This opinion is subject to revision before final

publication in the Pacific Reporter

2019 UT 47

IN THE

SUPREME COURT OF THE STATE OF UTAH

ROBERT C. STEINER and WENDY STEINER-REED,

Appellants and Cross-Appellees,

v.

UTAH STATE TAX COMMISSION,

Appellee and Cross-Appellant.

No. 20180223

Filed August 14, 2019

On Direct Appeal

Third District, Salt Lake

The Honorable Noel S. Hyde

No. 170901774

Attorneys:

Peter W. Billings, William H. Adams, Nora K. Brunelle, David P. 

Billings, Salt Lake City, for appellants and cross-appellees

Sean D. Reyes, Att’y Gen., Stanford E. Purser, Deputy Solic. Gen., 

Erin T. Middleton, Asst. Solic. Gen., John C. McCarrey, Mark E. 

Wainwright, Asst. Att’y Gens., Salt Lake City, for appellee and 

cross-appellant

ASSOCIATE CHIEF JUSTICE LEE authored the opinion of the Court, in 

which CHIEF JUSTICE DURRANT, JUSTICE HIMONAS, JUSTICE PEARCE, 

and JUSTICE PETERSEN joined.

ASSOCIATE CHIEF JUSTICE LEE, opinion of the Court:

¶1 The Utah State Tax Commission disallowed certain tax

deductions claimed by Robert and Wendy Steiner on their tax 

returns. The Steiners filed a challenge to that determination in the tax 

court. In that forum, the Steiners asserted that the United States 
STEINER v. TAX COMMISSION

Opinion of the Court

2

Constitution, specifically the Dormant Commerce Clause and the 

Dormant Foreign Commerce Clause,

1 mandated that Utah allow 

their claimed deductions relating to (1) income earned in the United 

States but outside of Utah and (2) income earned in foreign 

countries. The Steiners also cited the Utah Code section 59-10-115(2), 

in support of their latter claim. The tax court agreed in part. It 

allowed the second set of deductions but disallowed the first. 

¶2 Both parties appealed. We affirm in part and reverse in part. 

We agree with the State and hold that neither set of deductions is 

mandated by the United States Constitution. Nor are the deductions

required by the Utah Tax Code.

¶3 Our constitutional analysis is in line with our 2015 decision 

in DIRECTV v. Utah State Tax Commission, 2015 UT 93, 364 P.3d 1036. 

There we noted the lack of any textual or originalist mooring for the 

doctrine that has built up around the concept of dormant commerce, 

while also lamenting the lack of any “clear, overarching theory” in

the decisions of the United States Supreme Court in this field. Id. 

¶ 45. We acknowledged, of course, our duty to follow controlling 

precedent from that court. But we emphasized the difficulty of 

“anticipat[ing] expansions of the law” in this field “into new 

territory” not yet explored by the Supreme Court. Id. And in the 

absence of clear direction (in text, history, or precedent), we declined 

to make a guess about the direction the case law might take in the 

next case that comes before the Supreme Court. Id.

¶4 We resolve this case on this basis. We find no controlling 

precedent from the United States Supreme Court that mandates a 

decision striking down the challenged Utah tax provisions on 

dormant commerce grounds. And we uphold their constitutionality 

on that basis.

I

¶5 The Steiners filed joint tax returns as Utah residents in tax 

years 2011, 2012, and 2013. Although their income included earnings 

_____________________________________________________________

1 Throughout this opinion we refer to both the “Dormant 

Commerce Clause” and the “Dormant Foreign Commerce Clause.” 

We refer to them this way, despite the fact that we cannot find either 

such clause in our copy of the United States Constitution, for the 

sake of simplicity and concision. 
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Opinion of the Court

3

from various sources, the only component at issue on appeal is the 

tax on business income earned by Robert Steiner (Steiner). 

¶6 Steiner is a shareholder of Steiner, LLC, which is taxed as an 

S corporation.

2 He is also a beneficiary of the G.A. Steiner Trust (the 

Trust), which is the majority shareholder of Steiner, LLC. The 

Steiners’ income from Steiner, LLC during the relevant period 

included both amounts passed directly to Steiner by virtue of his 

direct stake in Steiner, LLC and amounts attributable to Steiner as a 

beneficiary of the Trust. 

¶7 Steiner, LLC is the sole shareholder of Alsco, Inc. Alsco is a 

textile rental business, which along with its subsidiaries does 

business in the United States and around the world. Alsco and all of 

its subsidiaries that do business in the United States have elected to 

be taxed as Qualified S Subsidiaries. Thus, all of the income derived 

from these entities is passed through to Steiner, LLC. Steiner, LLC, in 

turn, passes the income through to its individual shareholders, 

including Steiner. Such income is accordingly reflected on the 

Steiners’ joint tax returns. Most of Alsco’s foreign subsidiaries have 

elected to be taxed as partnerships for U.S. tax purposes. Ninety-nine 

percent of the income from each subsidiary is passed through to 

Alsco as a partner. This income goes through the same pass-through 

waterfall and ends up on the Steiners’ joint tax returns as well. 

¶8 On their federal tax returns during the relevant years the

Steiners claimed, and received, a tax credit for the taxes they had 

paid to foreign jurisdictions. On their Utah tax returns, the Steiners 

claimed a state tax credit for taxes they paid to other states. These 

credits are explicitly allowed by the Utah Tax Code. UTAH CODE

§ 59-10-1003. But the Steiners also claimed an “equitable adjustment” 

under Utah Code section 59-10-115—an adjustment excluding

foreign income from their Utah taxable income. 

_____________________________________________________________

2 That means that Steiner, LLC itself does not pay any federal or 

state-level tax. See 26 U.S.C. § 1363; UTAH CODE § 59-10-1403(1). All 

of its income passes through to individual shareholders’ tax returns 

(in proportion to their ownership interest). 26 U.S.C. § 1366; UTAH 

CODE § 59-10-1403.1(2). The individuals then pay taxes on the 

amount passed through to their individual returns. 26 U.S.C. § 1366.
STEINER v. TAX COMMISSION

Opinion of the Court

4

¶9 The Utah State Tax Commission3 audited the Steiners’ tax 

returns. The Commission disallowed the “equitable adjustment” for 

foreign income. But it also recalculated the state tax credit and 

determined that the Steiners were entitled to a larger credit than they 

had claimed. 

¶10 The Steiners filed a Petition for Redetermination challenging 

the Commission’s disallowance of the equitable adjustment for 

foreign income. In a subsequent amendment to their petition, the

Steiners also challenged Utah’s state tax credit system. They asked

the Commission to make a determination that only the portion of 

Steiner, LLC’s income that is apportioned to Utah should be

included in taxable income for Utah purposes.4 The Steiners also 

raised constitutional challenges to Utah’s tax scheme in their 

petition. 

¶11 The Commission conducted a formal hearing on the 

Steiners’ petition and later issued a final decision in which it upheld 

the original audit determination and denied the Steiners’ new 

apportionment claim. The Commission lacked jurisdiction to hear 

the constitutional claims and thus declined to address them. 

¶12 After this adverse ruling, the Steiners paid the assessed tax 

deficiency (plus statutory interest) pursuant to Utah Code section

59-1-611. They then appealed to the third district tax court for a “de 

novo” review of the Commission’s determination. See UTAH CODE

§ 59-1-601. In the tax court, both parties moved for summary 

judgment. The tax court first ruled that Utah’s tax treatment of 

income earned in other states did not run afoul of the Dormant

Commerce Clause. Specifically, the court held that the Dormant 

Commerce Clause did not require apportionment of the Steiners’ 

income and that Utah’s tax credit system satisfied the requirements 

_____________________________________________________________

3 Some of the actions in this case were undertaken by 

subdivisions of the Commission (specifically the Auditing Division). 

Because the distinctions are not relevant, we refer to all of the entities 

collectively as the Commission for the sake of simplicity. 

4 Apportionment involves allocation of corporate business 

income to Utah by comparing a corporation’s Utah-specific presence 

with its overall payroll, property, sales, and so forth. UTAH CODE

§ 59-7-311. Only the proportion of income attributable to Utah is then 

taxed by Utah. 
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Opinion of the Court

5

of that clause. The court went on to rule that the Steiners were 

entitled to claim an equitable adjustment for their foreign business 

income. The court’s ruling in this regard, although ultimately based 

on statutory grounds, was driven by constitutional concerns. In 

particular, the tax court believed that the Dormant Foreign 

Commerce Clause mandated that Utah allow foreign business 

income to be deducted. The tax court thus remanded the case to the 

Commission so it could apply the equitable adjustment to the 

Steiners’ income. Both parties filed notices of appeal to this court 

pursuant to Utah Code section 59-1-608.

II

¶13 The Commerce Clause grants Congress the authority to 

regulate interstate commerce. U.S. CONST. art. I, § 8, cl. 3. “By 

negative implication,” the United States Supreme Court has held 

that “this provision also limits the states’ authority in this realm.” 

DIRECTV v. Utah State Tax Comm’n, 2015 UT 93, ¶ 13, 364 P.3d 1036. 

“So even if Congress has not spoken on an issue of interstate 

commerce, states are prevented from encroaching on Congress’s 

authority—hence the term ‘dormant’ or ‘negative’ Commerce 

Clause.” Id. We must decide how to apply this negative implication 

to the Utah Tax Code. 

¶14 This case presents three distinct questions for our resolution: 

(1) whether the Dormant Commerce Clause requires Utah to 

apportion a residency-based income tax instead of simply granting a 

credit for taxes paid to other states; (2) whether the Dormant Foreign 

Commerce Clause requires Utah to allow a deduction for income 

earned in foreign countries; and (3) whether Utah’s “equitable 

adjustment” statute, Utah Code section 59-10-115(2), mandates a 

deduction for foreign income. 

¶15 We answer each of these questions in the negative,

explaining our reasoning below. But before diving into the specifics, 

we lay out some background on our general jurisprudential 

approach to dormant commerce issues.

A

¶16 Decades ago the United States Supreme Court likened its 

case law under the Dormant Commerce Clause to a “quagmire.” Nw. 

States Portland Cement Co. v. Minnesota, 358 U.S. 450, 458 (1959). That 

was an apt metaphor at the time. It seems even more so today. 

¶17 The Supreme Court’s body of dormant commerce 

jurisprudence has multiplied several-fold in the decades since the 

Portland Cement case. But “[n]ot much has changed . . . , except 
STEINER v. TAX COMMISSION

Opinion of the Court

6

perhaps to add more room for controversy and confusion and little 

in the way of precise guides to the States in the exercise of their 

indispensable power of taxation.” DIRECTV, 2015 UT 93, ¶ 44 

(citation and internal quotation marks omitted). This is unfortunate. 

The lower courts are operating largely in the dark in this important 

field of constitutional law. “Yet we must of course decide the cases 

that come before us, mindful of our role as a lower court to follow 

controlling precedent from the U.S. Supreme Court.” Id. 

¶18 In carrying out our duty, however, “we are reluctant to 

extend dormant Commerce Clause precedent in new directions not 

yet endorsed” by the Supreme Court. Id. ¶ 45. Because the high 

court’s rulings in this area have proceeded on an ad hoc basis lacking

“any clear, overarching theory,” we have noted the difficulty of the 

task of a lower court in attempting to “anticipate expansions of the 

law into new territory.” Id. And with this in mind, we have warned 

of the perils of a lower court reading tea leaves in this field. 

¶19 We have acknowledged, of course, the Supreme Court’s 

prerogative to place limits on the “longstanding police powers of 

state and local governments to regulate business.” Id. ¶ 46. But in 

light of the ad hoc nature of that court’s precedents, we have warned 

that “it should be the U.S. Supreme Court” that leads the way in 

charting new territory in this field. Id. 

¶20 We follow this same approach here. We will, of course, 

faithfully apply controlling precedent. But we decline to extend that 

precedent into new territory—even in ways that might seem logical 

in other jurisprudential realms. We do that not out of any disrespect 

for the United States Supreme Court, but in our best attempt at 

judicial humility in a constitutional field marked more by haphazard 

policy judgments than any unifying legal theory. In such a field it 

would seem presumptuous to make our own guess about the next 

move the high court might make as it extends its precedent. And we 

will thus leave it to that court to mark the next extension in this field.

B

¶21 Like many states, Utah taxes its residents on all of their 

income, regardless of where it is earned. But Utah also grants its 

residents credits for taxes they have already paid to other states. This 

ensures that Utah residents’ income is not subject to taxation by both 

Utah and another state. 

¶22 The Steiners nevertheless contend that this taxation scheme

violates the Dormant Commerce Clause because it taxes a 

disproportionate share of the income they earned outside of Utah.
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Opinion of the Court

7

They are mistaken. We hold that Utah’s provision of credits for 

income taxes already paid to other states satisfies the dormant 

commerce requirements set forth in controlling precedent.

5

¶23 The seminal case in this area is Complete Auto Transit, Inc. v. 

Brady, 430 U.S. 274 (1977). Complete Auto is the origin of the four-part 

test used to assess state taxes for compliance with the Dormant 

Commerce Clause. But the Complete Auto framework was altered by 

the Supreme Court’s more recent decision in Comptroller of the 

Treasury of Maryland v. Wynne, 135 S. Ct. 1787 (2015). In light of the 

complexity of the case law in this area, we first outline the evolution 

of Dormant Commerce Clause jurisprudence prior to Wynne. We 

next explain how Wynne changed the governing framework. Finally, 

we apply Wynne to conclude that Utah’s tax scheme is constitutional.

1

¶24 The modern framework for evaluating the validity of state 

taxes under the Dormant Commerce Clause has its origins in 

Complete Auto, 430 U.S. 274. In that case the high court overruled the 

previously governing analytical approach established in Freeman v. 

Hewit, 329 U.S. 249 (1946), and Spector Motor Service v. O’Connor, 340 

U.S. 602 (1951). Those cases established what was known as the 

“Spector Rule”—that “a tax on the ‘privilege’ of engaging in an 

activity in the State may not be applied to an activity that is part of 

interstate commerce.” Complete Auto, 430 U.S. at 278. The Complete 

Auto Court discarded the Spector Rule on the ground that it 

represented a “triumph of formalism over substance.” Id. at 281. 

¶25 Apart from its expressed dissatisfaction with the formalist 

nature of the Spector Rule, the Complete Auto Court offered very little 

in the way of an analytical explanation of its basis for a new legal 

framework in this field. Instead the Court just made brief note of 

four claims that the taxpayer had not made in that case. Id. at 287. 

The Court stated, almost in passing, “that no claim is made that the 

activity is not sufficiently connected to the State to justify a tax, or 

that the tax is not fairly related to benefits provided the taxpayer, or 

_____________________________________________________________

5 The tax court granted summary judgment in favor of the 

Commission on this issue. We review summary judgment decisions 

for correctness, granting no deference to the lower court’s legal 

conclusions. Salt Lake Cty. v. Holliday Water Co., 2010 UT 45, ¶ 14, 234 

P.3d 1105.
STEINER v. TAX COMMISSION

Opinion of the Court

8

that the tax discriminates against interstate commerce, or that the tax 

is not fairly apportioned.” Id. 

¶26 This offhand statement was eventually elevated into a “test.”

See D.H. Holmes Co. v. McNamara, 486 U.S. 24, 30 (1988). To pass 

Dormant Commerce Clause scrutiny under this “test,” a state tax 

must: (1) apply to an activity with a substantial nexus to the state, (2) 

be fairly apportioned, (3) not discriminate against interstate 

commerce, and (4) be fairly related to the services the state provides. 

Id. Only the fair apportionment prong is at issue in this appeal. 

¶27 The Supreme Court has further subdivided the fair 

apportionment prong into two parts—internal consistency and 

external consistency. Container Corp. of Am. v. Franchise Tax Bd., 463 

U.S. 159, 169 (1983). Internal consistency requires an analysis of the 

inherent characteristics of the state tax system. Under this analysis 

we assume that every state uses Utah’s tax system, and assess

whether, in this hypothetical world, there is systematic 

discrimination against interstate commerce. Wynne, 135 S. Ct. at 

1801–02. External consistency, on the other hand, requires that state 

taxes “reflect a reasonable sense of how income is generated.” 

Container Corp., 463 U.S. at 169. To evaluate this question, a court 

must assess “whether the State has taxed only that portion of the 

revenues from the interstate activity which reasonably reflects the instate component of the activity being taxed.” Goldberg v. Sweet, 488 

U.S. 252, 262 (1989). This essentially requires states to apportion 

income, and tax only that part of the income attributable to in-state 

activity. 

¶28 Prior to Wynne there was considerable uncertainty regarding 

the continued vitality of both of these two components. See, e.g., Okla.

Tax Comm’n v. Jefferson Lines, Inc., 514 U.S. 175, 196 (1995) (declining 

to require external consistency of sales taxes for sake of “simplicity”); 

Walter Hellerstein, Is “Internal Consistency” Dead?: Reflections on an 

Evolving Commerce Clause Restraint on State Taxation, 61 TAX. L. REV. 1, 

26 (2007). Despite this confusion, neither test has been expressly

overruled by the Supreme Court. With this in mind, the Steiners 

assert that Utah’s tax scheme, as applied to them, must satisfy both

the internal and external consistency tests. If the tax fails to do this, 

in their view, it does not survive the Dormant Commerce Clause 

challenge. 

¶29 To see why this assertion is mistaken, we have to take a 

detailed look at the Wynne decision.
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Opinion of the Court

9

2

¶30 Wynne was a challenge brought by individual taxpayers 

against Maryland’s tax statutes. The Wynnes sought two important 

extensions to the Supreme Court’s then-existing Dormant Commerce 

Clause jurisprudence. First, they wanted the Court to apply the 

clause to an individual (rather than a corporation) for the first time. 

Second, they wanted the Court to apply the clause to a 

residency-based income tax—also for the first time. 

¶31 Like the Steiners, the taxpayers in Wynne were shareholders

of an S corporation. Wynne, 135 S. Ct. at 1793. The Wynnes were 

residents of Maryland. Id. At the time of that case, Maryland 

imposed two levels of state taxation—first, a state income tax, which 

Maryland levied at a graduated rate; and second, a county income 

tax, which varied based on geography but was levied at a flat rate. 

Id. at 1792. Despite the differing nomenclature, both taxes were 

collected directly by the state of Maryland. Id. Maryland allowed 

taxpayers to claim a credit for taxes paid to other states, but only 

against the “state” tax—not the “county” tax. Id. Maryland residents 

were thus subject to double taxation on their income earned in other 

states. Income was taxed by the other state via that state’s taxation 

regime and Maryland via its flat rate county tax. Maryland also 

taxed the income of nonresidents. Id. Nonresidents paid the state 

income tax on all income they earned within Maryland. Id. They also 

had to pay a “special nonresident tax” instead of the county tax. Id. 

This tax was equivalent to the lowest county income tax rate. Id. The 

Wynnes claimed that this system violated the Dormant Commerce 

Clause. 

¶32 The Supreme Court agreed. As a threshold matter the Court 

noted that “it is hard to see why the dormant Commerce Clause 

should treat individuals less favorably than corporations.” Id. at 

1797. It thus concluded, with little analysis, that individuals are also 

protected by the Dormant Commerce Clause—even though the 

Court had previously never explicitly held as much.6 The Wynnes, as 

_____________________________________________________________

6 The Wynne case is a departure from the Court’s previous 

position that an individual’s residence in a state subjected him, in 

full, to that state’s taxation regime. Indeed, as the principal dissent 

noted, “the sheer volume and consistency of [the Court’s] precedent 

confirms . . . the degree to which this Court has—until now—

endorsed the well-established principle . . . that a State may tax its 

(continued . . .)
STEINER v. TAX COMMISSION

Opinion of the Court

10

shareholders of an S corporation, accordingly fell within the ambit 

its protection.

¶33 The Court then went on to assess the substance of the 

Maryland tax. But in doing so, it sailed past the four-part Complete 

Auto test and assessed the Maryland tax only on internal consistency 

grounds. Although the Court noted that the Maryland Court of 

Appeals applied the full Complete Auto test, id. at 1793, it did not 

endorse or apply the full test anywhere in its opinion. Nor did it 

state that it was simply unnecessary to apply the remaining prongs 

because one of the prongs was dispositive. Instead, it at least 

implicitly treated internal consistency as a standalone constitutional 

test. The continuing vitality of the Complete Auto test is thus in 

serious doubt.7

¶34 Wynne also introduced uncertainty into the fair 

apportionment prong. As discussed above, supra ¶ 27, the fair 

apportionment requirement consists of two subparts—internal 

consistency and external consistency. The Wynne Court first 

concluded that Maryland’s tax failed the internal consistency test. 

The Court imagined a simplified world in which every state had the 

same taxation system as Maryland. Id. at 1803. The Court then

[a]ssume[d] further 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.

_____________________________________________________________

residents’ worldwide income, without restriction arising from the 

source-based taxes imposed by other States and regardless of 

whether the State also chooses to impose source-based taxes of its 

own.” Comptroller of the Treasury of Md. v. Wynne, 135 S. Ct. 1787, 

1818 (2015) (Ginsburg, J., dissenting) (citation and internal quotation 

marks omitted). 

7 We flag this point without conclusively resolving it. We need 

not decide whether Wynne dispensed with Complete Auto because 

only the fair apportionment prong is at issue in this case.
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Opinion of the Court

11

Id. at 1803–04. Based on this hypothetical, the Court determined that 

the Maryland tax systematically discriminated against interstate 

commerce and thus failed the internal consistency test. Id. at 1803. 

And in light of this failure, the Court held that Maryland’s tax failed 

to survive the Dormant Commerce Clause challenge. Id.

8

¶35 So far so good. Because Maryland’s tax failed the internal 

consistency test, the Supreme Court need not have reached the 

external consistency test since a failure on either prong would have 

been determinative. But the Court went on to propose a potential 

solution to Maryland’s problem. Significantly, the Court’s proposed 

solution is one that would fail the external consistency test. 

¶36 The Wynne Court suggested that Maryland could fix the 

problem with its tax code by eliminating the special nonresident tax, 

but continuing to tax all of its residents’ income regardless of source.

Id. at 1806. Yet this solution would fail the external consistency 

requirement. The proposed system would allow Maryland to levy 

the county tax on 100 percent of its residents’ income generated 

outside of Maryland. Maryland would apportion none of this 

income to other states. Crucially, it would not even have to grant a credit 

for taxes paid to other states (as long as it didn’t tax nonresidents).9

This “would seem to squarely violate the external consistency test,” 

which requires states to apportion income such that it “reflect[s] a 

reasonable sense of how income is generated.” Dormant Commerce 

Clause—Personal Income Taxation—Comptroller of the Treasury of 

Maryland v. Wynne, 129 HARV. L. REV. 181, 186–87 (2015) (internal 

quotation marks and emphasis omitted). This tax system does not 

even come close to “slicing [the] taxable pie among [the] States in 

which the taxpayer’s activities contributed to taxable income.” 

_____________________________________________________________

8 This despite the fact that the Court had upheld internally 

inconsistent state taxes before. See, e.g., Am. Trucking Ass’ns v. Mich. 

Pub. Serv. Comm’n, 545 U.S. 429, 437 (2005); Shaffer v. Carter, 252 U.S. 

37, 57 (1920). So much for consistency. 

9 As long as Maryland taxes only residents, the tax system is 

internally consistent. If every state taxed based only on residency 

(and not based on the source of the income), there would be no 

discrimination against interstate commerce. A person living in State 

A would pay only State A taxes, and a person living in State B would 

pay only State B taxes. There would be no differing tax burden based 

on the interstate nature of the income. 
STEINER v. TAX COMMISSION

Opinion of the Court

12

Jefferson Lines, 514 U.S. at 186. Maryland would be entitled to tax the 

out of state “slice” simply because the taxpayer resided in Maryland. 

But slicing the tax pie is the quintessential point of external 

consistency.

¶37 The Wynne Court thus went out of its way to endorse a tax 

regime violative of the external consistency test. Whatever life 

external consistency might have left, it is highly unlikely that it 

continues to apply in the context of an individual taxpayer’s 

challenge to a state’s taxation system.10

¶38 To summarize, Wynne struck down Maryland’s tax system 

solely on the basis of internal consistency. The Court did not apply

the Complete Auto test. And it strongly implied that tax systems that 

fail external consistency would nonetheless pass constitutional 

muster. 

¶39 The task that remains, then, is to assess Utah’s tax scheme 

under the guidelines laid out in Wynne.

3

¶40 We can distill several principles from Wynne that bear on the 

Steiners’ first claim: (1) As shareholders of an S corporation, the 

Steiners are entitled to bring a Dormant Commerce Clause challenge; 

(2) Utah’s tax regime must satisfy the internal consistency test; and 

(3) Utah’s tax regime need not satisfy the external consistency test.

The Steiners’ challenge will rise and fall, then, on a showing of 

internal inconsistency in Utah’s tax code. 

_____________________________________________________________

10 Although we are unaware of any judicial opinions reaching 

this precise conclusion, there is significant scholarly commentary 

along these lines. See, e.g., Mackenzie Catherine Schott, Comment,

Inconsistency with the Internal Consistency Test, 77 LA. L. REV. 947

(2017) (arguing that Wynne established internal consistency as a

standalone constitutional test); Edward A. Zelinsky, The Enigma of 

Wynne, 7 WM. & MARY BUS. L. REV. 797, 809–10 (2016) (noting that 

Wynne “can be read as presaging a future formal repudiation of the 

external consistency test”); Dormant Commerce Clause—Personal

Income Taxation—Comptroller of the Treasury of Maryland v. 

Wynne, 129 HARV. L. REV. 181, 188 (2015) (asserting that Wynne

demonstrates that the Supreme Court is “hesitant to apply the 

[external consistency] test”). 
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Opinion of the Court

13

¶41 We uphold the constitutionality of the Utah tax scheme at 

issue under these principles. Because Utah’s tax system is internally 

consistent, we hold that the Steiners’ Dormant Commerce Clause 

challenge fails on the merits.

¶42 For the years in question, Utah taxed its residents’ state 

taxable income at a rate of 5 percent. UTAH CODE § 59-10-104 (2013).

Utah residents who paid income taxes in other states could take a 

credit against their Utah taxes in the amount of taxes they paid to 

other states, up to the amount that they would have paid under 

Utah’s tax rate. Id. § 59-10-1003. Nonresidents were also taxed at the 

same rate of 5 percent, but only on their income earned in Utah. Id. § 

59-10-103(1)(w), -104(2), -116.

¶43 This arrangement satisfies Wynne’s internal consistency test. 

If every state adopted the same tax system as Utah, there would be 

no discrimination against interstate commerce. April and Bob (our 

hypothetical taxpayers)—who are both residents of State A—pay the 

same tax even though April earns her income in State A and Bob 

earns his in State B. April will pay a 5 percent tax to State A on her 

income because she resides there. Bob will pay a 5 percent tax to 

State A because he resides there and a 5 percent tax to State B 

because he earns income there, but he will receive a credit in State A 

for the 5 percent tax paid to State B. Like April, he will be taxed only 

once on his income. Bob does not shoulder a higher tax burden even 

though he earns his income in interstate commerce.11 This conclusion 

is bolstered by the Wynne majority’s statement that “Maryland could 

cure the problem with its current system by granting a credit for 

taxes paid to other States.” 135 S. Ct. at 1806. This is exactly what 

Utah does. 

¶44 Utah’s tax code thus satisfies the internal consistency test. In 

Wynne, the Supreme Court declined to require anything else of 

Maryland’s tax. We accordingly apply Wynne and conclude that a 

_____________________________________________________________

11 It is true that some states have a 0 percent income tax, and no 

credit against Utah taxes is thus available for income earned in those 

states (because no taxes are paid to those states). But this is 

immaterial to the analysis. Internal consistency analyzes only the 

effects of a state’s own tax system. The fact that a given state’s system 

might generate odd results because of its interaction with the 

systems of other states is irrelevant. See Okla. Tax Comm’n v. Jefferson 

Lines, Inc., 514 U.S. 175, 185 (1995).
STEINER v. TAX COMMISSION

Opinion of the Court

14

state tax levied against individuals need satisfy only the internal 

consistency test to pass Dormant Commerce Clause scrutiny.12 It 

would be an extension of Wynne to require that these taxes also 

satisfy external consistency. If the Supreme Court wishes to mandate 

such an extension, it is of course free to do so. But we will not do so 

here. 

C

¶45 The Steiners also assert a challenge to Utah’s tax code under 

the Dormant Foreign Commerce Clause.13 They contend that Utah’s 

failure to grant a credit for taxes already paid to foreign countries 

impermissibly discriminates against international commerce. The tax 

court agreed and allowed the Steiners to deduct their foreign income 

under the equitable adjustment statute so as to avoid what it viewed 

as an otherwise unconstitutional result. We reverse. There is no 

Supreme Court case in which that Court has struck down a state tax 

on the foreign income of an individual or an S corporation. We 

decline to break new ground here—if the Dormant Foreign 

Commerce Clause is going to be extended to individuals “it should 

be the United States Supreme Court that makes that decision.” 

DIRECTV v. Utah State Tax Comm’n, 2015 UT 93, ¶ 46, 364 P.3d 1036. 

The protections of the Dormant Foreign Commerce Clause have 

been extended only to corporations. And even if the clause did apply 

to the Steiners, the requirements are met here. Accordingly, we hold 

that Utah’s tax system does not run afoul of the Dormant Foreign 

Commerce Clause.14

_____________________________________________________________

12 As discussed previously, only the fair apportionment prong of 

the Complete Auto test is at issue before us. So although a fair reading 

of Wynne is that it may have discarded that test entirely, we need not 

decide the issue. It is enough for our purposes to conclude that after 

Wynne, “fair apportionment” means the same as “internal 

consistency” in this context. 

13 The Dormant Foreign Commerce Clause is analogous to the 

Dormant Commerce Clause. But whereas the latter is derived by 

negative implication from the Commerce Clause, the former finds its 

footing (or lack thereof) in the Foreign Commerce Clause. 

14 We review the tax court’s grant of summary judgment for 

correctness. Salt Lake Cty. v. Holliday Water Co., 2010 UT 45, ¶ 14, 234 

P.3d 1105.
Cite as: 2019 UT __

Opinion of the Court

15

1

¶46 No Supreme Court case considering the Dormant Foreign 

Commerce Clause has involved an individual taxpayer (or S 

corporation shareholder). They have all involved C15 corporations.16

The Supreme Court has never indicated that a state—taxing an 

individual based on his residency in that state—could run afoul of the 

Constitution by failing to grant a tax credit against taxes levied by 

foreign countries. Under the principles we articulated in DIRECTV

that alone is enough to end the inquiry. We could conclude 

otherwise only by transplanting Wynne into the Court’s foreign 

commerce clause jurisprudence. But we find no established basis for

Wynne to be extended into this area. 

¶47 As discussed above, Wynne established—for the first time—

that a state tax levied against an individual who resided in that state 

was subject to the Dormant Commerce Clause. Supra ¶ 32. Justice 

Alito, writing for the Court, noted that “it is hard to see why the 

dormant Commerce Clause should treat individuals less favorably 

than corporations.” Comptroller of the Treasury of Md. v. Wynne, 135 S. 

Ct. 1787, 1797 (2015). Crucially, however, the Court applied a 

different doctrinal framework to the individual taxpayers in Wynne

than the one previously applied to corporations. 

¶48 Wynne adopted the internal consistency test as a 

freestanding constitutional requirement. Id. at 1803. In its previous 

cases, however, the Court applied this test as one part of the broader 

Complete Auto framework. See, e.g., D.H. Holmes Co. v. McNamara, 486 

U.S. 24, 30 (1988). And what’s more, the failure of a tax to pass the 

internal consistency test was not previously fatal. See, e.g., Am.

Trucking Ass’ns v. Mich. Pub. Serv. Comm’n, 545 U.S. 429, 437 (2005); 

Shaffer v. Carter, 252 U.S. 37, 57 (1920). Thus despite the Court’s 

_____________________________________________________________

15 C corporations file corporate tax returns and pay federal and 

state corporate-level taxes on the entity’s business and non-business 

income. 26 U.S.C. § 11; UTAH CODE § 59-7-101 et seq.

16 See Barclays Bank PLC v. Franchise Tax Bd. Of Cal., 512 U.S. 298 

(1994); Itel Containers Int’l Corp. v. Huddleston, 507 U.S. 60 (1993); Kraft 

Gen. Foods, Inc. v. Iowa Dep’t of Revenue & Fin, 505 U.S. 71 (1992); 

Wardair Canada, Inc. v. Fla. Dep’t of Revenue, 477 U.S. 1 (1986);

Container Corp. of Am. v. Franchise Tax Bd., 463 U.S. 159 (1983); Mobil 

Oil Corp. v. Comm’r of Taxes of Vt., 445 U.S. 425 (1980); Japan Line, Ltd. 

v. Cty. Of Los Angeles, 441 U.S. 434 (1979).
STEINER v. TAX COMMISSION

Opinion of the Court

16

insistence that individuals are entitled to be treated no “less 

favorably” than corporations under the Dormant Commerce Clause, 

it is clear that they can be treated differently. Crucial distinctions 

between individuals and corporations continue to exist as a doctrinal 

matter. Logically, then, individuals and corporations may also be 

subjected to differing analytical frameworks under the Dormant 

Foreign Commerce Clause. But the Supreme Court has provided no 

guidance whatsoever to lower courts regarding how to treat 

individuals in the context of foreign commerce. So even if we were 

inclined to conclude that state taxes of individual residents are 

subject to Dormant Foreign Commerce Clause scrutiny, we would be 

completely at sea. We would have no idea what test to apply or how 

to apply it.17

¶49 “Our hesitance to extend the law of dormant commerce is 

reinforced by a practical problem: The extension advocated by the 

[Steiners] would open a can of worms.” DIRECTV, 2015 UT 93, ¶ 46. 

This practical problem is amply illustrated by the Steiners’ own 

briefing. In seeking to extend Wynne to foreign commerce, the

Steiners attempt to apply the internal consistency test. As discussed, 

this test requires analyzing a hypothetical world in which all 

jurisdictions have the challenged tax scheme. We then would assess 

if interstate commerce suffers from systematic discrimination in this 

alternate world. But this test is quite impossible to apply in an 

international setting. Wynne’s internal consistency analysis 

contemplated only state-level taxes within a uniform federal system. 

And the international income earned by the Steiners is subject to 

multiple levels of foreign taxation—local, subnational, and national. 

It would make no sense to universalize Utah’s tax system to conduct 

a Wynne analysis—Utah is a single, subnational taxing jurisdiction. 

There is no proper basis to compare the effect of its tax system with 

_____________________________________________________________

17 This difficulty is exacerbated by the fact that the governing 

Dormant Foreign Commerce Clause framework is not identical to 

the domestic framework. See, e.g., Itel Containers Int’l Corp., 507 U.S. 

at 73 (noting that Complete Auto framework is the “domestic 

commerce clause test”). We thus do not know (1) how the 

assessment of an individual tax would work as a practical matter; or 

(2) how it would work as a doctrinal matter. We see no basis for 

stumbling through these nesting layers of unknowns until the 

Supreme Court lights the way. 
Cite as: 2019 UT __

Opinion of the Court

17

the effect of those of foreign jurisdictions encompassing multiple 

levels of taxation. 

¶50 In light of this uncertainty, we decline to “veer[] from a 

principle of interstate and international taxation repeatedly 

acknowledged by [the Supreme Court]: A nation or State ‘may 

tax all the income of its residents, even income earned outside the 

taxing jurisdiction.’” Wynne, 135 S. Ct. at 1813 (Ginsburg, J. 

dissenting) (quoting Okla. Tax Comm’n v. Chickasaw Nation, 515 U.S. 

450, 462–63 (1995)). Although the Supreme Court has chosen to 

depart from this settled rule in the context of domestic taxation, it 

has given no indication of its intent to extend that approach to state 

taxation of foreign commerce. “And since a move in that direction 

would require subjective line-drawing that would take us far afield 

of the Court’s current approach, we doubt that it will.” DIRECTV, 

2015 UT 93, ¶ 46. We reverse the tax court and hold that Utah may 

tax the entirety of the Steiners’ foreign income based on their 

residency in the state. 

2

¶51 Although the Supreme Court has never articulated a test for 

a residence-based individual income tax, Utah’s tax is consistent 

with the broader dormant foreign commerce principles the Court has 

hinted at. First, Utah’s tax code interacts with the federal tax code in 

a manner that leads to evenhanded treatment of foreign commerce. 

Second, we can infer that Congress approves of Utah’s tax system 

and has thus authorized it. 

¶52 The “foreign commerce clause cannot be interpreted to 

demand that a State refrain from taxing any business transaction that 

is also potentially subject to taxation by a foreign sovereign.” Itel 

Containers Int’l Corp. v. Huddleston, 507 U.S. 60, 74 (1993). Indeed, 

“absolute consistency, even among taxing authorities whose basic 

approach to the task is quite similar, may just be too much to ask.” 

Container Corp. of Am. v. Franchise Tax Bd., 463 U.S. 159, 192 (1983).

There is always some risk of double taxation in the international 

realm. Mitigation of this risk, however, would require complex 

negotiation with foreign nations—negotiations that the State of Utah 

is legally and practically ill-equipped to tackle.

¶53 This is a further indication of the need for leeway for states 

in the exercise of their taxing authority in the shadow of the Foreign 

Commerce Clause. See id. at 192 n. 31 (noting that “California . . . is in 

no position to negotiate with foreign governments,” and thus that 

the risk of double taxation was no reason to invalidate the tax). 
STEINER v. TAX COMMISSION

Opinion of the Court

18

Utah’s residency based individual tax may possibly subject the 

Steiners to a double tax on some of their income. But this alone may 

not be a basis for invalidating the Utah tax.

¶54 This conclusion is strengthened by the way in which Utah’s 

tax system interacts with the federal system. The United States 

government has entered into a multitude of complex tax treaties 

with foreign nations. The federal government, consistent with these 

treaties, provides residents with a credit for foreign taxes already 

paid on foreign-sourced income. 26 U.S.C. §§ 901–09. The rules 

governing these tax credits are understandably extremely complex. 

Crucially, these treaties and rules often allow a credit against federal 

tax for both foreign national and subnational taxes. Richard D. Pomp 

and Michael J. McIntyre, GATT, Barclays, and Double Taxation, 

8 STATE TAX NOTES 977 (1995). If the State of Utah were to also grant 

a foreign tax credit, foreign-sourced income would be granted the 

windfall of a double tax credit. This would systematically favor 

foreign commerce over domestic commerce. And we see no basis for 

the conclusion that the Dormant Foreign Commerce Clause requires

such a result.18

¶55 Congress seems to agree. Despite the fact that dozens of 

states decline to grant a credit for foreign taxes, Congress has never 

acted to prohibit the practice or to preempt these laws in any way. 

Normally we would hesitate to infer anything from Congressional 

inaction. But the Supreme Court has specifically stated that Congress 

may “passively indicate that certain state practices” do not violate 

the Dormant Foreign Commerce Clause. Barclays Bank PLC v. 

Franchise Tax Bd. of Cal., 512 U.S. 298, 323 (1994).19 “[I]f a state tax 

_____________________________________________________________

18 It is true that the Supreme Court has previously stated that 

there is “no authority . . . for the principle that discrimination against 

foreign commerce can be justified if the benefit to domestic 

subsidiaries might happen to be offset by other taxes imposed not by 

[the State], but by . . . the Federal Government.”

Kraft Gen. Foods, 505 U.S. at 81. But this was before the Court 

articulated the principle of passive congressional approval. The 

interaction between federal and state statutes is important for 

assessing if Congress has sub silentio approved a state law. 

19 The Court made this statement in the context of evaluating 

whether a tax impaired the ability of the federal government to 

operate uniformly. This is ostensibly one of two additional prongs 

(continued . . .)
Cite as: 2019 UT __

Opinion of the Court

19

merely has foreign resonances, but does not implicate foreign affairs, 

we cannot infer, absent some explicit directive from Congress” that 

the states must conform their taxes to federal practice. Container 

Corp. of Am., 463 U.S. at 194 (internal alterations, quotation marks,

and citations omitted). 

¶56 The lack of an explicit Congressional directive may thus 

come close to tacit approval of these state laws. And the Court has 

repeatedly stated that Congress can authorize state action that would 

otherwise violate the Dormant Commerce Clause. See, e.g., Camps 

Newfound/Owatonna, Inc. v. Town of Harrison, 520 U.S. 564, 572 & n.8 

(1997); Maine v. Taylor, 477 U.S. 131, 138 (1986). Regardless of any 

judicially jury-rigged multipart tests, then, this Congressional 

approval immunizes Utah’s tax code from judicial scrutiny under the 

Dormant Foreign Commerce Clause.

D

¶57 Lastly, the Steiners argue that the equitable adjustment 

statute in Utah’s tax code allows them to deduct their foreign income 

from their Utah tax base as a statutory matter. Applying principles of 

constitutional avoidance, the tax court agreed and read the relevant 

section to allow the deduction. We reverse. We hold that the 

equitable adjustment statute does not apply in this instance.

¶58 As in all cases of statutory interpretation, we begin with the 

text. See Olsen v. Eagle Mountain City, 2011 UT 10, ¶ 9, 248 P.3d 465 

(affirming “our commitment to interpreting statutes according to the 

‘plain’ meaning of their text”).20 The equitable adjustment statute 

_____________________________________________________________

(along with the Complete Auto factors) in evaluating taxes under the 

Dormant Foreign Commerce Clause. But it has broader applicability. 

If Congress may “passively” approve of state laws for one part of the 

test, there is no reason its passive approval should not be attributed 

to the law as a whole. After all, it seems implausible that Congress 

would intend to signal approval for just one part of a judicially 

invented six-part test.

20 We have previously suggested that statutes granting tax credits 

“must be narrowly construed against the taxpayer.” Ivory Homes, Ltd. 

v. Utah State Tax Comm’n, 2011 UT 54, ¶ 10, 266 P.3d 751. Yet we have 

also said that we “construe tax imposition statutes liberally in favor 

of the taxpayer.” Id. ¶ 31. This dichotomy presents a difficult 

line-drawing problem, as it is not always apparent whether a given 

statutory provision is better viewed as a matter of a tax “credit,” on 

(continued . . .)
STEINER v. TAX COMMISSION

Opinion of the Court

20

reads, in relevant part: “[t]he commission shall allow an adjustment 

to adjusted gross income of a resident or nonresident individual if 

the resident or nonresident individual would otherwise . . . suffer a 

double tax detriment under this part.” UTAH CODE § 59-10-115(2)(b). 

The question presented concerns the meaning of the phrase “double 

tax detriment under this part.”

¶59 The Steiners contend that if any of their income is taxed 

twice, then they have suffered a “double tax detriment.” Thus, they 

argue, the fact that their foreign-source income is taxed by both Utah 

and a foreign country entitles them to take advantage of the statute 

and adjust the income they report to Utah. 

¶60 It’s true that the Steiners have suffered a “double tax 

detriment” by being taxed by both Utah and a foreign country. But 

the statute doesn’t call for adjustments for any double tax 

detriment—it calls for an adjustment only if the taxpayer suffers “a 

double tax detriment under this part.” Id. (emphasis added). The 

words “under this part” are crucial. And “under this part” 

necessarily refers to the part of the tax code to which section 115 

belongs—part 1 of title 59, chapter 10, entitled “Determination and 

Reporting of Tax Liability and Information” of the State’s Individual 

Income Tax Act. See id. §§ 59-10-101–137. The clear import of that 

phrase is that an equitable adjustment is available only if the Utah 

tax code itself imposes double taxation.21

_____________________________________________________________

one hand, or as an element of the basis for the threshold imposition 

of the tax, on the other. The logic of the distinction is likewise a bit 

slippery. We have endorsed the notion of narrow construction of tax 

credits on the ground that such are a matter of legislative “grace.” 

See id. ¶ 10. But there is a sense in which all tax provisions are a 

matter of grace, as the taxing authority could always go further in 

imposing a greater tax. 

We flag this problem as a matter deserving greater attention in a 

future case. We need not resolve it here, however, as it has always 

been clear that the first order of business in a matter of statutory 

interpretation is to credit the ordinary meaning of the words enacted 

into law by the legislature. And here we conclude that such meaning 

cuts squarely against the Steiners.

21 The tax court’s invocation of the constitutional avoidance 

canon was thus erroneous. That canon is applicable only where the 

statute is “genuinely susceptible to two constructions.” Utah Dep’t of 

(continued . . .)
Cite as: 2019 UT __

Opinion of the Court

21

¶61 This is fatal to the Steiners’ position. Utah has not taxed their 

foreign income twice—it has only taxed it once. The second tax 

detriment they suffered was at the hands of a foreign sovereign. 

They cannot therefore take advantage of the equitable adjustment 

statute. We reverse the tax court and hold that the equitable 

adjustment statute applies only when Utah itself imposes double 

taxation. 

III

¶62 “The principle of dormant commerce . . . is not rooted in 

a clause, but in a negative implication of one.” DIRECTV v. Utah State 

Tax Comm’n, 2015 UT 93, ¶ 45, 364 P.3d 1036. For that reason there is 

a “dearth of any textual or historical foundation for a court to look 

to” in this field. Id. The problem is compounded when we search for 

principled guidance in precedent from the United States Supreme 

Court, as that Court itself has long acknowledged that its case law in 

this field is a bit of a “quagmire,” Nw. States Portland Cement Co. v. 

Minnesota, 358 U.S. 450, 458 (1959), and its recent decisions “add 

more room for controversy and confusion and little in the way of 

precise guides to the States in the exercise of their indispensable 

power of taxation.” DIRECTV, 2015 UT 93, ¶ 44 (citation and internal

quotation marks omitted).

¶63 This is the legal backdrop for our decision in this case. The 

Steiners have raised some plausible arguments and identified some 

potential policy concerns with the tax regime enacted by the State of 

Utah. But in the absence of any clear anchors in text, history, or 

precedent, we are left with little more than a request that we 

second-guess the policy judgment of our state legislature—based on 

speculation about how a rather haphazard body of case law may 

ultimately play out in the future.

¶64 We do not see this as our role.22 We uphold the 

constitutionality of the Utah tax provisions at issue on the ground 

_____________________________________________________________

Transp. v. Carlson, 2014 UT 24, ¶ 24, 332 P.3d 900 (quoting

Almendarez–Torres v. United States, 523 U.S. 224, 238 (1998)). Here the 

statute is unambiguous. 

22 See DIRECTV v. Utah State Tax Comm’n, 2015 UT 93, ¶ 46, 364 

P.3d 1036 (noting our “hesitance” to “limit[] the longstanding police 

powers of state and local governments to regulate business”); see also

(continued . . .)
STEINER v. TAX COMMISSION

Opinion of the Court

22

that the Steiners have identified no basis in controlling precedent for 

striking them down. We also hold that they have fallen short in their 

attempt to identify a statutory basis for their challenge to these 

provisions. 

_____________________________________________________________

Comptroller of Treasury of Md. v. Wynne, 135 S. Ct. 1787, 1810 (2015)

(Scalia, J., dissenting) (suggesting that the dormant commerce 

“doctrine does not call upon us to perform a conventional judicial 

function,” but “instead requires us to balance the needs of commerce 

against the needs of state governments”—“a task for legislators, not 

judges”).