Court Opinion

ID: 6361580
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:36:26.267675+00
Date Added: 2024-06-11T15:49:42.413950
License: Public Domain

Dissenting Opinion by
President Judge Bowman :
I respectfully dissent. In my opinion, the majority view will permit any corporation doing business in Pennsylvania and elsewhere, by the simple expedient of a change in operational structure, to substantially reduce its Pennsylvania corporate tax liability because it thereby engages in the so-called multiform business activity. Thus, the ultimate premium is given to form over substance and would appear to also be the ultimate extension of a judicially created theory of exclusion from the Pennsylvania tax base of so-called unrelated assets or outside of Pennsylvania business activity if conducted under a multiform concept.
As noted in Commonwealth v. ACF Industries, Inc., 441 Pa. 129, 271 A. 2d 273 (1970), the fons et origo of this judicially created concept is Commonwealth v. Columbia Cas and Electric Corporation, 336 Pa. 209, 8 A.2d 404 (1939). In ACF Industries, in which it was held that an isolated investment by corporate taxpayer *648in the stock of another corporation to be an unrelated asset, the Supreme Court undertakes a review of the case law developed to date and then concludes that three correlated principles have emerged. These are set forth in the majority opinion and will not be repeated here. However, in my opinion, the majority has given insufficient weight to the third principle announced in AGF Industries that a “. . . truly divisionalized business, conducting disparate activities with each division internally integrated with respect to manufacturing and selling, may well be in a position to make a valid claim for exclusion.” In my opinion, taxpayer here has fallen far short of showing disparate activities in Pennsylvania and Ohio with respect to the manufacture and sale of clay products in both states. That clay products are glazed in their manufacture in one state and not in the other cannot serve to establish disparate activities in the two states.
Whatever justification this judicially created theory may have enjoyed in its origin, particularly as to unrelated assets, its continued expansion and broadening, unless reexamined or limited to its present scope, will play a greater role in Pennsylvania corporate taxation than the allocation and apportionment provisions of the applicable statutory law which are specifically designed to measure the Pennsylvania business activity of corporations doing business here and elsewhere.
Judge Rogers joins in this dissent.