Court Opinion

ID: 9418667
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:34:55.980977+00
Date Added: 2024-06-11T16:49:48.186060
License: Public Domain

Mr. Justice Brandéis,
dissenting.
The corporation maintains in Washington a branch office and a'warehouse. There, it does a large intrastate business. Nearly one-half of the aggregate sales of $1,313,-2-76.74 made within the State were local and were from broken packages. It is subjected to two taxes which are separate and distinct. The filing fee is payable only once and as laid -was $545. The annual license fee is $580. The latter results in a charge of about one-tenth of one per cent on the intrastate business. The corporation’s pay roll there is more than a hundred times as large. These small taxes are obviously not more than a fair contribution to the necessary expenses of the State government. They are the same for foreign corporations as for domestic. In my opinion both taxes are valid.
If the statute sought to impose a tax on corporations engaged wholly in interstate commerce, or if the taxes laid a direct burden upon interstate commerce, or if they were laid upon property without the State, or. if they were unjustly discriminatory, the fact that they are small in amount would, of course, be immaterial. Sprout v. City of South Bend, 277 U. S. 163, 171. But these taxes are not subject to any of those infirmities. The taxes are not laid upon interstate commerce. They are not measured by the amount of interstate commerce. They do not grow, or shrink, according to the volume of interstate commerce or of the capital used in it. They are not *468furtively directed against such commerce. The taxes would be precisely the same in amount if the corporation did in Washington no interstate business whatsoever. Nor are they taxes laid upon property without the State. Indeed, they are neither property taxes nor substitutes for property taxes. They are an excise, laid solely for the privilege of doing business as a corporation. Añ individual doing the same business would not be required to pay either these taxes or any substitute therefor.
General Ry. Signal Co. v. Virginia, 246 U. S. 500, requires, in my opinion,r that the filing fee be held valid.' There, a filing fee of $1,000 on an authorized capitalization of $5,000,000 was sustained as against a foreign corporation, under a statute limiting the maximum tax to $5,000. Here, the filing fee demanded was $545 on an authorized capital nearly ten times as great; and the maximum fee demandable in any case was limited to $3,000. The General Ry. Signal Co. case was decided by a unanimous Court and the correctness of the decision has never been questioned.
Cheney Bros. Co. v. Massachusetts, 246 U. S. 147, 154-158, requires, in my opinion, that the license fee be held valid. That case held a statute ;imposing an annual license tax valid as applied to all the foreign corporations which, like, the Cudahy Company here, did both intrastate and interstate business. That decision was made by a unanimous Court after much deliberation. It has never been disapproved. The statute there in question is identical, so far as here material, with the Washington statute, except that the Massachusetts law fixes a maximum tax of $2,000, while here it is $3,000. But the Massachusetts statute was enacted in 1909; and the tax there challenged was laid in 1913. The Washington statute was enacted, in 1925; and the tax here challenged was laid in 1926. The rise in the general price level since 1913 makes the Wash*469ington maximum relatively lower than that prescribed by Massachusetts.
The Cheney Bros. Co. case is entirely consistent with Alpha Portland Cement Co. v. Massachusetts, 268 U. S. 203. In the latter case,,the tax held void was on a foreign corporation engaged solely in interstate commerce; and it was laid under a different statute. The situation here is also wholly unlike that considered in Air-Way Corp’n v. Day, 266 U. S. 71, 79 and in Looney v. Crane Co., 245 U. S. 178, and cases there cited. In those cases, not only did the statutes fail to fix a maximum, but the taxes actually laid were so large as compared with the local business done as to constitute a substantial obstruction of interstate commerce. The case at bar is also unlike International Paper Co. v. Massachusetts, 246 U. S. 135. There, the statute failed to fix any maximum.
A tax proportionate to >the capital of a corporation is sometimes laid in lieu of the ordinary property taxes, and in such eases is treated as a property tax. But the taxes here in question are not of that nature. I am aware that it has been said by this Court that a license fee of a given per cent of the entire authorized capital of a foreign corporation doing both a local and interstate business is essentially a tax on the entire business, interstate as well as intrastate; and a tax upon property outside the State. But that was said in cases where the statute did not fix any maximum; The statement seems tO' me legally un-, sound. If it'were true that every tax imposed generally upon a foreign corporation doing both interstate and intrastate business taxed its interstate business and its property outside the State, then most of such corporations would largely escape taxation. By the same process of reasoning; all taxes laid by a State upon property within its borders, which is used in both intrastate and interstate commerce, would be a tax on interstate commerce. But *470such taxes have been universally upheld. They are valid, because, when the burden is indirect, even a large burden upon interstate commerce does not render a tax void. See Southern Ry. Co. v. Watts, 260 U. S. 519, 530; Hump Hairpin Co. v. Emmerson, 258 U. S. 290.
It would be unfortunate to hold that merely because a foreign corporation, doing a local business does also interstate business, the State may not lay upon it a reasonable, non-discriminatory excise, necessarily limited to a reasonable amount, to which all domestic corporations similarly situated are subject and which can affect interstate commerce only indirectly, if at all. To hold such a tax void seems to me to ignore the wise rule of decision declared in Postal Telegraph Cable Co. v. Adams, 155 U. S. 688, 698: “ The substance and not the shadow determines the validity of the exercise of the [taxing] power.”
Mr. Justice Holmes joins in this opinion.