Legal Document

420 U.S. 656 95 Supreme Court Reporter 1191 43 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 530 Carl M. AUSTIN et al., Appellants,v.State of NEW HAMPSHIRE al. Number 73—2060. Argued Jan. 15, 1975. Decided March 19, Syllabus The New Hampshire Commuters Income Tax imposes a tax on nonresidents' Hampshire-derived income above $2,000 at 4% rate, except that if the nonresident's State residence would impose lesser had been earned in State, is reduced to amount. contains provisions practical effect exempt from by residents outside and no its residents' domestic income. Held: Under rule requiring substantial equality treatment for citizens taxing nonresident taxpayers, violates Privileges Immunities Clause, since falls exclusively incomes not offset even approximately other taxes imposed upon alone. Pp. 665-668. (a) State's contention tax's ultimate burden more onerous nonresidents because their total liability unchanged once credit received taken into account, cannot be squared with underlying policy comity Clause requires. 665-666. (b) possibility this case Maine, appellant taxpayers' residence, could shield amending does cure, but fact compounds, constitutional defect discrimination tax, invites appellants induce representatives retaliate against such discrimination. constitutionality one statutes affecting depend present configuration another statutes. 666-668. 114 N.H. 137, 316 Atlantic Reporter, 2nd 165, reversed. Charles W. Smith, Washington, D.C., appellants. G. Cleaveland, Nashua, N.H., appellee, pro hac vice, special leave Court. Mr. Justice MARSHALL delivered opinion 1 Appellants are Maine who were employed during 1970 year as subject Tax. On behalf themselves others similarly situated, they petitioned Superior declaration Equal Protection Clauses Constitutions States. cause was transferred directly Court, which upheld tax. 165 (1974). We noted probable jurisdiction federal claims, 419 822, 38, 42 46 (1974), basis Article IV, we now reverse. 2 * excess $2,000.1 rate taxpayer's state amount impose. Employers required withhold income, however, his home him less than full 4%. Any withheld refunded filing return after close showing he entitled taxed 3 initially well State. It then exempts however: (1) it derived; (2) exempted taxation or (3) derived income.2 these imposition exemption features resident out-of-state Nor taxed. In effect, then, only working Hampshire;3 disparate challenge Hampshire's right employment State.4 II 4 § 2, cl. 1, provides: 'The Citizens each shall all several States.' thus establishes norm without specifying particular subjects coming within guaranteed treatment. origins do reveal, concerns central import Framers. During preconstitutional period, practice some denying outlanders demanded widespread. fourth Articles Confederation intended arrest centrifugal tendency particularity. provided that: 5 better secure perpetuate mutual friendship intercourse among people different Union, free inhabitants States, paupers, vagabonds fugitives justice excepted, privileges immunities States; have ingress regress any enjoy therein trade commerce, same duties, impositions restrictions thereof respectively.' 6 discriminations aimed means eradicated short life Confederation,5 provision carried over article Constitution briefer form change substance intent,6 unless strengthen force clause fashioning single nation.7 Thus, first, long leading, explication sitting Circuit Justice, deemed fundamental protected essentially coextensive those calculated achieve purpose forming perfect including 'an higher paid state.' Corfield versus Coryell, Federal Cases 1789:1880 Pages 546, 552 (No. 3,230) (CCED Pa. 1825). 7 resolving challenges measures has made clear 'in taxation, fields, legislatures possess greatest freedom classification.' Madden Ken tucky, 309 83, 88, 60 406, 408, 84 L.Ed. 590 (1940). See Lehnhausen Lake Shore Auto Parts Co., 410 356, 93 1001, 35 351 (1973). Our review classifications generally concomitantly narrow, therefore, fit broad discretion vested legislatures. When measure challenged an undue activity granted recognition, appropriate degree inquiry necessary protect competing value erosion. id., 359, S.Ct., 1003. 8 This consideration applies equally protection individual liberties, see Grosjean American Press 297 233, 56 444, 80 660 (1936), maintenance our federalism. Michigan-Wisconsin Pipe Line company Calvert, 347 157, 164, 74 396, 399, 98 583 (1954). making noncitizenship nonresidence8 improper locating burden, implicates individual's nondiscriminatory also, perhaps so, structural balance essential concept Since represented legislative halls, cf. Allied Stores Ohio, Incorporated Bowers, 358 522, 532—533, 79 437, 443—444, 480 (1959) (Brennan, J., concurring), judicial acquiescence schemes them particularly remit redress through own State; 'to prevent (retaliation) chief ends sought accomplished adoption Constitution.' Travis Yale & Towne Mfg. 252 60, 82, 40 228, 64 460 (1920). prior cases, reflect appropriately heightened concern integrity erecting standard substantially rigorous applied distinctions among, say forms business organizations trades professions. 9 first Ward Maryland, 12 Wall. 418, 20 449 (1871), challenging statute under pay $300 per license goods manufactured while traders fee varying $12 $150, depending inventory. attempted justify disparity response 'runners' industrial selling sample local overhead expenses incurred merchants. portrayed 'tax trade, mode,' rather Although may 'palpably arbitrary,' supra, 530, 442, denied held violated guarantee 'being subjected excise exacted law . permanent residents.'9 10 Travellers' Insurance Connecticut, 185 364, 22 673, 949 (1902), considered laid stock insurance corporations. shares stockholders assessed market value, owned proportionate real estate corporation already property analyzing apparent worked nonresidents, took account overall distribution between stockholders. Finding taxes, average approximating exceeding stock, scheme. While precise two classes obtained, 'enough secured reasonably fair burdens, intentional nonresidents.' Their contribution revenues, is, ratable share 11 principles Shaffer Carter, 37, 221, 445 (1920), supra. Oklahoma where also income—from wherever derived—of citizens. Putting aside 'theoretical distinctions' looking 'the operation' scheme, treated onerously particular, called make support government. York issue Travis, contrast, sustained when actual considered. there personal exemptions taxpayer himself dependent, similar nonresidents. 'deemed counterbalanced' interest dividend likely benefit corresponding them.' Looking concrete, incidence' said many Jersey Connecticut York: 'They pursue occupations side York—in wages, salaries, terms employment. Whether must $1,000 associates competitors reside not, makes difference. occasional accidental inequality due circumstances general rule, operating disadvantage favoring .' U.S., 80—81, 232 (citations omitted). III 13 Against background establishing sustained. overwhelming fact, concedes, nonresidents; alone.10 Rather, argument advanced favor 'not effect,' receive account. n. 4, initial appeal commits us. 14 According theory case, divert revenues otherwise entirely Maine's power terminate repeal Legislature this, presumably, so deny retaining 48 acceptability relevance increase appellants' diversionary have,11 think cures compounds it. For representatives, can, 15 A similar, though much disruptive, invitation extended discriminatory Travis. York-derived contended 'looked forward speedy adjoining states,' eliminate 'by providing conditioned.' To responded fully applicable case. Referring anticipated neighboring stated: 16 'This, wholly speculative; authority legislate states; pass respect operation existing situation. barter away right, conferred go states. can corrected retaliation; 233.12 17 Nor, add, 18 dispose Constitution, occasion address equal arguments directed feature causes vary established residence. 19 Reversed. DOUGLAS part decision 21 BLACKMUN, dissenting. me, noncase. N Dec. Immigration Nationality Decisions dismiss want question. far urgent demands limited time kind litigation. 23 Because operate way ultimately glance appears attraction. That attraction, superficial and, careful analysis, promptly fades disappears entirely. reason appellants, Hampshire, Legislature—the duly elected representatives—has given option increment (on resident's Hampshire) willingly picked up option. All done what specifically permits indeed, do. If should become disenchanted bestowed bounty, legislature statute. crux Hampshire. really complaining about ironic allows credit, appearance amicus urging, denial adjudication unconstitutionality seems me here seeking uphold legislatively devised plan turn attention legislature. 24 reminiscent death originally 301(b) Revenue Act 1924, Statutes-at-Large 304, 1926, 44 70, constituting 2011 Internal Code 1954, 26 KF62 2011. adjacent it, specific legislation, advantage allowed. Me.Rev.Stat.Ann., Tit. 36, §§ 3741—3745 (1965 Supp.1973); Mass.Gen.Laws, chapter 65A, 1—7 (1969 Supp.1975); N.H.Rev.Stat.Ann. 87:1—13 (1971); Vt.Stat.Ann., 32, 7001—7005 (1970). attack. Florida Mellon, 273 12, 17, 47 265, 266, 71 511 (1927); Rouse 65 Ct.Cl. 749, cert. denied, 278 638, 49 73 554 (1928). 25 One wonders whether just lawyers' lawsuit. Certainly, prevailing today, direct financial gain. Relief results corresponding, tanto, Dollarwise, emerge exactly point. difference enjoys Hampshire-earned Where, injury? element injury, Maine-imposed. waste time, theorizing agonizing But exercise futility nevertheless indicated, little merit quest relief. settled absolute requisite Clause. Toomer Witsell, 334 385, 68 1156, 1162, 92 1460 (1948); 1168 (Frankfurter, concurring). And fail perceive unconstitutional unequal part. exists, differences respective rates border 27 again noncase, seemingly attractive high-sounding suggestions unfairness. cure grasp, importance citizens, adjusting house collateral 77—B:2 (1971) 'A hereby every taxable nonresident, levied, collected annually four percent thousand dollars; provided, exceeds taxpayer, state, .; derived, constitute satisfaction imposed; further, statutory paragraph.' 4.5% (other notes bonds bank deposits) dividends cash national banks thrift institutions) $600. 77:1—77:5 (1971). Residents $10 annual 'resident tax' use town city 72:1, 72:5—a (Supp.1973). Other profits, transfers, property, alike. unearned fiscal $3,462,000. 1971, rose $5,238,000. Dept. Commerce, Bureau Census, State-Tax Collections (Series GF70 1) 1971 GE71 1), Page 26. Appellees standing maintain action economic position despite offsetting laws 5127 (Supp.1973), owing liability, unaffected. question covered, holding (1959). addition, affected requirements file employers earnings; appellees suggest very least withholding requirement deprives any. These effects substantial, establish status parties 'adversely affected' laws, giving 'a stake outcome' Sierra Club Morton, 405 727, 740, 1361, 1368, 31 636 (1972). James Madison, commentary union proposed William Paterson Jersey, wrote: 'Will trespasses other? Of enough seen. He instanced Acts Virga. Maryland give preference cases (of States) Confederation.' Farrand, Records Convention 317 (1911). Pinckney, drafted shorter version found 37 Annals Cong. 1129 (1821), assured '(t) 4th article, respecting extending rights throughout (etc.) formed 112. explanation deletion certain phrases IV light Fugitive Slave Commerce Lemmon People, N.Y. 562, 627 (1860) (opinion Wright, J.). Id., 607 (Denio, J.); Paul Virginia, 168, 180, 357 (1869). purposes scheme 'citizen' 'resident' interchangeable. 79, 231, (1920) ('a discriminates states'); Smith Loughman, 245 486, 492, 157 Northeastern KF135 N59 753, 755, 275 560, 119, 72 426 397, (1948). Accord, invalid licensing-fee system, citing proposition 'it ago decided guarantees doing B State.' (Emphasis added.) $600 rarely equal, exceed, $2,000. Appellant Logan, example, $33,000 $252 disparities find record assertion court below creates 'practical equality' '(S)omething bald assertion'—by counsel here—to validity face Mullaney Anderson, 342 415, 428, 430, 96 458 (1952). Vermont, amici curiae, point out $400,000 diverted included, thereby bore additional cents taxes. inference strong, deem insufficient demonstrate actually revenue loss. Neither nor denigrate reciprocity matters. evil unilateral reciprocally favorable coordinate laws.

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