Court Opinion

ID: 9481509
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:21:22.055315+00
Date Added: 2024-06-11T17:48:22.108180
License: Public Domain

FLOYD R. GIBSON, Senior Circuit Judge,
dissenting.
Because I do not believe that Missouri’s Private Car Tax has been shown to result in discriminatory treatment in violation of Section 306(l)(d), I respectfully dissent.
I do not fault the majority for following the precedents of this and other courts of appeal, but I simply cannot in good conscience participate in the judicial extension of legislation to an absurd end. Congress’ effort to save the railroads by enactment of the 4-R Act prohibits discriminatory taxation of railroads. The law was originally focused at unfair taxation of railroad property.8 The concluding catchall provision invoked in this case — 306(l)(d)—has been extended to have the practical effect of prohibiting virtually any taxation of railroads. Perhaps this was the result Congress hoped to achieve, but the language of subsection (d) does not go that far. I do not deny Congress’ authority to fully prohibit taxation of the railroads, but I am unwilling to believe that it exercised that authority with this less-than absolute statute. As I read the law, it only prohibits a tax which results in discriminatory treatment.
Of course, “[t]he meaning of ‘discrimination’ presents a somewhat stickier problem,” McNamara, 817 F.2d at 374, but I think we should meet the challenge head on. Simply saying that “because a tax applies to railroads and no other taxpayer, then the tax is discriminatory” is insufficient analysis. Subsection (d) prohibits taxes that result in discriminatory treatment. We cannot gauge that result by only looking at how the railroad is treated. Examination of other taxpayers and other tax schemes will be necessary to make a comparison. Discrimination can neither exist nor be discovered without a comparison between two allegedly different treatments; looking only to the treatment of the railroads reveals discrimination by virtue of having singled them out in the first instance as much as by the actual presence of a discriminatory tax.
Thus, I disagree with the majority on the proper method for determining when a tax “results in discriminatory treatment.” Relying on Snead, the majority denies that we may look beyond the state tax in question to gauge its resultant treatment of railroads. I believe we must look beyond the single tax statute, and I do not find the majority’s citation to Snead for the contrary proposition to be authoritative or persuasive.9
The federal statutory scheme in Snead was designed to prevent a “ ‘tax on or with respect to the generation or transmission of electricity’ which ‘results, either directly or indirectly, in a greater tax burden on electricity’ consumed outside of New Mexico than that consumed in the State.” Snead, 441 U.S. at 149, 99 S.Ct. at 1634 (emphasis added). The federal prohibition here is designed to prevent a tax that “results in discriminatory treatment” of railroads. While violations of the former prohibition may be found by the examination of the isolated tax statute, violations of the latter prohibition cannot be so readily established.
In Snead, the Court said that looking only to the type of tax involved without comparison to other New Mexico taxes was sufficient. “Because the electrical energy tax itself indirectly but necessarily discriminates against electricity sold outside New *1305Mexico, it violates the federal statute.” Id. at 150, 99 S.Ct. at 1634 (footnote omitted) (emphasis in original). The violation, of course, was that a greater tax burden resulted. Gauging that burden on electricity could be done by looking to the statute alone because the prohibition dealt with the taxation of electricity alone. The determination was only whether the out-of-state taxation was unequal to the in-state burden — either the tax law made the burdens equal or it did not. The resulting unequal burdens on the taxed electricity violated the federal law.
Would that our inquiry was so easily made. I believe that subsection (d) of the 4-R Act as written requires a qualitatively different judgment by the courts to determine whether a tax results in discriminatory treatment which cannot be made by looking at the subject tax singularly. The law and analysis in Snead looked to what was taxed, while our analysis under 4-R’s subsection (d) is more properly focused on who is taxed. In the statute considered in Snead, Congress was concerned with what was taxed by requiring that the burden on the taxed commodity be equal in and out of New Mexico. With the 4-R Act, Congress is worried not about what is taxed, but that the tax (whatever its burdens) not result in discriminatory treatment of who is taxed, viz., a railroad taxpayer subject to the tax.
Admittedly, a tax on only railroad ears such as Missouri’s Private Car Tax is immediately suspect, but not necessarily discriminatory. A myopic review of any tax law will reveal that one party is treated differently from another. Does a sales tax result in discriminatory treatment of landowners who must also pay real estate taxes while non-landowners pay only the sales tax? Does the exemption for churches from real property taxation result in discriminatory treatment of railroads who cannot get an exemption? I can think of almost no viable tax scheme which would not leave the railroads treated differently from some other taxpayer when the tax is examined in isolation. Perhaps there are no longer any taxes that can survive 4-R, and perhaps states will have to restructure their entire tax laws should they endeavor to successfully tax railroads. I do not believe that Congress by the 4-R Act has yet demanded such results.
I cannot join the court's opinion because I do not believe Congress has broadly eliminated taxation of the railroads without a demonstration of a discriminatory result by comparison to other taxes and taxpayers under subsection (d). I believe such a demonstration is still necessary lest Congress be openly called a fool.10 I would remand to the trial court to consider whether the tax in question is actually discriminatory considered in conjunction with other state tax provisions. I would employ an analysis like that set forth in McNamara, 817 F.2d at 376, despite the absence of the Commerce Clause issue:
Any state tax scheme is prima facie valid, and the Commerce Clause will “of its own force” invalidate state laws only when the taxpayer can show that the laws will actually operate in a discriminatory fashion. See Maryland v. Louisiana, 451 U.S. 725, 756 [101 S.Ct. 2114, 2134, 68 L.Ed.2d 576] (1981) (“A state tax must be assessed in light of its actual effect considered in conjunction with other provisions of the State’s tax scheme.”).

. On this point, I recommend the entire opinion of Judge Gee in McNamara be read, beyond the scant bit quoted by the majority at its footnote six and accompanying text. Particularly, I point out that McNamara confesses the truth of what this court does here and in earlier opinions by taking the catchall provision to its (il)logical end. See McNamara, 817 F.2d at 372-73 and n. 8.

. I also find the majority’s citation to Ogilvie unhelpful. Though we there declined to look to the overall tax schemes of North Dakota, we were examining a specific violation of § 306(l)(a), dealing with property taxes in particular. In this case we are dealing with the broader language of subsection (d). Ogilvie does not prevent a likewise broader examination of Missouri’s tax laws to discern a discriminatory result against railroads.

. See McNamara, 817 F.2d at n. 8 (quoting Judge Warriner in Richmond, Fredericksburg & Potomac Railroad v. Dept, of Taxation, 591 F.Supp. 209, 221 (E.D.Va.1984), rev'd, 762 F.2d 375 (4th Cir.1985).