship 

between the state and county revealed that the word “under,” as employed by Arizona’s 

legislature in Section 42-1409(A)(2), was unambiguous and justified an exemption for the 

gross receipts tax which the utility company paid to McKinley County. 

While the Arizona intermediate court briefly mentioned the Commerce Clause in 

its disposition of the tax issue before it, its focus, undoubtedly, was on the language of its 

state’s legislation, and it is that legislation which governed the outcome of the case. As 

such, Arizona Public Service does not support the novel practice of aggregating state and 

local taxes for purposes of a dormant Commerce Clause analysis. 

Likewise, General Motors is of limited value. Therein, the Colorado Supreme Court 

was tasked with determining whether a use tax imposed by the City and County of Denver 

violated the dormant Commerce Clause. In finding that it did, the court preliminarily 

concluded that “[i]nternal consistency [under Complete Auto] requires that states impose 
[J-5A-B-2023] - 26

identical taxes when viewed in the aggregate — as a collection of state and sub-state 

taxing jurisdictions.” General Motors, 990 P.2d at 69. Markedly, this brief conclusory 

statement represents the entirety of the court’s reasoning, or lack thereof, underlying its 

determination that state and local taxes must be aggregated for consideration under the 

dormant Commerce Clause. Thus, General Motors provides a poor basis on which for 

our Court to declare, for the first time, that state and local level taxes are one and the 

same for purposes of the Commerce Clause.11 

11 Notably, the General Motors court also erroneously employed the Complete Auto test. 

Specifically, in attempting to discern whether Denver’s taxation scheme was internally 

consistent, the court provided the following hypothetical scenario:

[I]f Colorado imposed a 1% sales or use tax and Denver a 2% 

tax, a purchaser or user would owe a 3% total tax. Similarly, 

if Michigan collected a 2% sales or use tax and Detroit a 1% 

tax, a purchaser or user in Detroit would pay a 3% total tax. 

However, a user who purchased the item in Detroit would be 

subject to an additional 1% tax upon the storage or use of the 

item in Denver because section 53–92(c) only credits taxes 

paid to other municipalities. Thus, Denver’s use tax could 

burden interstate commerce if every other state and 

municipality employed the same tax structure as Colorado 

and Denver, but imposed different tax rates.

General Motors, 990 P.2d at 70. This is an inaccurate application of the internal 

consistency test, as the Colorado Supreme Court invented a scenario with “similar” tax 

schemes in Colorado and Michigan, but with differing rates of taxation, and which are 

inverted such that Colorado’s tax rate matched that of Detroit, and Michigan’s tax rate 

matched the rate imposed by Denver. The court was correct that this scenario could have 

led to double taxation, as an individual who purchased an item in Detroit would have 

received a 1% credit against his or her Denver tax, leaving 1% remaining. Based on its 

view in this regard, the court reasoned that Denver’s tax structure was “internally 

inconsistent because Denver’s credit mechanism could cause multiple taxation even if 

every state and municipality were to impose a taxing scheme similar to the one present 

in Colorado and Denver.” Id. at 69 (emphasis added). 

Yet, the internal consistency test does not operate, as the Colorado Supreme 

Court suggested, in terms of “similar taxes.” Rather, the appropriate question, which we 

address below, is whether an individual would be subject to double taxation if all states 

and local taxing authorities were to adopt the same taxes and crediting systems as 

Pennsylvania and Philadelphia. See Wynne, 575 U.S. at 562 (“This test, which helps 

(continued...)
[J-5A-B-2023] - 27

The third and final out-of-state case on which Appellant relies, Matkovich, also 

provides negligible support for her claim that state and local income taxes must be viewed 

as one under the dormant Commerce Clause. In Matkovich, the West Virginia Supreme 

Court concluded that a tax credit statute, W. Va. Code § 11-15A-10a, which operated to 

offset the state’s motor fuel use tax, violated the dormant Commerce Clause because the 

state’s tax department applied the statute in a manner which provided a taxpayer credit 

only for sales taxes paid on fuel to other states and not for such taxes paid to cities, 

counties, and localities of other states. Relying on Wynne, Arizona Public Service, and 

General Motors, the court found that proper application of the statute entitled taxpayers 

to receive sales tax credits for sales taxes paid to other states and to subdivisions of other 

states. In so doing, the court opined that “[a]ny other construction of th[e] statute would 

invariably violate the Commerce Clause’s prohibition on subjecting interstate transactions 

to a greater tax burden than that imposed on strictly intrastate dealings.” Matkovich, 793 

S.E.2d at 897. We are unpersuaded by Matkovich, given that the court therein derived 

support for its conclusion from Arizona Public Service, which, as discussed, is 

distinguishable from the instant case, and from General Motors, which, as noted, 

concluded that state and local taxes must be aggregated without citing any authority or 

undertaking any semblance of a substantive analysis with respect to the issue. Moreover, 

we find that the Matkovich court’s ruling contravenes the high Court’s reasoning in 

Wynne, which, as explained, requires an ad hoc assessment of the local income tax 

scheme at issue to discern whether it is distinct from the corresponding state income tax 

or indistinguishable therefrom for purposes of a Complete Auto analysis. 

courts identify tax schemes that discriminate against interstate commerce, looks to the 

structure of the tax at issue to see whether its identical application by every State in the 

Union would place interstate commerce at a disadvantage as compared with commerce 

intrastate.” (emphasis added; citations and internal quotation marks omitted)). 
[J-5A-B-2023] - 28

Thus, Appellant has failed to persuade us that her construction of the dormant 

Commerce Clause aligns with Wynne, and these three out-of-state cases do not sway us 

in her favor. Accordingly, consistent with Wynne, we conclude that the Philadelphia Tax 

was enacted, and operates, as a purely local tax, given that it was promulgated by 

Philadelphia’s City Council and is collected by the Department for the sole benefit of the 

City and its residents; as a result, we will not consider these state and local taxes in the 

aggregate in applying the Complete Auto test.

Having determined that the Philadelphia Tax and the PIT should be treated as

discrete taxes, we must consider whether the City’s tax scheme discriminates against 

interstate commerce. We conclude, as did the Commonwealth Court, that the 

Philadelphia Tax and the City’s corresponding crediting system satisfy the test set forth 

in Complete Auto. 

As explained above, Appellant challenges the Philadelphia Tax under two prongs 

of the Complete Auto test: first, she contends that the City’s tax scheme is not fairly 

apportioned; and second, she avers that the tax scheme discriminates against interstate 

commerce. In assessing whether the tax scheme is fairly apportioned, we must 

determine whether it is internally and externally consistent. Once more, the high Court’s 

decision in Wynne provides clear guidance with respect to this endeavor. 

To briefly reiterate, the Wynne Court found that Maryland’s tax scheme was not 

internally consistent because, if every state adopted the three taxes at issue (the county 

tax, the state tax, and the special non-resident tax) and adopted Maryland’s system of not 

crediting against those taxes, residents who paid income tax to out-of-state jurisdictions

would incur double taxation. Wynne, 575 U.S. at 565. The Court stressed that such 

double taxation was “not simply the result of [the tax scheme’s] interaction with the taxing 

schemes of other States,” but, instead, emanated from inherent discrimination contained 
[J-5A-B-2023] - 29

within the scheme. Id. (citations omitted). Pertinently, in declaring Maryland’s tax scheme 

unconstitutional, the Court explained that “Maryland could remedy the infirmity in its tax 

scheme by offering, as most States do, a credit against income taxes paid to other 

States,” which would vindicate the tax scheme under the internal consistency test. Id. at 

568 (citation omitted).

In accordance with Wynne, we must now determine whether the City’s tax scheme 

is internally consistent. To do so, we must assume that all local taxing jurisdictions adopt 

the Philadelphia Tax rate of 3.922% and the City’s corresponding practice of crediting 

taxpayers for local taxes paid to other jurisdictions. In this scenario, April, who lives in 

State A and works exclusively in State A, would pay 3.922% once to State A, while Bob, 

who lives in State A but works in State B, would also pay only 3.922% once, to State B, 

because State A would permit him a credit against its own tax. Thus, both in-state and 

out-of-state taxpayers would yield the same tax obligation. The same remains true even 

if we add the Commonwealth’s state tax to this hypothetical, as each taxpayer would 

simply incur an additional state tax obligation of 3.07% consistent with the PIT and the 

Commonwealth’s corresponding practice of offsetting the PIT with state taxes paid 

elsewhere. Accordingly, when the internal consistency test is properly applied to the 

Philadelphia Tax and the PIT, along with the corresponding tax credits permitted by the 

City and the Commonwealth, it is evident that any remaining “disparate incentives to 

engage in interstate commerce” stem solely from “the interaction of two different but 

nondiscriminatory and internally consistent schemes.” Id. at 562 (citations omitted); see 

Steiner, 449 P.3d at 197 (finding that, because Utah offered a tax credit for out-of-state 

taxes, it was internally consistent and compatible with Wynne); Goggin v. State Tax 

Assessor, 191 A.3d 341, 347 (Me. 2018) (“Here, the Maine statute expressly allows a 
[J-5A-B-2023] - 30

credit for the payment of individual income taxes to other states . . . and therefore does 

not run afoul of Wynne.”). 

Hence, the Commonwealth Court correctly determined that any excess taxes paid 

by Appellant were simply the result of Delaware’s higher income tax rate of 5%, rather 

than any inherent discrimination contained in the Philadelphia Tax or the City’s practice 

of offsetting its tax with credits paid only to local taxing jurisdictions. A simple hypothetical 

bolsters our conclusion in this regard: If neither Philadelphia nor Wilmington imposed a 

local wage tax, Appellant would have nonetheless paid 1.93% more in income taxes than 

her Pennsylvania counterparts who worked solely in the Commonwealth, as the DIT rate 

was 5% while the PIT rate was 3.07%. In this hypothetical, Commerce Clause principles 

would not have required the Commonwealth to credit Appellant beyond the 3.07% which 

it already permitted her, nor would Delaware incur any similar obligation to lessen

Appellant’s tax burden, given that states may set their own income tax rates. Certainly, 

the City should not be required to subsidize Delaware’s higher tax rate when it already 

offsets its Wage Tax by crediting taxpayers for analogous local taxes paid outside of its 

jurisdiction. For these reasons, we find that the Philadelphia Tax meets the internal 

consistency test, and that, relatedly, the tax is not discriminatory under the third prong of 

the Complete Auto test because the City imposes a consistent tax on all residents and 

provides the necessary credit against similar out-of-state local taxes paid by them. See 

Armco Inc., 467 U.S. at 644 (commingling consideration of the internal consistency test 

and the discrimination prong of the Complete Auto test because “[a] tax that unfairly 

apportions income from other States is a form of discrimination against interstate 

commerce”); see also City’s Brief at 25-26 (advocating that the discrimination and fair 

apportionment prongs of the Complete Auto test merge). 
[J-5A-B-2023] - 31

Additionally, we find that the Philadelphia Tax meets Complete Auto’s external 

consistency test, which examines “the economic justification for the State’s claim upon 

the value taxed, to discover whether a State’s tax reaches beyond that portion of value 

that is fairly attributable to economic activity within the taxing State.” Jefferson Lines, 514 

U.S. at 185. It is well-established that “domicile in itself establishes a basis for taxation” 

because the “[e]njoyment of the privileges of residence within the state, and the attendant 

right to invoke the protection of its laws, are inseparable from the responsibility for sharing 

the costs of government.” Lawrence, 286 U.S. at 279. Indeed, “[a] tax measured by the 

net income of residents is an equitable method of distributing the burdens of government,” 

which include public education and emergency services, “among those who are privileged 

to enjoy its benefits.” People of State of N.Y. ex rel. Cohn v. Graves, 300 U.S. 308, 313 

(1937). Consequently, we agree with the lower court that “Philadelphia’s provision of 

municipal benefits and services to its residents provides sufficient economic justification 

for the imposition of its Wage Tax.” Zilka, 1063-1064 C.D. 2019, at 9 (citation omitted). 

Moreover, as the lower court explained, “Philadelphia avoided taxing more than its fair 

share of [Appellant’s] wages by providing a tax credit for 100% of the Wilmington Tax.” 

Id. Thus, we find that the City’s tax scheme is externally consistent under Complete Auto.

For these reasons, we conclude that the City did not violate the dormant 

Commerce Clause by imposing upon Appellant the Philadelphia Tax, crediting her for the 

similar local tax she paid to Wilmington, but declining to afford her an additional credit for 

the state taxes she paid to Delaware, as the tax scheme is both internally and externally 

consistent and is not discriminatory against interstate commerce, in conformance with the 

Complete Auto test. To hold otherwise would, in effect, nullify the high Court’s venerable 

recognition that “tax schemes that create disparate incentives to engage in interstate 

commerce (and sometimes result in double taxation) only as a result of the interaction of 
[J-5A-B-2023] - 32

two different but nondiscriminatory and internally consistent schemes” are not 

unconstitutional. Wynne, 575 U.S. at 562. Accordingly, we affirm the Commonwealth 

Court’s decision concluding that the tax scheme is constitutional.

Justices Donohue and Wecht join the opinion.

Justice Wecht files a concurring opinion. 

Justice Dougherty files a dissenting opinion in which Justice Mundy joins.

Justice Brobson did not participate in the consideration or decision of this matter.