Court Opinion

ID: 9418539
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:30:17.211164+00
Date Added: 2024-06-11T17:19:21.086473
License: Public Domain

Mr. Justice Brandéis,
dissenting.
The Court assumes, without discussion, that if, in Missouri, the company is engaged exclusively in interstate commerce, the tax assessed upon the Ozark Company is bad. It concludes, upon discussion, that the business actually done by the company within that State is exclusively interstate commerce, because the article with which it deals is not produced within Missouri and the physical operations of the company within the State relate directly or indirectly to transporting the article through it. Under the rule applied, every tax laid by any State upon the corporate franchise (properly so-called) of every corporation, domestic or foreign, must be void, in the absence of congressional authorization,, where the corporation is actually engaged exclusively in what is deemed interstate commerce. I find in the Constitution no warrant for the assumption which leads to such a result.
The tax assailed is .not laid upon the occupation, as was that in Texas Transport & Terminal Co. v. New *568Orleans, 264 U. S. 150. Nor is the tax laid upon the privilege of doing business. It is laid upon the privilege of carrying on business in corporate form; of doing so with a usual place of business within the State, and with power to exercise for that purpose the right of eminent domain. The office within the State is the corporation’s main office. The property physically located within the State constitutes more than half of all its property. The operations actually performed within the State include, among others, mechanical operations indispensable to the conduct of the business, and extensive auxiliary activities. The business which the company sought and obtained leave to do in corporate form is intrastate or interstate or both. The broad powers sought and granted, it still possesses and seeks to retain.
The immunity from state taxation accorded is not that enjoyed by federal instrumentalities in the absence of legislation by Congress authorizing such taxation. See Thompson v. Pacific Railroad, 9 Wall. 579. It is not the immunity of a federal corporate franchise, as in California v. Central Pacific R. R. Co., 127 U. S. 1, 42. It has not the support of congressional action. The tax is held void solely on the ground that it is obnoxious to the Commerce Clause. A state tax is obnoxious to that provision of the Federal Constitution only if it directly burdens interstate commerce, or (where the burden is indirect) if it obstructs or discriminates against such commerce. Here, there is no contention that, in fact, the tax assessed either obstructs, or appreciably burdens, interstate commerce. The tax is trifling in amount.1 *569There is no contention that, in fact, the tax discriminates against interstate commerce. The tax is applied alike whether the business done is interstate, or intrastate, or both.2 There is no contention that the statute discriminates against corporations organized under the laws of other States. The tax is the same for domestic corporations as it is for foreign corporations. The citizenship of the corporation is confessedly not of legal significance in this connection.3
Can it be said that this tax directly burdens interstate commerce? A tax is a direct burden, if laid upon the operation or act of interstate commerce. Thus, a tax is a direct burden where it is upon property moving in interstate commerce, Champlain Realty Co. v. Brattleboro, 260 U. S. 366; Eureka Pipe Line Co. v. Hallanan, 257 U. S. 265; United Fuel Gas Co. v. Hallanan, 257 U. S. 277; or where, like a gross-receipts tax, it lays a burden upon every transaction in such commerce, Crew Levick Co. v. Pennsylvania, 245 U. S. 292, 297. But a tax is not a direct burden merely because it is laid upon an indispensable instrumentality of such commerce, or because it arises exclusively from transactions in interstate commerce. Thus, a tax is valid although imposed upon property used exclusively in interstate commerce, Transportation Co. v. Wheeling, 99 U. S. 273, 284; Old Dominion S. S. Co. v. Virginia, 198 U. S. 299, 306; or, although laid upon net-income derived exclusively from interstate commerce, United States Glue. Co. v. Oak Creek, 247 U. S. 321; Shaffer v. Carter, 252 U. S. 37, 57. Compare Peck & Co. v. Lowe, 247 U. S. 165; Wagner v. *570City of Covington, 251 U. S. 95. These taxes were held valid because, unlike a gross-receipts tax, they do not withhold, “ for the use of the State, a part of every dollar received in such transactions.” See 245 U. S., p. 297. Surely the tax upon the corporate franchise is as indirect as the tax upon the pipe-line.
I find in the Commerce clause no warrant for thus putting a State to the choice of either abandoning the corporate franchise tax or discriminating against intrastate commerce;4 nor for denying to a State the right to encourage the conduct of business by natural persons through imposing, for the enjoyment of the corporate privilege, an annual tax so small that it cannot conceivably be deemed an obstruction of interstate commerce.

 It is now one-twentieth of one per cent, of that fraction of the whole capital stock and surplus which is proportionate to the fraction in value of the total assets of the corporation which are located within the State. The question of a limit upon the amount of the tax discussed in Baltic Mining Co. v. Massachusetts, 231 U. S. 68, 87, and International Paper Co. v. Massachusetts, 246 U. S. 135, 140, is not material here.

 If the tax assessed is held void, the statute will, in fact, discriminate against intrastate commerce; for the tax is confessedly valid as applied to all corporations which do not engage exclusively in interstate commerce.

 It applies also to corporations organized under the laws of a foreign country.

 See the discussion of Adams Express Co. v. Ohio State Auditor, 165 U. S. 194, by Thomas Reed Powell, 32 Harv. Law Rev. 251, 261-2.