Opinion ID: 1613623
Heading Depth: 3
Heading Rank: 2

Heading: discriminatory purpose

Text: Caterpillar claims that the CAD provided in subsection 23(a) is discriminatory because the two-factor apportionment formula excludes consideration of the sales factor used in the three-factor apportionment formula used to calculate the taxpayer's apportioned tax base under the SBT. When the reasons for using the two-factor formula and the three-factor formula in the various parts of the SBT are reviewed, it is clear that a finding of a discriminatory purpose for enacting subsection 23(a) is not required. The three factors used in apportioning the tax base under the SBT  payroll factor, property factor, and sales factor  `appear in combination to reflect a very large share of the activities by which value is generated. ' Trinova, supra, 111 S Ct 833 (emphasis in original). Likewise, the two factors used in apportioning the capital acquisitions of tangible personal property under subsection 23(a)  payroll factor, property factor  appear to reasonably reflect the in-state component of capital acquisitions of tangible personal property. See part III(B) of our opinion, ante, pp 417-422. Formulas used in apportioning a value-added tax base and a deduction provided for acquisitions of capital are not constitutionally required to be identical. There is no constitutional requirement that different provisions of a taxing statute be in any way symmetrical. Therefore, we cannot conclude that the use of two different apportionment formulas in the SBT evidences any discriminatory purpose. Caterpillar also urges that subsection 23(c) is discriminatory because it was enacted to promote investment in Michigan. In Trinova, supra, 111 S Ct 835, the United States Supreme Court held that the promotion of development and investment of business in Michigan does not violate the Commerce Clause. It is a laudatory goal in the design of a tax system to promote investment that will provide jobs and prosperity to the citizens of the taxing state. States are free to structur[e] their tax systems to encourage the growth and development of intrastate commerce and industry. Boston Stock Exchange, supra, 429 US 336-337. Therefore, we do not find discriminatory purpose in the enactment of subsection 23(c). We conclude, as did the Trinova Court, that all the contemporaneous evidence concerning passage of the SBT suggests a benign motivation, combined with a practical need to increase revenues. Trinova, supra, 111 S Ct 835. Furthermore, we do not find any evidence that the SBT was inspired as a way to export tax burdens or import tax revenues. Id., 111 S Ct 836. Thus, we conclude and more specifically find no discriminatory purpose in the enactment of the CAD.