Court Opinion

ID: 9649746
Source: CourtListenerOpinion
Date Created: 2023-08-23 15:08:01.706994+00
Date Added: 2024-06-11T18:12:14.256845
License: Public Domain

O’HERN, J.,
dissenting.
The Court today strikes down New Jersey’s excise tax on bus operations, N.J.S.A. 48:4-20, concluding that the tax unconstitutionally discriminates against interstate commerce because certain carriers are granted an exemption from the tax if they provide an instate service to New Jersey’s commuters and travelers. Because I believe that intercity bus service and commuter service are not substantially equivalent taxable events, and there is no direct discrimination against out-of-state operators who engage in the same business, I believe the Constitution does not compel the result reached by the majority-
The Commerce Clause simply provides that “[t]he Congress shall have Power * * * [t]o regulate Commerce * * * among the several States * * U.S. Const, art. I, sec. 8, cl. 3. Although stated as a grant of power to Congress, the clause has been read as imposing some limitations on states even in the absence of action by Congress. See, e.g., City of Philadelphia v. New Jersey, 437 U.S. 617, 623, 98 S.Ct. 2531, 2535, 57 L.Ed.2d 475, 481 (1978) (subjects of potential federal regulation that have escaped congressional attention “are open to control by the States so long as they act within the restraints imposed by the Commerce Clause itself”).
The negative implications of the grant of power to Congress have been referred to as “ ‘silent,’ ‘negative,’ and ‘dormant.’ ” Eule, Laying the Dormant Commerce Clause to Rest, 91 Yale L.J. 425, 425 n. 1 (1982). When a court interprets this dormant aspect of the Commerce Clause, it will, on occasion, invalidate unwarranted state intrusion into commerce; a court should not do so, however, merely because it believes it to be in the public *554interest to determine policy where Congress has not. The establishment of transportation or tax policy for a state is for the other branches of government. Cf. Northwest Airlines, Inc. v. Minnesota, 322 U.S. 292, 302, 64 S.Ct. 950, 955, 88 L.Ed. 1283, 1290 (1944) (Black, J., concurring) (“The Constitution gives [Congress] the power to regulate commerce among the states, and until it acts I think we should enter the field with extreme caution”). Our constitutional traditions have been similar. “ ‘To declare a statute unconstitutional is a judicial power to be delicately exercised.’ ” Harvey v. Board of Chosen Freeholders of Essex County, 30 N.J. 381, 388 (1959) (quoting Wilentz v. Hendrickson, 133 N.J.Eq. 447, 487 (Ch. 1943), aff'd, 135 N.J.Eq. 244 (E. & A.1944)). A legislative act should not be declared void “unless its repugnancy to the constitution is clear beyond reasonable doubt.” Gangemi v. Berry, 25 N.J. 1, 10 (1957). I cannot dispel that reasonable doubt in this case and therefore must dissent.
The majority opinion reflects a formalism once prevalent in analysis of state taxation of interstate commerce. But in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977), the United States Supreme Court abandoned altogether “ ‘the use of magic words or labels’ [that] could ‘disable an otherwise constitutional levy’ ” and recognized that they no longer served an analytic function. Id. at 284-89, 97 S.Ct. at 1081-1084, 51 L.Ed.2d at 334-37 (quoting Railway Express Agency v. Virginia, 358 U.S. 434, 441, 79 S.Ct. 411, 416, 3 L.Ed.2d 450, 456 (1959)). “[interstate commerce may be made to pay its way.” 430 U.S. at 284, 97 S.Ct. at 1081, 51 L.Ed.2d at 334. The Court shifted its focus away from labels to the question of “whether the tax produces a forbidden effect.” Id. at 288, 97 S.Ct. at 1083, 51 L.Ed.2d at 337.
Having replaced formalisms with economic reality, the Court developed a simpler, more straightforward approach based on an analysis of the effects of the tax: a tax will be sustained against a Commerce Clause challenge when the tax applies to an activity with a substantial nexus with the taxing state, is *555fairly apportioned, does not discriminate against interstate commerce, and is fairly related to the services provided by the state. Id. at 285-89, 97 S.Ct. at 1082-84, 51 L.Ed.2d at 335-37.
The problem with this tax is that it looks, sounds, and reads like one that is discriminatory. It is understandable then for the majority to conclude that this tax is discriminatory since, on its face, it appears to be so. However, our duty is to look deeper than appearance. When considering whether a tax is discriminatory for the purposes of competition, the flow of commerce is measured in terms of the nature of the transactions involved, not in legal abstractions.
Recognizing that the decisions of the United States Supreme Court had left little in the way of precise guides to the states in the exercise of their indispensable powers of taxation, Justice Clark once observed: “From the quagmire there emerge, however, some firm peaks of decision which remain unquestioned. It has long been established doctrine that * * * a State [may not] impose a tax which discriminates against interstate commerce * * * by providing a direct commercial advantage to local business * * *.” Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450, 458, 79 S.Ct. 357, 362, 3 L.Ed.2d 421, 427 (1959). I simply find that aspect missing from this case. A New Jersey business engaged in bus transportation gets no break on routes that compete with Trailways.
The relevant inquiry is whether or not the differing taxpayers are engaged in “substantially equivalent event[s].” Maryland v. Louisiana, 451 U.S. 725, 759, 101 S.Ct. 2114, 2135, 68 L.Ed.2d 576, 603 (1981). In Boston Stock Exchange v. State Tax Comm’n, 429 U.S. 318, 97 S.Ct. 599, 50 L.Ed.2d 514 (1977), the Court found the fatal defect in the New York stock transfer tax to be that the same transaction, i.e., sale of securities that would be transferred or delivered in New York, was subjected to differing tax consequences on the basis of whether the transaction took place in state or out of state. Id. at 332, 97 S.Ct. at 608, 50 L.Ed.2d at 526. The commodity was identical. *556It was plain to the Court that New York had created a tax granting a direct commercial advantage to local businesses. Id. at 331, 97 S.Ct. at 607, 50 L.Ed.2d at 525. However, when the transactions are different, a different tax may be imposed. See, e.g., Alaska v. Arctic Maid, 366 U.S. 199, 204-05, 81 S.Ct. 929, 932, 6 L.Ed.2d 227, 231 (1961) (no discrimination where tax on operation of freezer ships is greater than tax on local fish processors since the businesses are not competitive).
We must then look beyond appearance and try to focus upon the commercial event that is involved here. I am certain that the commuter standing at a roadside in Scotch Plains would not fail to see that a Trailways bus that roars through the community on its route between Miami and Boston is not engaged in the same business as a bus company that provides public transportation from that point to another point within the commuter shed. There really should be no question in the minds of the majority that intercity bus service is an entirely distinct commodity from commuter bus service. See Salorio v. Glaser, 93 N.J. 447, 459, cert. denied, 464 U.S. 993, 104 S.Ct. 486, 78 L.Ed.2d 682 (1983) (comparing journeys to work within, from, and to New Jersey, all modes). In essence, the Court now holds that the State cannot tax this commodity, a discrete aspect of interstate commerce, unless it taxes a different commodity, intrastate or commuter bus service. While a case of discrimination might be made in particular circumstances when the transportation products are analyzed, the primary facial effect of the tax is not discriminatory because it rationally distinguishes between products.
In the last analysis, the issue is whether the state has given something for which it may ask for something in return. In the case of commuter bus service, the benefits to the state are self-evident. Not only is a transportation crisis eased, but air-pollution problems and energy-consumption problems are addressed by the delivery of the local bus service. The same holds true for intrastate bus services essential to the New *557Jersey job market. Hence, important public purposes, which are not related to intercity bus transportation, are served by the provision of intracity or commuter service.
The essence of discrimination under the Commerce Clause was expressed thus in Boston Stock Exchange v. State Tax Comm’n, supra:
Our decision today does not prevent the States from structuring their tax systems to encourage the growth and development of intrastate commerce and industry. Nor do we hold that a State may not compete with other States for a share of interstate commerce; such competition lies at the heart of a free trade policy. We hold only that in the process of competition no State may diseriminatorily tax the products manufactured or the business operations performed in any other State.
[429 U.S. at 336-37, 97 S.Ct. at 610, 50 L.Ed.2d at 528-29.]
The intricate relationship between state and national domain in the field of mass transit was outlined in Garcia v. San Antonio Metropolitan Transit Auth., 469 U.S. —, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985). There, the federal interest in supporting urban mass transit was an important factor in considering Congress’ power to regulate wages in that area. Id. at —, 105 S.Ct. at 1019-1020, 83 L.Ed.2d at 1036-37. The issue, however, was the sweep of Congress’ power, and not, as here, the negative restraints of the Commerce Clause. Id. at —, 105 S.Ct. at 1020-1021, 83 L.Ed.2d at 1037-38. Given the essentiality of transportation to a state’s sovereign function, the negative or dormant aspect of the Commerce Clause is not directly relevant. It is only when the state regulates the commercial market for the advantage of its private citizens that it may be found to offend the constitutional policy against economic balkanization.
In sum, I believe that only a formalistic analysis could lead to the conclusion that this tax is unconstitutionally discriminatory. The excise tax furthers no New Jersey private interest since it treats both resident and nonresident deliverers of the same service equally and is rationally related to an important public *558purpose. The Constitution does not require the invalidation of this tax.
For affirmance as modified —Chief Justice WILENTZ, and Justices POLLOCK, HANDLER and GARIBALDI-4.
For affirmance — Justices CLIFFORD and STEIN-2.
For reversal — Justice CLIFFORD-1.