Court Opinion

ID: 3135382
Source: CourtListenerOpinion
Date Created: 2015-10-22 17:36:35.430597+00
Date Added: 2024-06-11T11:54:09.616493
License: Public Domain

Docket No. 103849.

                              IN THE
                      SUPREME COURT
                                 OF
                 THE STATE OF ILLINOIS

SUN LIFE ASSURANCE COMPANY OF CANADA, Appellant, v.
DEIRDRE K. MANNA, Acting Director of Insurance, et al.,
                     Appellees.

                 Opinion filed November 29, 2007.

   JUSTICE FITZGERALD delivered the judgment of the court,
with opinion.
   Chief Justice Thomas and Justices Freeman, Kilbride, Garman,
Karmeier, and Burke concurred in the judgment and opinion.

                              OPINION

    Sun Life Assurance Company of Canada (Sun Life) brought a
declaratory judgment action against the Director of Insurance for the
State of Illinois, and the Division of Insurance of the Illinois
Department of Financial and Professional Regulation (Division),
claiming that Illinois’ retaliatory tax (215 ILCS 5/444 (West 2006))
on alien corporations is unconstitutional. The circuit court found that
the tax was constitutional. The appellate court affirmed. 368 Ill. App.
3d 591. This appeal raises three issues: whether the Retaliatory Tax
violates the uniformity clause of the Illinois Constitution (Ill. Const.
1970, art. IX, §2); whether the United States Congress, through the
language of the McCarran-Ferguson Act (15 U.S.C. §1012 (2000)),
has authorized Illinois to impose a retaliatory tax upon Sun Life, an
alien corporation; and, if not, whether the retaliatory tax violates the
so-called dormant commerce clause of the United States Constitution
(U.S. Const., art. I, §8, cl. 3). For the following reasons, we affirm the
judgment of the appellate court.

                            BACKGROUND
     The Illinois Insurance Code classifies insurance companies doing
business in Illinois into three categories. Illinois insurers are
“domestic”; insurers organized under the state laws of the United
States other than Illinois are “foreign”; and insurers organized under
the laws of another country are “alien.” Sun Life is a corporation
organized under the laws of Canada doing business in Illinois.
Therefore, it is considered an “alien” insurance company under the
Illinois Insurance Code.
     The two relevant taxes on insurance companies for purposes of
this appeal are the privilege tax and the retaliatory tax. Domestic,
foreign, and alien insurance companies pay a privilege tax to do
business in Illinois. 215 ILCS 5/409, 413 (West 2006). The privilege
tax is equal to 0.5% of their net premium income “for the privilege of
doing business in this State.” 215 ILCS 5/409(1) (West 2006). The
retaliatory tax, however, is not imposed on domestic companies; it is
only imposed on foreign and alien companies. 215 ILCS 5/444.1
(West 2006).
     The retaliatory tax provision (215 ILCS 5/444 (West 2006))
provides, in part,
             “Whenever the existing or future laws of any other state or
         country shall require of companies incorporated or organized
         under the laws of this State as a condition precedent to their
         doing business in such other state or country, compliance with
         laws, rules, regulations, and prohibitions more onerous or
         burdensome than the rules and regulations imposed by this
         State on foreign or alien companies, or shall require any
         deposit of securities or other obligations in such state or
         country, for the protection of policyholders or otherwise or
         require of such companies or agents thereof or brokers the
         payment of penalties, fees, charges, or taxes greater than the

                                   -2-
        penalties, fees, charges, or taxes required in the aggregate for
        like purposes by this Code or any other law of this State, of
        foreign or alien companies, agents thereof or brokers, then
        such laws, rules, regulations, and prohibitions of said other
        state or country shall apply to companies incorporated or
        organized under the laws of such state or country doing
        business in this State, and all such companies, agents thereof,
        or brokers doing business in this State, shall be required to
        make deposits, pay penalties, fees, charges, and taxes, in
        amounts equal to those required in the aggregate for like
        purposes of Illinois companies doing business in such state or
        country, agents thereof or brokers.” 215 ILCS 5/444(1) (West
        2006).
The purpose of the retaliatory tax is “to promote the interstate
business of domestic insurance companies and thus attempt to prevent
other states from handicapping Illinois domestic companies with
excessive taxes.” Trinity Universal Insurance Co. v. O’Connor, 113
Ill. App. 3d 560, 563-64 (1983); Pacific Mutual Life Insurance Co.
of California v. Lowe, 354 Ill. 398, 405-06 (1933).
     The Department of Insurance has promulgated regulations to
determine the retaliatory tax on foreign and alien companies. 50 Ill.
Adm. Code §2515.10 et seq., amended at 24 Ill. Reg. 10228, eff. July
1, 2000. The Illinois Administrative Code provides that a retaliatory
tax is due from a foreign or alien insurance company if the sum of its
“State of Illinois basis” is less than the sum of its “state of
incorporation’s basis” (50 Ill. Adm. Code §2515.50) and then sets out
a formula to determine the retaliatory tax. According to the
Administrative Code, “State of Illinois’ Basis means the taxes, fees
and charges in the aggregate assessed against and paid by a company
transacting insurance business in the State of Illinois” 50 Ill. Adm.
Code §2515.40. The Administrative Code also defines the “State of
Incorporation’s Basis” as:
        “State of Incorporation's Basis means the taxes, fees and
        charges that would have been assessed against and paid by an
        Illinois company if it had similar operation in the state of
        domicile of the foreign or alien company, as the foreign or
        alien company had in Illinois. *** If applicable, the state of
        domicile for the alien company may mean its port or state of

                                  -3-
         entry or, for an alien Lloyds, the state in which it maintains its
         assets in compliance with Article V of the Code.” (Emphasis
         added.) 50 Ill. Adm. Code §2515.40.
Sun Life uses the State of Michigan as its “port of entry” to conduct
its United States branch business. Therefore, the Division determined
that Sun Life’s state of incorporation basis would be determined by its
port of entry in Michigan.
     Sun Life consistently paid the privilege tax for the years it
operated in Illinois. Sun Life, however, did not pay the retaliatory tax
for the years 1997-2003 because it argued that it would owe no
Canadian tax on its life insurance business in Canada. Because Sun
Life owed tax and fees under the Illinois tax law but not under the
Canadian tax law, it determined that its Canadian tax basis was not
higher than its Illinois tax basis and that it owed no retaliatory tax.
According to the Division, Illinois companies doing insurance business
in Michigan are charged more in aggregate taxes and fees than Illinois
charges Michigan companies doing the same insurance business in
Illinois. Accordingly, basing its retaliatory tax audit on Michigan tax,
the Division assessed Sun Life $4,010,743 in retaliatory taxes for
1997 through 2003.
     Sun Life filed a declaratory action in the circuit court of Cook
County. It sought a declaration that Illinois is not authorized to
impose a discriminatory retaliatory tax on insurance business
conducted by alien companies in Illinois. Sun Life asserted the
retaliatory tax violates the uniformity clause of the Illinois
Constitution, the equal protection clause of the Illinois Constitution,
and the foreign commerce clause of the United States Constitution.
Both parties filed motions for summary judgment. On March 23,
2005, the circuit court granted defendant’s motion for summary
judgment and denied plaintiff’s motion for summary judgment. Sun
Life appealed.
     The appellate court first held that the retaliatory tax did not violate
the uniformity clause of the Illinois Constitution (Ill. Const. 1970, art.
IX, §2). The appellate court stated, “[w]hether an alien insurer must
actually pay a retaliatory tax depends entirely on the tax laws of its
own state of incorporation, not on the retaliatory tax statute.” 368 Ill.
App. 3d at 596. It noted that in an interstate context, the United
States Supreme Court in Western & Southern Life Insurance Co. v.

                                    -4-
State Board of Equalization, 451 U.S. 648, 68 L. Ed. 2d 514, 101 S.
Ct. 2070 (1981), held that the retaliatory tax is not “ ‘imposed on
[alien] corporations qua [alien] corporations ***; it is imposed only
on corporations whose home States impose more onerous burdens on
[Illinois] insurers than [Illinois] otherwise would impose on those
corporations.’ ” 368 Ill. App. 3d at 596. Further, the “ ‘ “ultimate
object is not to punish foreign corporations doing business in the state
*** but to induce such foreign state to show the same consideration
to corporations of the enacting state doing business therein as is
shown to corporations of such foreign state doing business in the
enacting state.” ’ ” 368 Ill. App. 3d at 597, quoting Western &
Southern Life Insurance Co. v. State Board of Equalization, 451 U.S.
at 668-69, 68 L. Ed. 2d at 531, 101 S. Ct. at 2083, quoting P.
Vartanian, Annotation, Constitutionality, Construction, Operation
and Effect of Retaliatory Statutes Against Foreign Corporations
Doing Business Within the State, 91 A.L.R. 795, 795 (1934). The
court then considered whether this could be applied in the
international context, discussing the principles enunciated in our
decision in Springfield Rare Coin Galleries, Inc. v. Johnson, 115 Ill.
2d 221 (1986). The appellate court found the retaliatory tax to be an
“incidental” intrusion, as “[t]he tax is not directed at one particular
nation, being applied to all alien insurers equally.” 368 Ill. App. 3d at
600. The appellate court also noted that because the retaliatory tax on
alien insurers is valid under the uniformity clause, it is also valid under
the equal protection clause. 368 Ill. App. 3d at 600-01.
     The appellate court next considered the case under the commerce
clause. The appellate court rejected Sun Life’s interpretation that the
McCarran-Ferguson Act, a federal statute ceding regulation of
insurance to the states, operates to remove only domestic restrictions
on interstate insurance regulation. It noted that the United States
Supreme Court in Western & Southern Life Insurance Co., 451 U.S.
at 655, 68 L. Ed. 2d at 522, 101 S. Ct. at 2076 (1981), stated that
“ ‘the McCarran-Ferguson Act removes entirely any Commerce
Clause restriction upon California’s power to tax the insurance
business.’ ” (Emphasis in original.) 368 Ill. App. 3d at 602. The
appellate court, following both the plain language of the McCarran-
Ferguson Act and United States Supreme Court precedent, interpreted
the Act to mean that there is no limitation in the Act to domestic

                                   -5-
enterprises. It explained, “Although Western & Southern Life
Insurance Co. is an interstate commerce case, its pronouncement that
the McCarran-Ferguson Act ‘removes entirely any’ commerce clause
restrictions on a state’s taxation of insurance is categorical. All such
restrictions are eliminated by the Act. If Congress intended that states
could only tax interstate commerce, it failed to say so and the United
States Supreme Court has yet to interpret the Act in this manner.”
(Emphasis in original.) 368 Ill. App. 3d at 602. The appellate court
further held that even if the McCarran-Ferguson Act did not remove
foreign commerce clause restrictions, its treatment of alien insurers is
not discriminatory and its impact on allowing the federal government
to speak with one voice is negligible. 368 Ill. App. 3d at 602.
    We allowed Sun Life’s petition for leave to appeal. 210 Ill. 2d R.
315(a). We allowed the National Association of Insurance
Commissioners to file a brief of amicus curiae.

                               ANALYSIS
    Summary judgment is appropriate where the pleadings show that
there is no genuine issue as to any material fact. 735 ILCS
5/2–1005(c) (West 2006). All cases involving summary judgment are
reviewed de novo. Quad Cities Open, Inc. v. City of Silvis, 208 Ill. 2d
498, 508 (2004); Arangold Corp. v. Zehnder, 204 Ill. 2d 142, 146
(2003). The constitutionality of a statute is also reviewed de novo.
Arangold, 204 Ill. 2d at 146. Statutes carry a strong presumption of
constitutionality and the party challenging a statute carries the burden
of rebutting that presumption and “clearly establishing” its
unconstitutionality. Arangold, 204 Ill. 2d at 146. The three issues are
as follows: whether the retaliatory tax violates the uniformity clause
of the Illinois Constitution (Ill. Const. 1970, art. IX, §2); whether the
United States Congress, through the language of the McCarran-
Ferguson Act (15 U.S.C. §1012 (2000)), has authorized Illinois to
impose a retaliatory tax upon Sun Life, an alien corporation; and, if
not, whether the retaliatory tax violates the so-called dormant
commerce clause of the United States Constitution (U.S. Const., art.
I, §8, cl. 3).

                                  -6-
                            Uniformity Clause
     We first address Sun Life’s argument that the retaliatory tax is in
violation of the uniformity clause of the Illinois Constitution. Ill.
Const. 1970, art. IX, §2. The uniformity clause of the Illinois
Constitution is a “specific limitation on the General Assembly in the
exercise of its taxing power.” Searle Pharmaceuticals, Inc. v.
Department of Revenue, 117 Ill. 2d 454, 466-67 (1987). The clause
provides, in relevant part, that “[i]n any law classifying the subjects or
objects of nonproperty taxes or fees, the classes shall be reasonable
and the subjects and objects within each class shall be taxed
uniformly.” Ill. Const. 1970, art. IX, §2. To survive scrutiny under the
uniformity clause, a tax classification: (a) must be based on a real and
substantial difference between the persons taxed and those not taxed,
and (b) must bear some reasonable relationship to the object of the
legislation or to public policy. Arangold Corp., 204 Ill. 2d at 153;
Milwaukee Safeguard Insurance Co. v. Selcke, 179 Ill. 2d 94, 98
(1997). After a taxpayer establishes a good-faith challenge to the
discriminatory tax, the burden shifts back to the taxing body to
produce a justification for the tax. Milwaukee Safeguard Insurance
Co., 179 Ill. 2d at 102. Only then does the burden shift back to the
taxpayer to demonstrate that the purported justification is
unsupported by the facts or is insufficient as a matter of law. Arangold
Corp., 204 Ill. 2d at 153.
     Sun Life asserts that the retaliatory tax establishes a discriminatory
taxing classification because it is imposed on foreign and alien
insurance companies and not on Illinois domestic companies. Thus, an
alien insurer like Sun Life must pay higher Illinois taxes than an
Illinois-domiciled company on the same amount of Illinois business.
Sun Life further asserts that there is no legitimate state purpose for the
retaliatory tax on alien insurers, relying primarily on our decisions in
Springfield Rare Coin Galleries, Inc. v. Johnson, 115 Ill. 2d 221
(1986), and National Commercial Banking Corp. of Australia, Ltd.
v. Harris, 125 Ill. 2d 448 (1988). The Division responds that there is
no discrimination in the retaliatory tax statute’s treatment of alien
insurers, as the statute applies to all alien insurers. It does not
discriminate against one alien company in favor of another or against
companies from a particular country. Further, according to the
Division, the statute has a legitimate purpose. Both Springfield Rare

                                   -7-
Coin and National Commercial Banking are easily distinguishable as
the nondiscriminatory retaliatory tax’s legitimate purpose is to
equalize tax burdens, which has only an incidental effect, if any, on
foreign affairs.
     Preliminarily, we agree with the Division that the appellate court
correctly found, “[t]here is no discrimination in the retaliatory tax
statute’s treatment of alien insurers. The statute applies to all alien
insurers uniformly. It does not discriminate against one alien company
in favor of another or against companies from a particular country.”
368 Ill. App. 3d at 596. Nevertheless, even if such discrimination
existed, the retaliatory tax has a legitimate purpose to equalize tax
burdens, which only has an incidental effect on foreign affairs. An
examination of Springfield Rare Coin and National Commercial
Banking demonstrate this legitimacy.
     In Springfield Rare Coin, the Illinois legislature passed a tax on
the Krugerrand, a gold coin issued from South Africa. Springfield
Rare Coin, 115 Ill. 2d at 226. At that time, the apartheid policy was
still in place, and “the plain purpose behind the exclusion was to avoid
the appearance of encouraging South African investment.” Springfield
Rare Coin, 115 Ill. 2d at 226. In considering the question of whether
the taxing body had a legitimate purpose for the law, we noted, “ ‘The
States have a very wide discretion in the laying of their taxes. When
dealing with their proper domestic concerns, and not trenching upon
the prerogatives of the National Government *** the States have the
attribute of sovereign powers in devising their fiscal systems to ensure
revenue and foster their local interests.’ ” Springfield Rare Coin, 115
Ill. 2d at 232, quoting Allied Stores of Ohio, Inc. v. Bowers, 358 U.S.
522, 526, 3 L. Ed. 2d 480, 484, 79 S. Ct. 437, 440 (1959).
     The states’ discretion, however, is tempered by “[t]he power
possessed by the Federal government to establish and carry out
foreign policy is plenary and exclusive.” Springfield Rare Coin, 115
Ill. 2d at 233. This is because the United States must speak with “one
voice” in dealing with foreign nations. Springfield Rare Coin, 115 Ill.
2d at 233. We summarized the balance between federal and state
prerogatives by stating,
              “Despite these broad principles, it would be an obvious
          oversimplification and wrong to assert that no State law which
          has any impact whatsoever upon foreign relations may ever

                                  -8-
         stand. For example, the fact that Illinois imposes taxes upon
         imported products generally can be said to have some effect
         on foreign nations. Clearly, such incidental, evenhanded
         burdens do not rise to the level of unconstitutionality.”
         Springfield Rare Coin, 115 Ill. 2d at 233.
We then cited examples of cases where a state had gone beyond its
proper domestic concerns. Such cases included a state statute
regarding probate rules governing inheritance from residents of
authoritarian nations; a state statute denying admission to students of
Iran to its universities; a statute fostering a “Buy American” campaign;
and another state statute imposing a de facto embargo of South
African products. Springfield Rare Coin, 115 Ill. 2d at 234-36. We
noted that the line between incidental and unconstitutional intrusions
into foreign affairs cannot be demarcated precisely. However, an
unconstitutional exclusion may include the following attributes: (1) the
sole purpose of the law must be disapproval of a nation’s policies; (2)
the exclusion is targeted at a single foreign nation; (3) and the
practical effect is to encourage an economic boycott. Springfield Rare
Coin, 115 Ill. 2d at 236. We found the tax on the Krugerrands was not
motivated by a legitimate purpose, holding
             “only that disapproval of the political and social policies of
         a foreign nation does not provide a valid basis for a tax
         classification by this State. The State may not exercise its
         otherwise wide-ranging taxing power for the purpose of
         encouraging a boycott of a single nation’s products.”
         Springfield Rare Coin, 115 Ill. 2d at 237.
We now consider whether the retaliatory tax had a legitimate purpose
following the principles we set forth in Springfield Rare Coin.
    Unlike Springfield Rare Coin, the retaliatory tax at issue does not
contain the sole motivation of disapproval of another nation’s policies.
The exclusion is not “targeted at a single foreign nation.” The
practical effect is not “an economic boycott.” Here, all foreign and
alien insurance companies must pay the tax, regardless of their origin.
Further, the Administrative Code designates that the retaliatory tax is
calculated according to the taxes of an alien corporation’s port of
entry, not the alien corporation’s home country. 50 Ill. Adm. Code
§2515.40. Sun Life’s retaliatory tax payment is triggered by the high
tax rates of its port of entry in Michigan, rather than its status as an

                                   -9-
alien company. Thus, the retaliatory tax’s legitimate purpose of
equalizing tax burdens between states bars Sun Life’s challenge.
Further, the tax does not result in a boycott and is properly termed
“incidental” because it is retaliating against the Michigan tax, not any
Canadian tax regime. Accordingly, while it may have some effect on
international commerce, such effect is only incidental to its purpose of
inducing Michigan to lower its retaliatory tax. Sun Life has presented
no evidence that the retaliatory tax statute or accompanying
regulations are intended to influence Canadian law in any way.
    Sun Life’s citation of National Commercial Banking, 125 Ill. 2d
448 (1988), is inapposite. In that case, a federal statute provided that
foreign banks would have the same rights as banks from other states.
An Illinois statute, however, limited the rights of foreign banks. This
court held that, under the supremacy clause of the United States
Constitution, the Illinois statute was preempted. National Commercial
Banking, 125 Ill. 2d at 466. Here, Sun Life makes no further
argument that the retaliatory tax conflicts with any federal statute.
Therefore, our ruling in National Commercial Banking has no bearing
on Sun Life’s uniformity clause argument and is therefore inapposite.
    Accordingly, the retaliatory tax is not prohibited by the uniformity
clause of the Illinois Constitution.

                          Commerce Clause
    We now turn to Sun Life’s contention that the retaliatory tax on
alien companies violates the commerce clause. The commerce clause
of the United States Constitution (U.S. Const., art. I, §8) provides
that “The Congress shall have Power *** To regulate Commerce with
foreign Nations, and among the several States, and with the Indian
Tribes.” The commerce clause bars states from enacting laws that
burden interstate or international commerce without express
congressional permission, even if Congress has not enacted any
conflicting legislation. Minnesota v. Clover Leaf Creamery Co., 449
U.S. 456, 66 L. Ed. 2d 659, 101 S. Ct. 715 (1981). Our threshold
question is whether Congress, through the McCarran-Ferguson Act
(15 U.S.C. §1012 (2000)), has given Illinois this express permission
to impose the present retaliatory tax.

                                 -10-
     We briefly provide some background to regulation of the business
of insurance by the states as interpreted by the United States Supreme
Court. Before 1944, courts nationwide denied constitutional
challenges to states’ insurance taxes, including retaliatory taxes, even
by alien insurance companies. Primarily, the court decisions were
based on Paul v. Virginia, 75 U.S. 168, 19 L. Ed. 357 (1869), which
held that the business of insurance was not commerce. Importantly,
the Supreme Court referred to both interstate and international
business, as it stated, “If foreign bills of exchange may thus be the
subject of State regulation, much more so may contracts of insurance
***.” Paul, 75 U.S. at 184-85, 19 L. Ed. at 361. The Supreme Court
continued to recognize that the insurance business involved alien
companies in New York Life Insurance Co. v. Deer Lodge County,
231 U.S. 495, 510, 58 L. Ed. 332, 338, 34 S. Ct. 167, 172 (1913). It
stated, “The argument was anticipated in Paul v. Virginia, *** where,
as we have seen, a tax on money and exchange brokers who dealt in
the purchase and sale of foreign bills of exchange was sustained as not
conflicting with the constitutional power of Congress to regulate
commerce among the States or with foreign nations.” (Emphasis
added.) New York Life Insurance Co., 231 U.S. at 510, 58 L. Ed. at
338, 34 S. Ct. at 172.
     In 1944, in United States v. South-Eastern Underwriters Ass’n,
322 U.S. 533, 88 L. Ed. 1440, 64 S. Ct. 1162 (1944), the Supreme
Court held for the first time that the business of insurance was
commerce, overruling 75 years of precedent. The immediate
congressional response to this was the McCarran-Ferguson Act, the
same statute at issue here. After its passage, the Supreme Court stated
that the McCarran-Ferguson Act “transformed the legal landscape by
overturning normal rules of pre-emption.” United States Department
of Treasury v. Fabe, 508 U.S. 491, 507, 124 L. Ed. 2d 449, 463, 113
S. Ct. 2202, 2211 (1993). That is, “Congress’ primary objective” was
“granting the States broad regulatory authority over the business of
insurance.” Fabe, 508 U.S. at 505, 124 L. Ed. 2d at 462, 113 S. Ct.
at 2210. Congress achieved this purpose by “ ‘removing obstructions
which might be thought to flow from [Congress’] own power,
whether dormant or exercised, except as otherwise expressly provided
in the Act itself or in future legislation.’ ” Fabe, 508 U.S. at 500, 124
L. Ed. 2d at 459, 113 S. Ct. at 2207, quoting Prudential Insurance

                                  -11-
Co. v. Benjamin, 328 U.S. 408, 429-30, 90 L. Ed. 1342, 1360, 66 S.
Ct. 1142, 1155 (1946). Further, Congress was “ ‘declaring expressly
and affirmatively that continued state regulation and taxation of this
business is in the public interest and that the business and all who
engage in it “shall be subject to” the laws of the several states in these
respects.’ ” Fabe, 508 U.S. at 500, 124 L. Ed. 2d at 459, 113 S. Ct.
at 2207 quoting Prudential Insurance Co., 328 U.S. at 430, 90 L. Ed.
at 1360, 66 S. Ct. at 1155.
    Indeed, the Supreme Court has twice upheld the constitutionality
of taxes imposed on foreign corporations. In Prudential Insurance
Co. v. Benjamin, the Supreme Court held that the McCarran-
Ferguson Act empowered the State of South Carolina to impose a
license tax on an insurance business incorporated in New Jersey while
domestic corporations were not taxed. Prudential Insurance Co., 328
U.S. at 414, 90 L. Ed. at 1351, 66 S. Ct. at 1146-47. The Court found
the Act’s reference to “continued regulation” to be significant in that
it must have been aware of the entirety of state regulation before the
South-Eastern decision:
              “Moreover, in taking this action Congress must have had
         full knowledge of the nation-wide existence of state systems
         of regulation and taxation; of the fact that they differ greatly
         in the scope and character of the regulations imposed and of
         the taxes exacted; and of the further fact that many, if not all,
         include features which, to some extent, have not been applied
         generally to other interstate business. Congress could not have
         been unaquainted with these facts and its purpose was
         evidently to throw the whole weight of its power behind the
         state systems.” Prudential Insurance Co., 328 U.S. at 430, 90
         L. Ed. at 1360, 66 S. Ct. at 1155.
In Western & Southern Life Insurance Co. v. State Board, 451 U.S.
648, 68 L. Ed. 2d 514, 101 S. Ct. 2070, the Supreme Court found
retaliatory taxes did not violate the commerce and equal protection
clauses because it found that imposing retaliatory taxes supported the
legitimate purpose of equalizing insurance taxes. In doing so, the
Supreme Court stated that “the McCarran-Ferguson Act removes
entirely any Commerce Clause restriction upon California’s power to
tax the insurance business.” Western & Southern Life Insurance Co.,
451 U.S. at 655, 68 L. Ed. 2d at 522, 101 S. Ct. at 2076. Further, the

                                  -12-
Supreme Court stated that “Congress removed all Commerce Clause
limitations on the authority of the States to regulate and tax the
business of insurance when it passed the McCarran-Ferguson Act.”
Western & Southern Life Insurance Co., 451 U.S. at 653, 68 L. Ed.
2d at 520, 101 S. Ct. at 2075.
    With this in mind, we consider whether Congress, through the
McCarran-Ferguson Act, has authorized the retaliatory tax at issue.
Where clear and unambiguous, statutory language must be enforced
as enacted. Town & Country Utilities, Inc. v. Illinois Pollution
Control Board, 225 Ill. 2d 103 (2007). The McCarran-Ferguson Act
provides, in pertinent part:
             “Congress hereby declares that the continued regulation
         and taxation by the several States of the business of insurance
         is in the public interest, and that silence on the part of the
         Congress shall not be construed to impose any barrier to the
         regulation or taxation of such business by the several States.”
         15 U.S.C. §1011 (2000).
             “The business of insurance, and every person engaged
         therein, shall be subject to the laws of the several States which
         relate to the regulation or taxation of such business.” 15
         U.S.C. §1012(a) (2000).
Congress has never subsequently enacted legislation prohibiting the
imposition of any retaliatory taxes on alien insurers.
    Sun Life argues that the McCarran-Ferguson Act solely allows
retaliatory taxation of foreign corporations (from the other 49 states),
rather than additional taxation on alien corporations. Sun Life points
to the United States Supreme Court decision in American Insurance
Ass’n v. Garamendi, 539 U.S. 396, 156 L. Ed. 2d 376, 123 S. Ct.
2374 (2003), as well as seven cases purporting to demonstrate that the
McCarron-Ferguson Act applies only to interstate commerce. Sun
Life further directs us to a Senate judiciary committee report dated 15
years after the passage of the McCarran-Ferguson Act. The Division
responds that the plain language of the McCarran-Ferguson Act, as
interpreted by the United States Supreme Court cases delineated
above, demonstrates that Congress did not provide any limit to the
states ability to impose retaliatory taxes, including those on alien
corporations. We agree with the Division.

                                  -13-
    We find that the plain language of the McCarran-Ferguson Act
imposes no limitation on the imposition of a retaliatory tax on an alien
insurer. The McCarran-Ferguson Act provides that there will not be
“any barrier” on the regulation of “every person” involved in the
“business of insurance.” 15 U.S.C. §§1011, 1012(a) (2000). We read
this to mean that alien insurers are within the ambit of the McCarran-
Ferguson Act. Our interpretation is consistent with the United States
Supreme Court, which stated, “the McCarran-Ferguson Act removes
entirely any Commerce Clause restriction upon California’s power to
tax the insurance business.” Western & Southern Life Insurance Co.,
451 U.S. at 655, 68 L. Ed. 2d at 522, 101 S. Ct. at 2076. The United
States Supreme Court emphasized, “Congress removed all Commerce
Clause limitations on the authority of the States to regulate and tax the
business of insurance when it passed the McCarran-Ferguson Act.”
(Emphasis added.) Western & Southern Life Insurance Co., 451 U.S.
at 653, 68 L. Ed. 2d at 520, 101 S. Ct. at 2075.
    Sun Life does not attempt to construe the plain language of the
McCarran-Ferguson Act but instead primarily relies on American
Insurance Ass’n v. Garamendi, 539 U.S. 396, 156 L. Ed. 2d 376, 123
S. Ct. 2374 (2003). However, Garamendi concerned a California
statute involving proceeds from life insurance polices taken by
Germany during the Third Reich. A majority of the Court found the
statute conflicted with the presidential power to conduct foreign
affairs and was preempted on that basis. Garamendi, 539 U.S. at 429,
156 L. Ed. 2d at 405, 123 S. Ct. at 2394. We again note that Sun
Life’s argument is lessened by its failure to acknowledge that the
Division imposes the retaliatory tax on Sun Life due to the taxes of
Michigan, its port of entry state, and not according to any Canadian
tax. This accords with the purpose of the retaliatory tax, which is “to
promote the interstate business of domestic insurance companies and
thus attempt to prevent other States from handicapping Illinois
domestic companies with excessive taxes.” Trinity Universal
Insurance Co., 113 Ill. App. 3d at 563-64; Pacific Mutual Life
Insurance Co. of California, 354 Ill. at 405-06. The statute implicated
in Garamendi was explicitly directed at the actions of a foreign
country, not another state.
    Similarly, Sun Life’s additional citations are preemption cases
where state and federal law were in conflict, and did not consider

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retaliatory taxes. Finally, we do not consider Sun Life’s proffer of a
Senate report 15 years after the legislation because we have found the
language of the Act unambiguous and need not resort to extrinsic aids.
    Accordingly, because the McCarran-Ferguson Act permits the
states to regulate alien insurers, we need not consider the third issue
and, thus, we find that there is no commerce clause restriction on the
retaliatory tax.

                         CONCLUSION
   For the foregoing reasons, we affirm the judgment of the appellate
court.

                                 Appellate court judgment affirmed.

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