Court Opinion

ID: 4953026
Source: CourtListenerOpinion
Date Created: 2021-09-24 13:20:52.81062+00
Date Added: 2024-06-11T08:15:28.262399
License: Public Domain

McGINLEY, Judge,
dissenting.
I respectfully dissent. The majority concludes that the application of the capital stock tax manufacturing exemption by the Department of Revenue does not violate the Commerce Clause of the United States Constitution. I do not agree.
The Commerce Clause prohibits states from imposing taxes which discriminate against interstate commerce by providing direct commercial advantages to businesses within the state. Westinghouse Electric Corp. v. Tully, 466 U.S. 388, 104 S.Ct. 1856, 80 L.Ed.2d 388 (1984). When a statute is challenged as unconstitutional under the Commerce Clause we must “determine whether the statute under attack ... will in its practical operation work discrimination against interstate commerce.” Maryland v. Louisiana, 451 U.S. 725, 756, 101 S.Ct. 2114, 2134, 68 L.Ed.2d 576 (1981).
The Department’s application of the manufacturing exemption has a discriminatory economic effect on multi-state corporations with a low percentage of manufacturing in Pennsylvania. If a multi-state corporation expands its manufacturing in another state, one of the direct costs of the expansion is an increase in the capital stock tax. Conversely, if a multi-state corporation expands in Pennsylvania the capital stock tax decreases. Not only does the manufacturing exemption provide a positive incentive for nfulti-state corporations to increase manufacturing in Pennsylvania, but it penalizes corporations for manufacturing in other states. Thus, the Department’s application of the exemption substantially discriminates against out-of-state manufacturing in violation of the Commerce Clause.
I would reverse.