Document: 430 U.S. 274 97 S.Ct. 1076 51 L.Ed.2d 326 COMPLETE AUTO TRANSIT, INC., Appellant,v.Charles R. BRADY, Jr., etc. No. 76-29. Argued Jan. 19, 1977. Decided March 7, Rehearing Denied April 18, See 976, 1669. Syllabus A Mississippi tax on the privilege of doing business in State held not to violate Commerce Clause when it is applied an interstate activity (here transportation by motor carrier dealers cars manufactured outside State) with a substantial nexus taxing State, fairly apportioned, does discriminate against commerce, and related services provided State. Spector Motor Service v. O'Connor, 340 602, 71 508, 95 L.Ed. 573, overruled. Pp. 279-289. 330 So.2d 268, Miss., affirmed. Alan W. Perry, Jackson, for appellant. James H. Haddock, appellee. Mr. Justice BLACKMUN delivered opinion Court. 1 Once again we are presented "the perennial problem validity state carrying within state, certain activities' corporation's operation business.' Colonial Pipeline Co. Traigle, 421 100, 101, 1538, 1539, 44 (1975), quoting Memphis Gas Stone, 335 80, 85, 68 1475, 1477, 92 1832 (1948). The issue this case whether runs afoul Clause, Const., Art. I, § 8, cl. 3, applies imposes 'the . business' appellant's commerce. Supreme Court unanimously sustained constitutional challenge. 268 (1976). We noted probable jurisdiction order consider anew applicable principles troublesome area. 429 813, 52, 50 72 2 * taxes question sales assessed Tax Commission appellant, Complete Auto Transit, Inc., period from August 1, 1968, through July 31, 1972. assessments were made pursuant following statutes: 3 'There hereby levied shall be collected, engaging or continuing determined application rates gross proceeds income values, as may be, sections.' Miss.Code Ann., 1942, 10105 (1972 Supp.), amended.1 4 'Upon every person operating pipeline, railroad, airplane, bus, truck, any other persons property compensation hire between points there levied, assessed, equal five per cent such ..' 10109(2), amended.2 5 Any liable required add price and, 'insofar practicable,' collect at time collected. 10117, amended.3 6 Appellant Michigan corporation engaged transporting vehicles General Motors Corporation. assembles that destined then shipped rail where, usually 48 hours, they loaded onto trucks transported appellant dealers. App. 47-48, 78-79, 86-87. paid contract basis railhead dealers.4 Id., 50-51, 68. 7 By letter dated October 5, 1971, informed was being interest totaling $122,160.59 during three-year 1971.5 Remittance 10 days requested. 9-10. similar December 28, 1972, advised assessment $42,990.89 11-12. under protest 1973, 10121.1, amended, 1942 Code (now 27-65-47 1972 Code), instituted present refund action Chancery First Judicial District Hinds County. 8 claimed its but one part movement, unconstitutional operations 4, 6-7. Court, unreported opinion, assessments. 99-102. 9 It concluded: 'It will Taxpayer has large dependent upon police protection same citizens. should pay fair share so long, only no danger commerce smothered cumulative several states. There possibility duplicating involved case.' So.2d, 272. 11 Appellant, complaint did allege which have sufficient State; discriminates commerce; unfairly apportioned; unrelated State.6 No claims before although argues here commerce' creates unacceptable risk discrimination undue burdens, Brief 20-27, claim burdens exist fact. 12 Appellant's attack based solely decisions holding 'privilege' See, e. g., 573 (1951); Freeman Hewit, 329 249, 67 274, 91 265 (1946). This rule looks fact incidence 'privilege business'; deems irrelevant consideration practical effect tax. reflects underlying philosophy enjoy sort 'free trade' immunity taxation.7 13 Appellee, turn, relies stating '(i)t purpose clause relieve those their just burden even though increases cost business,' Western Live Stock Bureau Revenue, 303 250, 254, 58 546, 548, 82 823 (1938). These decisions8 considered formal language statute rather effect, challenge 14 Over years, analysis approving many types avoided running prohibition each instance refused overrule prohibition. Under law, rule, come known, relationship economic realities. Rather stands trap unwary draftsman. II 15 modern origin found supra.9 At Indiana receipt entire income' residents domiciliaries. U.S., S.Ct., 275. sought impose generated trustee estate instructed his local stockbroker sell securities. broker arranged correspondents New York securities Exchange. sold, brokers, after deducting expenses commission, transmitted who turn them, less trustee. tax, reversed. 16 Frankfurter, speaking Members announced blanket taxation imposed directly transaction. He explicitly deemed unnecessary decision showing error apportionment 256-257, 277, 278-79. recognized could constitutionally manufacture, license corporations residence measure net income, including derived 255, 278. Nevertheless, direct sales, if apportioned nondiscriminatory, se. 17 Rutledge, lengthy concurring argued judged effects than phrasing. After reviewing Court's prior decisions, he 'The 'direct incidence' regulation long since been discarded itself outlaw legislation.' 265-266, 283-284. In view, lacks necessary connection give 'jurisdiction tax,' id., 271, 286, subject multiple taxation. 276-277, 289.10 18 viewed commentary triumph formalism over substance, providing little guidance requirements. P. Hartman, Taxation Interstate 200-204 (1953); Dunham, Gross Receipts Taxes Transactions, 47 Colum.L.Rev. 211 (1947). Although might utilized keystone movement toward absolute taxation,11 consistently indicated 'interstate way,' moved standard permissibility actual legal terminology. 19 narrowing draftsmanship phraseology began another case, Natural Company owned operated pipeline Louisiana Memphis. Approximately 135 miles line Mississippi. 'franchise excise' measured value capital used, invested employed exercise power, right enjoyed (a corporation) state.' Miss. 9313. upheld 20 himself two others, Reed discriminatory, taxation, amount reasonable, properly investment 87-88, 1478-79. went 'upon 88, 1479. drew distinction exercising corporate functions State,' while former unconstitutional, latter barred Clause. 88-93, 1481. approved because 21 'there attempt secure anything except enumerated activities 'maintaining, keeping repair, otherwise manning facilities." 93, 1482. 22 Black concurred judgment without opinion. 96, 1483. Rutledge fifth vote, concurrence: 23 '(I)t enough me sustain clearly state's power lay insofar limitation due process tax' sense concerned; is, places greater competing intrastate like character; duly undertake carried borders; cannot repeated 96-97, 1483-1484. (footnotes omitted). 24 Four Justices dissented, 99, 1485, grounds had shown afforded return tax,12 that, therefore, must dissenters identical achieved increase ad valorem 104, 1487 would held, notwithstanding, unconstitutional. 25 reaffirmed (1951), facts instant case. taxpayer Missouri exclusively trucking. Some shipments originated terminated Connecticut. Connecticut 'tax excise franchise state,' income. 603-604, n. 509. brought suit federal court enjoin collection activities. issued injunction. Second Circuit three dissent, reversed Appeals applied. 26 'where both reasonable limits, compute charge applying rate proportion taxpayer's done intrastate.' 609-610, 512 (footnote nevertheless, what argued, hand, 610, 512, difference 'exclusively interstate' 'mixed' business, nondiscriminatory either type prohibited 27 Railway Express Agency Virginia, 347 359, 74 558, 98 337 (1954) (Railway I), declare State's 'annual receipts State.' 5-to-4 Virginia contended. 28 thereupon revised wording 'intangible property' form 'going concern' receipts. asserted buttressed opinions concurrence result, reworded violative rule. 358 434, 79 411, 450 (1959) II). upholding statute, created situation where use magic words labels' 'disable levy.' 441, 416. 29 real statutes I II. way. Yet realities became irrelevant. operate draftsmanship, served distract courts parties inquiry into challenged produced results forbidden 30 On day II, further confirmed proper drafting, create Northwestern Cement Minnesota, 450, 357, (1959), foreign subjected levy discriminatory forming support Limited way, sales. distinguished, briefly passing, 'was 464, 365. 31 Thus, Spector, clear taxed not, however, reason attaching significance semantic difficult discern. 32 unsatisfactory well demonstrated our recent (1975). Delaware approximately 258 miles. maintained work force pumping stations keep flowing, 101-102, 1539-40. 1962, Appeal invalidated Spector. Moton, 228 718 (La.App.1969). review. 255 La. 474, 231 393 (1970). Legislature, perhaps recognizing run redrafted alternative incident, 'qualification carry do form.' Again, Agerton, 275 834 (La.App.1973). But new 289 93 (La.1974). 33 7-to-1 raised propriety discriminatory. 1539. aspect bore special relation, bestowed powers, privileges, benefits Louisiana. 109, 1543. Accordingly, authority Gas, constitutional. distinguished familiar ground contrast, worded 'narrowly confine impost 113-114, 1546.13 34 While refraining overruling noted: 35 '(D)ecisions particularly decades, protections justified asking return.' 108, 36 One commentator 'After reading Colonial, most sanguine conclude maintains serious belief doctrine immune taxation.' Hellerstein, Business 1974 Term: Standard Pressed Steel Pipeline, 62 Va.L.Rev. 149, 188 (1976).14 III 37 course, confronted labeled 'for Mississippi, Code, assumed note sufficiently connected justify taxpayer, apportioned. 38 view gave rise some substance. Nonetheless, defending abstract alter rejected proposition taxation: 39 truism mere act exempt (1938).' 40 Not rejected, stripped significance. If called 'net concern value' invalidate it. consequence follows necessarily particular words, focus merely obscrues produces effect. Simply put, address problems concerned.15 now reject Service, Inc. se 41 objection Mississippi's nothing interstate, 42 ordered. 27-65-13 Code. 27-65-19(2) effective exclude Laws, c. 506, 2. Section 10109, codified all transportation, defined 'so much thereof conducted States United Constitution America.' 1955, exclusionary eliminated amended cover 'between 1955 10. amendment essentially possessed relevant here. evinces intent reach construed. make argument, appellee commercial transactions distinct service performed payment point Tr. Oral Arg. 34-35, 38. 27-65-31 Violation requirements section misdemeanor. Ibid. understandably go great pains describe details bills lading, responsibility various entities travel assembly plant seeks demonstrate provides Appellee 11-14; 12-24; Reply 14-16. courts, For purposes, assumption. 1960, 77, audit covered beginning 1968. 37-38. effort apply date. Boston Exchange Comm'n, 318, 599, 514 (1977); Corp. Washington, 377 436, 84 1564, (1964); Illinois Cent. 309 157, 60 419, 670 (1940); Ingels Morf, 300 290, 57 439, 81 653 (1937). also Washington Rev. Dept., 419 560, 706, 719 Clark Paul Gray, 306 583, 59 744, 83 1001 (1939). summarized 252, 276: '(T)he authorization Congress enact laws encouragement among States, own area trade free interference States. short, implementing legislation forbid single out hostile action. precluded taking impeding flow immaterial encumbrance.' supra; (1959); (1948); Wisconsin J. C. Penney Co., 311 435, 444, 61 246, 85 267 (1940). mention starting point, elements views expressed therein, positions underlie debate, evident opinions. Compare Receipts, Wall. (82 U.S.) 284, 164 (1873), Fargo Michigan, 121 230, 857, 888 (1887); compare Di Santo Pennsylvania, 273 34, 267, 524 (1927), Cooney Mountain Tel. 294 384, 55 477, 934 (1935), generally Barrett, 'Direct Burdens,' 'Multiple What Have You?, Vand.L.Rev. 496 writings cited therein 1; agreed result reached best solved market unapportioned kind exact. consistent necessitated cases whose burden, indirect, fell arriving conclusion, dissent relied construction stipulation entered parties, 100-101, 1485-86, independent review record. plurality dissent's noted, addition, petition certiorari raise ask recompense. 83-84, 1476-77. provide Five joined distinguishing Two judgment, indistinguishable overruled 114-116, 1546-47. indistinguishable, felt established precedent until forthrightly 116, 1547. Douglas took part. Less charitably put: 'In light expanding scope anachronism. Continued adherence especially Portland Cement, justified.' Comment, Pipelines, Privileges Labels: 70 Nw.U.L.Rev. 835, 854 taxes, focusing easily tailored businesses them imposition business. differentiate used property, see different business; form' change nature involved. increased apportionment, lack 13, 283 (concurring opinion). however accomplished, receive careful scrutiny determine perceive reason, why creating qualitatively require unconstitutionality. adoption would, beyond Spector) judgments occasion made. believe, administrative convenience, instance, insufficient justification abandoning principle way.'

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