Opinion ID: 1309243
Heading Depth: 1
Heading Rank: 4

Heading: commerce clause purpose

Text: Since we conclude that Tyler did establish a new principle of law, we must look to see if the purpose of the commerce clause will be furthered or retarded by retroactive application. [5] The central purpose of the commerce clause is to create an area of free trade among states. American Trucking Ass'ns v. Scheiner, ___ U.S. ___, 97 L.Ed.2d 226, 107 S.Ct. 2829 (1987). However, the Court was clear in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 288, 51 L.Ed.2d 326, 97 S.Ct. 1076 (1977) that interstate commerce may be made to pay its fair share of tax burdens. After years of development of Commerce Clause jurisprudence, the Court has concluded that interstate friction will not chafe when commerce pays for the governmental services it enjoys. Department of Rev. v. Association of Wash. Stevedoring Cos., 435 U.S. 734, 760, 55 L.Ed.2d 682, 98 S.Ct. 1388 (1978). It is difficult to understand how retroactive application would encourage free trade among the states since whatever chill was imposed on interstate trade is in the past and the Legislature has enacted law to attempt to comport with the new commerce clause taxation laws announced in Tyler. Laws of 1985, ch. 190; Laws of 1987, 2d Ex. Sess., ch. 3. The Supreme Court has noted that a state has a significant interest in exacting from interstate commerce its fair share of the cost of state government. Department of Rev. v. Association of Wash. Stevedoring Cos., supra at 748. If this court afforded retroactive application and ordered full refunds, taxpayers engaged in interstate commerce would pay no portion of their share of the tax burden. The multiple activities exemption is now known to be unconstitutional because it imposes the risk of multiple burdens on interstate commerce, but this is not to say that all taxes imposed on a manufacturer or wholesaler under the B & O tax were unfair or interfered with free trade among states. The very risk of multiple burdens is now enough (since Tyler ) to invalidate the Washington exemption. But, forcing the State to collect no taxes for the entire period of the statute of limitations would be more in the nature of a punitive award for misconstruing the constitutionality of the B & O tax. Dicta in Tyler suggested that the State could continue to tax under the B & O statute if the Legislature expanded the multiple activities exemption to provide out-of-state manufacturers with a credit for manufacturing taxes paid to other states. Tyler, 107 S.Ct. at 2821. The Washington Legislature has now enacted two credits whereby out-of-state manufacturers are afforded credits against Washington's selling tax for manufacturing tax paid to another state, and a credit whereby out-of-state sellers are afforded a credit against Washington's manufacturing tax for selling tax paid to another state. Laws of 1985, ch. 190; Laws of 1987, 2d Ex. Sess., ch. 3. Taxpayers now tell this court that most of the litigants would receive no credits or only very minimal credits under this legislation. This appears to be an admission that the risk of multiple burdens possible under the Washington B & O tax was not in fact an actual double burden for most of these litigants. The effect of complete retroactive application with refunds of all taxes paid would be to create a window of tax-free time for taxpayers involved in interstate commerce to the detriment of all other taxpayers. Therefore, since the purpose of the commerce clause of free trade among the states is not enhanced by retroactive application and the effect of retroactive application would be to relieve some interstate taxpayers of their duty to pay their fair share of the tax burden, we must ask whether retroactivity would be inequitable.