Source: https://case-law.vlex.com/vid/490-u-s-66-605087358
Timestamp: 2020-01-22 07:23:58
Document Index: 752461419

Matched Legal Cases: ['§ 4986', '§ 4988', '§ 4988', '§ 54', '§ 54', '§ 54']

490 U.S. 66 (1989), 87-453, Amerada Hess Corp. v. Director, Division of Taxation, - Federal Cases - Case Law - VLEX 605087358
490 U.S. 66 (1989), 87-453, Amerada Hess Corp. v. Director, Division of Taxation,
Docket Nº: No. 87-453
Citation: 490 U.S. 66, 109 S.Ct. 1617, 104 L.Ed.2d 58, 57 U.S.L.W. 4418
Party Name: Amerada Hess Corp. v. Director, Division of Taxation,
109 S.Ct. 1617, 104 L.Ed.2d 58, 57 U.S.L.W. 4418
(b) The tax is fairly apportioned, since the part of the "entire net income" to be taxed is determined according to the standard three-factor apportionment formula that this Court has expressly approved. See, e.g., Container Corp. of America v. Franchise Tax Board, 463 U.S.
159, 170. The use of the formula as applied to appellants is not invalid on the ground that the windfall profit tax is an exclusively out-of-state expense, since the costs of a unitary business cannot be deemed confined to the locality in which they are incurred. Pp. 73-75.
(c) The tax does not discriminate against interstate commerce. The add-back provision is not facially discriminatory, since there is no explicit discriminatory design to the tax. Nor does the provision apply exclusively to a localized industry, [109 S.Ct. 1619] since it generally excludes any federal tax "on or measured by income or profits," including the nationwide federal income tax. Moreover, appellants concede that no discriminatory motive underlies the provision, which cannot be held to exert pressure on an interstate business to conduct more of its activities in New Jersey. Pp. 75-79.
(d) The tax is "fairly related" to the benefits the State provides appellants, including police and fire protection, a trained workforce, and the advantages of a civilized society. P. 79.
§§ 4986-4998 (Act).1 The Act imposes a tax on the "windfall profit" that a crude-oil producer receives from the oil it produces. The "windfall profit" for each barrel of oil is essentially the difference between (a) the deregulated price for the oil (that is, its actual sales price)2 and (b) the regulated price that would have applied had decontrol not taken place.3
[109 S.Ct. 1620] One significant provision of the Act, known as the "net income limitation," places a cap on the amount of a producer's windfall profit that may be taxed each year: "The windfall profit on any barrel of crude oil shall not exceed 90 percent of the net income attributable to such barrel." § 4988(b)(1). The net income attributable to each barrel is the taxable income derived from the oil removed from a particular property for a given year divided by the number of barrels from that property taken into account for that year. § 4988(b)(2).4
New Jersey's Corporation Business Tax Act, N.J.Stat.Ann. § 54:10A-l et seq. (West 1986), imposes a tax on a portion of the "entire net income" of a corporation "for the privilege of doing business, employing or owning capital or property, or maintaining an office in this State." § 54:10A-2. For a corporation doing business both within and outside New Jersey, the portion of the "entire net income" to be taxed is determined according to a three-factor formula concerning property, receipts, and payroll. The formula calls for the average of three ratios: in-state property to total property; in-state to total receipts; and in-state to total wages, salaries, and other forms of employee compensation. § 54:10A-6. Cf. Moorman Mfg. Co. v. Bair, 437 U.S. 267 (1978).
Entire net income shall be determined without the exclusion, deduction, or credit of . . . [t]axes paid or accrued to the United States on or measured by profits or income.
amount of its federal windfall profit tax. In effect, then, each appellant claimed a deduction for that tax from its "entire net income." As a result, appellee, the Director of the New Jersey Division of...