Source: http://www.law.cornell.edu/supremecourt/text/464/7
Timestamp: 2014-04-16 19:21:01
Document Index: 27979607

Matched Legal Cases: ['§ 7', '§ 208', '§ 203', '§ 7', '§ 7', '§ 239', '§ 239', '§ 239', '§ 1513', '§ 239', '§ 1513', '§ 239', '§ 1513', '§ 1513', '§ 1513', '§ 1513', '§ 239', '§ 1513', '§ 1513', '§ 239', '§ 1513', '§ 239', '§ 1513', '§ 1513', '§ 532', '§ 239']

ALOHA AIRLINES, INC., Appellant v. DIRECTOR OF TAXATION OF HAWAII. HAWAIIAN AIRLINES, INC., Appellant v. DIRECTOR OF TAXATION OF HAWAII. | LII / Legal Information Institute
Supreme Court aboutsearch liibulletin subscribe previews ALOHA AIRLINES, INC., Appellant v. DIRECTOR OF TAXATION OF HAWAII. HAWAIIAN AIRLINES, INC., Appellant v. DIRECTOR OF TAXATION OF HAWAII.
464 U.S. 7 (104 S.Ct. 291, 78 L.Ed.2d 10)
[HTML] Syllabus A Hawaii statute imposes a tax on the annual gross income of airlines operating within the State, and declares that such tax is a means of taxing an airline's personal property. Section 7(a) of the Airport Development Acceleration Act of 1973 (ADAA) prohibits a State from levying a tax, "directly or indirectly, on persons traveling in air commerce or on the carriage of persons traveling in air commerce or on the sale of air transportation or on the gross receipts derived therefrom," but provides that property taxes are not included in this prohibition. Appellant airlines each brought an action for refund of taxes assessed under the Hawaii statute, claiming that the statute was pre-empted by § 7(a). The Hawaii Tax Appeal Court rejected this pre-emption argument, and the Hawaii Supreme Court affirmed.
* In 1970, Congress committed the federal government to assisting States and localities in expanding and improving the nation's air transportation system. See Airport and Airway Development Act of 1970, Pub.L. 91-258, 84 Stat. 219. In the same session, Congress established the Airport and Airway Trust Fund to funnel federal resources to local airport expansion and improvement projects. See Airport and Airway Revenue Act of 1970, Pub.L. 91-258, § 208, 84 Stat. 236, 250-252. As originally devised, the Trust Fund received its revenues from several federal aviation taxes, including an 8% tax on domestic airline tickets, a $3 head tax on international flights out of the United States, and a 5% tax on air freight. See §§ 203, 204, 84 Stat. 238-240 (codified as amended, at 26 U.S.C. 4261, 4271 (1976 ed. and Supp.1981)). See generally Massachusetts v. United States, 435 U.S. 444, 98 S.Ct. 1153, 55 L.Ed.2d 403 (1978).
To deal with these problems, Congress passed § 7(a) of the Airport Development Acceleration Act of 1973 (ADAA), the provision at issue in these appeals. See Pub.L. 93-44, § 7(a), 87 Stat. 88, 90. That section, which is currently codified at 49 U.S.C. 1513,
"There shall be levied and assessed upon each airline a tax of four per cent of its gross income each year from the airline business. . . . The tax imposed by this section is a means of taxing the personal property of the airline or other carrier, tangible and intangible, including going concern value, and is in lieu of the general excise tax imposed by chapter 237 but is not in lieu of any other tax." § 239-6 (1976).
In 1978, Appellant Aloha Airlines sought refunds for taxes assessed under this provision for the carriage of passengers between 1974 and 1977 on the ground that 49 U.S.C. 1513(a) had preempted Haw.Rev.Stat. § 239-6 as of December 31, 1973. In 1979, Appellant Hawaiian Airlines filed a similar action seeking a refund for taxes paid between 1974 and 1978. In separate decisions, the Tax Appeal Court of the State of Hawaii rejected Appellants' preemption arguments, In re Aloha Airlines, Inc., No. 1772 (Haw.Ct.Tax App.1978); In re Hawaiian Airlines, Inc., Nos. 1853, 1868 (Haw.Ct.Tax App.1980). On consolidated appeal, the Hawaii Supreme Court affirmed, one Justice dissenting, In re Aloha Airlines, Inc., 65 Haw. 1, 647 P.2d 263 (1982). Appellants then filed timely notices of appeal, this Court noted probable jurisdiction, 459 U.S. ----, 103 S.Ct. 721, 74 L.Ed.2d 948 (1983), and we now reverse.
The plain language of 49 U.S.C. 1513(a) would appear to invalidate Haw.Rev.Stat. § 239-6. § 1513(a) expressly preempts gross receipts taxes on the sale of air transportation or the carriage of persons traveling in air commerce, and Haw.Rev.Stat. § 239-6 is a state tax on the gross receipts
of airlines selling air transportation and carrying persons traveling in air commerce. The Hawaii Supreme Court sought to avoid this direct conflict by looking beyond the language of § 1513(a) to Congress's purpose in enacting the statute. The Court concluded that Congress passed the ADAA to deal with the proliferation of local and state head taxes on airline passengers in the early 1970's. Since Haw.Rev.Stat. § 239-6 is imposed upon air carriers as opposed to air travelers, the Hawaii Court reasoned that the provision did not come within the ambit of § 1513(a)'s prohibitions.
We cannot agree with the Hawaii Supreme Court's analysis. First, when a federal statute unambiguously forbids the States to impose a particular kind of tax on an industry affecting interstate commerce, courts need not look beyond the plain language of the federal statute to determine whether a state statute that imposes such a tax is preempted.
Thus, the Hawaii Supreme Court erred in failing to give effect to the plain meaning of § 1513(a).
Second, even if the absence of an express proscription made it necessary to go beyond the plain language of § 1513(a), nothing in the legislative history of the ADAA suggests that Congress intended to limit § 1513(a)'s preemptive effect to taxes on airline passengers or to save gross receipts taxes like § 239-6.
Although Congress passed § 1513(a) to deal primarily with local head taxes on airline passengers, the legislative history abounds with references to the fact that § 1513(a) also preempts state taxes on the gross receipts of airlines.
For example, Senator Cannon, one of the ADAA's sponsors, clearly stated in floor debate: "The bill prohibits the levying of State or local head taxes, fees, gross receipts taxes or other such charges either on passengers or on the carriage of such passengers in interstate commerce." 119 Cong.Rec. 3349 (1973).
Finally, we are unpersuaded by Appellee's contention that, because the Hawaii legislature styled § 239-6 as a property tax measured by gross receipts rather than a straight-forward gross receipts tax, the provision should escape preemption under § 1513(b)'s exemption for property taxes. The manner in which the state legislature has described and categorized § 239-6
cannot mask the fact that the purpose and effect of the provision is to impose a levy upon the gross receipts of airlines. § 1513(a) expressly prohibits States from taxing "directly or indirectly" gross receipts derived from air transportation. Beyond question, a property tax that is measured by gross receipts constitutes at least an "indirect" tax on the gross receipts of airlines. A state statute that imposes such a tax is therefore preempted.
in the view that § 1513(a) proscribes the imposition of state and local taxes on gross receipts derived from air transportation or the carriage of persons in air commerce. The judgment of the Supreme Court of the State of Hawaii is reversed, and the cases are remanded for further proceedings not inconsistent with this opinion.
In 1982, Congress amended 49 U.S.C. 1513 to prohibit discriminatory property taxes imposed on air carriers. See Airport and Airway Improvement Act of 1982, Pub.L. 97-248, § 532, 96 Stat. 701 (codified at 49 U.S.C. 1513(d)). Being enacted after the relevant periods, this amendment has no bearing on these appeals.
Appellee concedes that the phrase "gross income," under Haw.Rev.Stat. § 239-6, is synonymous the phrase "gross receipts," used in 49 U.S.C. 1513(a). See Brief for Appellee 7, n. 2.