Opinion ID: 1387771
Heading Depth: 1
Heading Rank: 5

Heading: Fairly Related

Text: [5] The Armco Court did not address the fairly related to state services prong. The controlling case is Commonwealth Edison Co. v. Montana, 453 U.S. 609, 69 L.Ed.2d 884, 101 S.Ct. 2946 (1981). Certain Montana coal producers and their out-of-state customers argued that they should be permitted to show that the state's high coal severance tax was not fairly related to state services provided. The Court refused to view the fair relation test as a cost-benefit analysis of the taxes paid and services received. The test is basically a nexus test, with the additional limitation that the measure of the tax must be reasonably related to the extent of the [taxpayer's] contact with the state. 453 U.S. at 626. The Court declined to determine what a reasonable measure might be because (1) no usable legal test could adequately reflect the varied considerations that inform a decision about an acceptable rate or level of state taxation, 453 U.S. at 628; and, hence, (2) this is a question more suited to the political process. The taxpayer's substantial privilege of mining coal provided sufficient nexus and the only benefit the state needed to show was that the taxpayer enjoyed the privileges of living in an organized society, established and safeguarded by the devotion of taxes to public purposes. 453 U.S. at 629. See also Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434, 60 L.Ed.2d 336, 99 S.Ct. 1813 (1979). Manufacturing, or wholesaling, would also appear to be privileges comparable to mining so that the nexus requirement is sufficiently met in the present case. Despite any warts Washington may suffer, the State can show that ours is an organized society. While local manufacturer-sellers enjoy two activities for the price of one, interstate businesses cannot, under this prong, apply a cost-benefit analysis to show how they have been short changed. We believe the Washington B & O tax continues to meet commerce clause standards. We do not believe Armco requires the result urged by appellants and can be reconciled with compelling precedent not overruled in Armco and with scholarly commentary. We also believe the controlling facts in Armco differ significantly from those before us. The trial court is affirmed. DOLLIVER, C.J., and BRACHTENBACH, DORE, PEARSON, ANDERSEN, CALLOW, GOODLOE, and DURHAM, JJ., concur.