Court Opinion

ID: 9485775
Source: CourtListenerOpinion
Date Created: 2023-08-05 11:29:16.103231+00
Date Added: 2024-06-11T17:51:20.569375
License: Public Domain

VAN GRAAFEILAND, Circuit Judge,
dissenting:
If my colleagues had decided to affirm the judgment of the district court, I would have been content to rest my concurrence on the well-written opinion of Chief Judge Parker reported at 801 F.Supp. 1282. However, because my colleagues have opted to reverse and their troublesome interpretation of the concepts of apportionment and internal consistency may lead to further review, I believe that I should state briefly why I believe that Chief Judge Parker was correct.
The State of .Vermont operates on the practical theory that resident owners of vehicles registered and operated in Vermont should contribute to the cost of maintaining Vermont’s highways. To accomplish this, Vermont levies a tax on Vermont residents’ initial registration of pleasure vehicles in the State, which, in general, is equal to five percent of each vehicle’s value. If the vehicle was purchased in Vermont, the tax is called a “sales” tax; if the vehicle was purchased elsewhere, the tax is called a “use” tax. Regardless of nomenclature, the taxes are in the same amount, i.e., five percent. There is no claim that this amount is excessive or not fairly related to the benefits received.
Because of my colleagues’ emphasis on apportionment and internal consistency, it is important, I think, that we pinpoint exactly what is and what is not involved in this case. This case does not involve a tax levied on a so-called “unitary business,” the customary genre of the internal consistency rule. See Trinova Corp. v. Michigan Dep’t of Treasury, 498 U.S. 358, 373, 111 S.Ct. 818, 828, 112 L.Ed.2d 884 (1991); Exxon Corp. v. Department of Revenue of Wisconsin, 447 U.S. 207, 229, 100 S.Ct. 2109, 2123, 65 L.Ed.2d 66 (1980). It involves two individuals, each of whom purchased and operated a pleasure vehicle in Connecticut where he or she resided and thereafter moved with the vehicle to Vermont. It does not involve owners who are using their vehicles in an interstate commercial operation only part of which takes place in the State of Vermont. It involves Vermont residents who pay a five percent initial registration tax on their pleasure vehicles as their contribution to the cost of maintaining Vermont highways. Under the circumstances, I agree with Chief Judge Parker’s comments concerning the irrelevance of fair apportionment in the instant case. See 801 F.Supp. at 1285-86.
The mechanics of unitary business taxation is discussed in some detail in Container Corp. of Am. v. Franchise Tax Bd., 463 U.S. 159, 103 S.Ct. 2933, 77 L.Ed.2d 545 (1983), and more recently in Allied-Signal, Inc. v. Director, Div. of Taxation, — U.S. —, 112 S.Ct. 2251, 119 L.Ed.2d 533 (1992). For our purpose, the following excerpt from Container Corp. is illustrative:
Having determined that a certain set of activities constitute a “unitary business,” a State must then apply a formula apportioning the income of that business within and without the State. Such an apportionment formula must, under both the Due Process and Commerce Clauses, be fair. The first, and again obvious, component of fairness in an apportionment formula is what might be called internal consistency — that is, the formula must be such that, if applied by *1340every jurisdiction, it would result in no more than all of the unitary business’ income being taxed.
463 U.S. at 169, 103 S.Ct. at 2942 (citations omitted).
There is no issue of apportionment in the instant case. To apportion means to divide. Black’s Law Dictionary 128-29 (rev. 4th ed. 1968). The tax at issue is a charge levied on Vermont inhabitants for the use of Vermont highways. It “ ‘cannot be repeated by any other state.’ ” Quill Corp. v. North Dakota, — U.S. —, —, 112 S.Ct. 1904, 1919, 119 L.Ed.2d 91 (1992) (White, J., concurring in part, dissenting in part) (quoting Memphis Natural Gas Co. v. Stone, 335 U.S. 80, 96-97, 68 S.Ct. 1475, 1484, 92 L.Ed. 1832 (1948) (Rutledge, J., concurring)). Conceivably, if appellants moved from Vermont to another state, that state could impose a tax for the use of its highways. That, however, would be a tax by a different entity based on a different use. “[Cjlassification based upon residency is a rational way to assess for road use.” Williams v. Vermont, 472 U.S. 14, 36, 105 S.Ct. 2465, 2478, 86 L.Ed.2d 11 (1985) (Blackmun, J., dissenting). Moreover, we are not concerned here with phantom peripatetic owners who move with their cars from state to state to state. To the extent that appellants’ pleasure cars were involved in interstate commerce when appellants moved with the cars from Connecticut to Vermont, that involvement has ceased — apparently permanently. Although my colleagues discuss apportionment at some length, neither appellants nor my colleagues state what the Vermont tax should be apportioned with or against. Appellants’ actual contention is that anyone who pays a sales tax when purchasing a car in Connecticut is entitled to a free ride on the highways of Vermont if, one, two, three, four or five years following the purchase, he or she moves with the car to Vermont. I find nothing in the Constitution that entitles them to this benefit.
As the Supreme Court stated in Williams v. Vermont, supra, Vermont’s use tax is not typical of taxes bearing this name, because it was not designed to protect Vermont’s revenues by taking away the advantages of residents traveling out of the state to make purchases at lower costs than would be available in Vermont. Id. at 24-25, 105 S.Ct. at 2472-73. It was designed pursuant to the principle that “those using [Vermont’s] roads should pay for them.” Id. at 25, 105 S.Ct. at 2473. In order for Vermont to make fair charges for the use of its highways it had to adopt some means of measuring use that was practical in operation and possessed at least a modicum of accuracy. Because of their shorter life expectancy, older vehicles ordinarily will make-less use of highways than will newer and more highly valued cars. Accordingly, a tax that is based on-a car’s value bears at least a rough relationship to the benefits the car’s owner will receive. In Williams, supra, the Supreme Court found this relationship sufficient to withstand constitutional scrutiny:
[D]espite the looseness of the fit, we would be hard pressed to say that this manner of funding highway maintenance and construction is irrational. “If the classification has some ‘reasonable basis,’ it does not offend the Constitution simply because the classification ‘is not made with mathematical nicety or because in practice it results in some inequality.’ ” Dandridge v. Williams, 397 U.S. 471, 485 [90 S.Ct. 1153, 1161, 25 L.Ed.2d 491] (1970), quoting Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 78 [31 S.Ct. 337, 340, 55 L.Ed. 369] (1911).
Id., 472 U.S. at 25 n. 9, 105 S.Ct. at 2473 n. 9.
In United States v. City of Detroit, 355 U.S. 466, 78 S.Ct. 474, 2 L.Ed.2d 424 (1958), the Government, similarly to my colleagues herein, argued that since the tax involved was “measured by the value of the property used it should be treated as nothing but a contrivance to lay a tax on that property.” Id. at 470, 78 S.Ct. at 476. Rejecting this argument, the Court said:
We do not find this argument persuasive. A tax for the beneficial use of property,, as distinguished from a tax on the property itself, has long been a commonplace in this country.

Id.

In short, I am compelled to disagree with my colleagues’ assertion that, “[although Vermont’s ‘use’ tax purports to tax use, in *1341reality it actually taxes the value of goods or property just as does a sales tax.” Supra, at 1335.
Vermont’s use tax on motor vehicles is based upon an estimated use of Vermont’s highways, in the same manner and in the same amount as is Vermont’s sales tax on motor vehicles. Because a similar calculation is made for both use and sales taxes, I am unmoved by my colleagues’ plaint that “use taxes like Vermont’s fall most heavily on owners of out-of-state autos.” Supra, at 1334. Of course they do. Owners of cars purchased in Vermont pay a sales tax which is for the same amount as the use tax and therefore falls with equal and off-setting weight on those owners. The fairness of a tax is determined by its effect, not by its name.
It is too late in the day to successfully contend that a state may not levy a tax such as Vermont’s use tax simply because it may have some adverse effect on interstate commerce. A state “ ‘is free to pursue its own fiscal policies, unembarrassed by the Constitution, if by the practical operation of a tax the state has exerted its power in relation to opportunities which it has given, to protection which it has afforded, to benefits which it has conferred by the fact of being an orderly, civilized society.’ ” Commonwealth Edison Co. v. Montana, 453 U.S. 609, 625, 101 S.Ct. 2946, 2957, 69 L.Ed.2d 884 (1981) (quoting Wisconsin v. J.C. Penney Co., 311 U.S. 435, 444, 61 S.Ct. 246, 249-50, 85 L.Ed. 267 (1940)); see Quill Corp. v. North Dakota, supra, — U.S. at — n. 5, 112 S.Ct. at 1912 n. 5. That, I believe, is precisely what Vermont is doing in this case.
Fairness, I suggest, is a two-way street. Those Vermont inhabitants who purchased their cars in Vermont get no benefit whatever from sales taxes paid by other residents who purchased their cars while residing in Connecticut. The latter, however, get the same benefits from highway improvements, traffic control, removal of snow and other debris as do the former. Vermont asks only that both pay a like amount for benefits equally received. I see nothing violative of the Constitution in this. I would affirm.1

. Because Norman Williams, the plaintiff in Williams v. United States, supra, and one of the counsel for appellants herein, has made somewhat of a career out of challenging the Vermont statute at issue herein, I cannot fault the district court for denying Williams’ last minute motion to amend the complaint to assert a cause of action under the Privileges and Immunities Clause of the Constitution. In any event, I believe the end result would be the same if the amendment had been granted.