Document: 358 U.S. 522 79 S.Ct. 437 3 L.Ed.2d 480 ALLIED STORES OF OHIO, INC., Appellant,v.Stanley J. BOWERS, Tax Commissioner of Ohio. No. 10. Argued Nov. 12, 1958. Decided Feb. 24, 1959. Mr. Carlton S. Dargusch, Sr., Columbus, Ohio, for appellant. Messrs. William Saxbe and John M. Tobin, appellee. Justice WHITTAKER delivered the opinion Court. 1 The principal question presented is whether an Ohio statute that exempts from ad valorem taxation 'merchandise or agricultural products belonging to a nonresident * if held in storage warehouse only' denies appellant, resident State, equal protection laws guaranteed by Fourteenth Amendment Constitution. 2 facts are stipulated. So far as pertinent, they Allied Stores Inc., corporation, owns operates department store each four cities. It also maintains those cities private where it stores stocks merchandise kinds sold its stores. As needed, transferred store, when sample store—usually heavy bulky article—it directly customer. Title 57, Page's Rev.Code Ann.1953, § 5709.01, provides, inter alia, 'All personal property located used business this state (shall be) subject taxation, regardless residence owners thereof. *' (Emphasis added.) During tax year involved another statute, 5701.08(A), provided, pertinent part, that: 4 'As LVII Revised Code: 5 '(A) Personal 'used' within meaning 'used business' stored kept on hand material, parts, products, merchandise; but not only. *'1 (We have added italics, and, was done Supreme Court we will refer italicized portion 'proviso.') Acting under statutes, appellee, proposed assessment against appellant based average value had warehouses during ending January 31, 1954.2 Appellant petitioned Board Appeals redetermination, contending only,' because section exempted nonresidents,3 taxed residents, so held, denied upheld tax, did Cuyahoga County. On appeal, lacked standing raise constitutional affirmed judgment. 166 St. 116, 140 N.E.2d 411. case comes here Allied's appeal. 6 first preliminary thus correctly prosecute sought be presented. settled '(w)hether pleading sets up sufficient right action defense, grounded Constitution law United States, necessarily federal law, coming court presents question, must determine itself sufficiency allegations displaying concluded view taken them court.' First National Bank Guthrie Center v. Anderson, 269 341, 346, 46 135, 137, 70 L.Ed. 295; Staub City Baxley, 355 313, 318, 78 277, 280. 7 In reaching conclusion, said (166 413) 'In our opinion, necessary consider raised taxpayer instant because, contention with regard sound, leads conclusion entire proviso subdivision (A) Section 5701.08, which read, 'but void should stricken. That being so, apparent any taxpayer's would taxable described preceding words remaining reading, 'stored merchandise." But hold invalid, nor strike statute. Instead, expressed valid legislative purpose exempt nonresidents only powerless it. this, following prior decisions question. General Cigar Co. Peck, 1953, 159 152, 111 265, B. F. Goodrich 1954, 161 202, 118 525, held. latter answered invalid undue preference saying 'such argument addressed Assembly at page 210, 530. Those interpretations, present purposes, became part proviso. Wheeling Steel Corp. Glander, 337 562, 566, 69 1291, 1293, 93 1544. basis appellant's claim denial laws. With validly quite immaterial fall were out. follows does claim. 8 This brings merits. Does exempting deny Amendment? applicable principles been often stated entirely familiar. States very wide discretion laying their taxes. When dealing proper domestic concerns, trenching upon prerogatives Government violating guaranties Federal Constitution, attribute sovereign powers devising fiscal systems ensure revenue foster local interests. Of course, exercise taxing power, requirements Equal Protection Clause Amendment. clause imposes no iron rule equality, prohibiting flexibility variety appropriate reasonable schemes taxation. State may impose different specific taxes trades professions vary rate excise various products. required resort close distinctions maintain precise, scientific uniformity reference composition, use value. Bell's Gap R. Commonwealth Pennsylvania, 134 232, 237, 10 533, 535, 33 892; Magoun Illinois Trust & Savings Bank, 170 283, 293, 18 594, 598, 42 1037; Southwestern Oil Texas, 217 114, 121, 30 496, 498, 54 688; Brown-Forman Kentucky, 563, 573, 578, 580, 883; Sunday Lake Iron Township Wakefield, 247 350, 353, 38 495, 62 1154; Heisler Thomas Colliery Co., 260 245, 255, 43 83, 84, 67 237; Oliver Mining Lord, 262 172, 179, 526, 529, 929; Stebbins Riley, 268 142, 45 424, 426, 884; Conway, 281 146, 159, 50 310, 74 775; Com'rs Indiana Jackson, 283 527, 537, 51 540, 543, 75 1248. 'To otherwise essential power intolerable supervision, hostile basic government wholly beyond general intended assure.' supra, 314. 9 there point cannot go without Clause. proceed rational classification palpably arbitrary. has 'must rest some ground difference having fair substantial relation object legislation.' Royster Guano Virginia, 253 412, 415, 40 560, 561, 64 989; Louisville Gas Electric Coleman, 277 32, 37, 48 423, 425, 72 770; Air-Way Appliance Day, 266 71, 85, 15, 169; Schlesinger Wisconsin, 270 230, 240, 260, 261, 557; 160, 314, 775. 'If selection neither capricious arbitrary, rests consideration policy, law.' BrownForman Co 883. discriminate favor certain class render arbitrary discrimination founded distinction, policy. American Sugar Refining Louisiana, 179 89, 21 43, 102; 884. Coming concrete problem now before us, repeatedly appears encourages location needed useful industries them, though others, violate 535; 313; Williams Mayor Council Baltimore, 289 36, 53 431, 77 1015; Colgate Harvey, 296 404, 439, 56 252, 263, 80 299 (dissenting opinion). Similarly, long classification, discriminatory, violative reasonably can conceived sustain Lindsley Natural Carbonic 220 61, 78, 31 337, 340, 55 369; Quong Wing Kirkendall, 223 59, 32 192, 350; Rast Van Deman Lewis 240 342, 357, 36 370, 374, 60 679; 543. 11 light well settled, how stands case? We assume enactments adopted arbitrarily good reason further legitimate policy State. What special reasons, motives policies Legislature adopting questioned do know certainty, important should, 126, 500, 688, legislature need explicitly declare purpose. obvious Legislature, proviso, encourage construction leasing operation attendant benefits State's economy, stimulate market produced enabling purchase only, free taxes, anticipation future needs. Other similar purposes conceived. Therefore, say For said, shown cases cited, invidious 12 heavily relies think apposite. There statutes accounts receivable owned residents nonresidents. face admittedly discriminatory nonresidents, themselves declared proffer other scheme 'reciprocity' receivable.4 argued reciprocal character eliminated effects not. Having specifically purpose, left room conceive existence. And found could hardly escape 'the inequality (was) slightest Ohio's decisive transaction, solely owner.' 572, 1297. shown, situation here. Here 'different owner,' constitute prohibited separately classifying 13 Affirmed. 14 STEWART took decision case. 15 BRENNAN, whom HARLAN joins, concurring. 16 today subjecting corporations applied identical non-Ohio corporations. Yet 1544,1 struck down, Clause, provision subjected corporations.2 17 two cases, generally, I shall show, somewhat superficially, is: Measured demands constitutionally permitted classify foreign payment exemption tax? both distinction complained denying incidence fact turns due respect my Brethren's view, all matter was, indistinguishable.3 while agree Brethren case, reach developing distinguishable. Why owner' freeing corporation 19 answer lies remembering instrument federalism. furnishes structure other. maintenance federalism foremost interpreting provisions examines action. Because 49 much Nation's commercial activity carried enterprises contacts more than one, common continuing interpretation adjusting individual regulate these multistate nature federation. While most ready examples Court's function field furnished innumerable examined regulation Commerce Due Process Clauses, still among roles, principle 20 Viewing federalism, between seems me apparent. My demonstrates practical complex utmost latitude, afforded defining categories classification. teaches burdens like outside pale. discriminates nonresidents: such benign beneficent desire own increase prosperity expense outlanders, protect from, give advantage over, 'foreign' competition? These bases national too many countries, including time own, that, absolutely considered, irrational. analysis, me, effect role members hand, clearly disruptive pattern. is, therefore, judge mechanically same efforts residents. makes clear, latitude define classifications One could, fact, concept who bound tie accordingly permanently receive persons bear primary share costs. Accordingly, context, relief forthcoming obtained Legislature. unitalicized enacted 1931, 114 Laws, pp. 714, 716. next session 1933, 115 548, 553. September 1955 amended deleting inserting following: 'and shipped place shipment state.' 126 p. 78. date 1, 5711.03. ended instead explained record briefs. A merchant's valued 'by taking amount nearly possible, month he engaged business, adding together amounts, dividing aggregate number months year.' 5711.15. although authorized doing 204, 527. derived sales goods negotiated consummated exchange claimed 'The effect,' '(was) intangibles (were) assigned situs without. (Thus), (t)he offered states embrace doctrine separate residence, (but) (ever) take proffer.' pages 573—574, To Southern Greene, 216 400, 287, 536, Hanover Fire Ins. Harding, 272 494, 47 71 372. distinguished levied original entry privilege corporation. 571—572, 1296. 'A allowed come into carry claim, subsequent application Connecticut Life Johnson, 303 77, 79—80, 58 436, 437—438, 82 673. 'discriminated' way 'discriminates' describe forbidden rejected made show fact. 572 574, 1296—1297. see indication condemnation rejection argument.

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