Court Opinion

ID: 9659120
Source: CourtListenerOpinion
Date Created: 2023-08-23 21:32:52.120187+00
Date Added: 2024-06-11T18:14:04.252346
License: Public Domain

Cavanagh, C.J.
(dissenting). In Trinova Corp v Dep’t of Treasury, 433 Mich 141; 445 NW2d 428 (1989), aff’d 498 US 358; 111 S Ct 818; 112 L Ed 2d 884 (1991), this Court and the United States Supreme Court upheld the three-factor apportionment formula of Michigan’s Single Business Tax *430Act (sbt).1 This case presents the distinct question whether, in light of the underlying sbt apportionment, the different apportionment formulas formerly applied to the capital acquisition deduction (cad) provision of the sbt2 discriminate against interstate commerce in violation of the Commerce Clause, US Const, art I, § 8, cl 3.3
The majority concludes that the cad apportionment does not discriminate against interstate commerce. My Brother Brickley concludes that the apportionment of the personal property component of the cad does discriminate, but that the apportionment of the real property component does not. I agree with Justice Brickley’s result with regard to the apportionment of the personal property cad, although on the basis of significantly different analysis. I also believe, contrary to the results of both Justice Brickley and the majority, that the proper analysis requires the conclusion that the real property cad apportionment is equally unconstitutional.
In my view, the apportionment formulas applied both to the personal property and real property *431components of the cad discriminate against interstate commerce on their face and in their inevitable effect. Indeed, the cad apportionment scheme, when analyzed carefully in light of the underlying apportionment formula applied to the sbt itself, is revealed to be a subtle but classic example of interstate economic protectionism forbidden by the Commerce Clause. I therefore respectfully dissent.
I. COMMERCE CLAUSE ANALYSIS
A. GENERAL PRINCIPLES
The United States Supreme Court recently summarized its Commerce Clause jurisprudence as follows:
The Commerce Clause of the United States Constitution provides that "[t]he Congress shall have Power . . . [t]o regulate Commerce . . . among the several States . . . .” Art I, § 8, cl 3. It is long-established that, while a literal reading evinces a grant of power to Congress, the Commerce Clause also directly limits the power of the States to discriminate against interstate commerce. "This 'negative’ aspect of the Commerce Clause prohibits economic protectionism — that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors.” When a state statute clearly discriminates against interstate commerce, it will be struck down, unless the discrimination is demonstrably justified by a valid factor unrelated to economic protectionism. Indeed, when the state statute amounts to simple economic protectionism, a "virtually per se rule of invalidity” has applied. [Wyoming v Oklahoma, 502 US —; 112 S Ct 789; 117 L Ed 2d 1, 22 (1992). Citations omitted.]
It is well established, of course, that the prohibition of discrimination against interstate commerce *432applies to tax as well as regulatory legislation. One of the earliest leading Commerce Clause cases involved a discriminatory license tax imposed on vendors of goods made out of state. The United States Supreme Court struck down the tax, holding that the Commerce Clause was designed to guard against "all the evils of discriminating State legislation, favorable to the interests of one State and injurious to the interests of other states and countries, which existed previous to the adoption of the Constitution . . . .” Welton v Missouri, 91 US (23 Wall) 275, 281; 23 L Ed 347 (1876).
It is also well established that the Commerce Clause generally operates to forbid two distinct types of discrimination. States may not discriminate between economic entities on the basis of instate or out-of-state status, see, e.g., Dean Milk Co v Madison, 340 US 349; 71 S Ct 295; 95 L Ed 329 (1951) (discrimination against out-of-state milk producers); Nippert v Richmond, 327 US 416; 66 S Ct 586; 90 L Ed 760 (1946) (license tax on sales solicitation effectively discriminating against out-of-state distributors), nor may they discriminate between economic goods, services, or activities on the basis of in-state or out-of-state origin or location, see, e.g., Wyoming v Oklahoma, supra (discrimination against coal mined out of state); New Energy Co of Indiana v Limbach, 486 US 269; 108 S Ct 1803; 100 L Ed 2d 302 (1988) (discrimination against ethanol produced out of state); Boston Stock Exchange v State Tax Comm, 429 US 318; 97 S Ct 599; 50 L Ed 2d 514 (1977) (discriminatory tax on securities transfers resulting from out-of-state sales).
Either type of discrimination will run afoul of the Commerce Clause.4 In Nippert, the Court in*433validated a municipal license tax on door-to-door salespeople because it had the effect of discriminatorily burdening out-of-state distributors as compared to established local businesses engaged in similar solicitation, see 327 US 429-432, even though the tax in no way hinged on whether the goods being sold were of in-state or out-of-state origin. Conversely, in Boston Stock Exchange, the Court struck down a discriminatory state tax on securities transfers resulting from out-of-state sales even though, in certain respects, it did not discriminate between in-state and out-of-state residents. The Court specifically rejected the argument that the tax was valid to the extent that it merely favored in-state sales by nonresidents over out-of-state sales by those same nonresidents.
The fact that this discrimination is in favor of nonresident, in-state sales which may also be considered as interstate commerce, does not save [it] from the restrictions of the Commerce Clause. A State may no more use discriminatory taxes to assure that nonresidents direct their commerce to businesses within the State than to assure that residents trade only in intrastate commerce. [429 US 334-335. Citation omitted; emphasis added.]
B. THE PURPORTED STATE INTEREST IN PROMOTING DOMESTIC DEVELOPMENT
The majority and Justice Brickley rely very heavily on language in some opinions of the *434United States Supreme Court to the effect that the promotion of in-state investment and economic development is not, generally speaking, an impermissible state goal. See Riley, J., ante, pp 424, 425-426; Brickley, J., post, pp 480-481. My colleagues rely principally on passages in three United States Supreme Court opinions: Boston Stock Exchange, 429 US 336-337, Armco, Inc v Hardesty, 467 US 638, 645-646; 104 S Ct 2620; 81 L Ed 2d 540 (1984), and Trinova, 112 L Ed 2d 912. Because this issue appears to dominate my colleagues’ analysis and conclusions, and because I believe my colleagues have misconstrued the United States Supreme Court’s case law in this regard, I discuss this issue in some detail.
Trinova would seem, at face value, to afford the greatest support to my colleagues’ position. The Court there stated:
It is a laudatory goal in the design of a tax system to promote investment that will provide jobs and prosperity to the citizens of the taxing state. States are free to "structure] their tax systems to encourage the growth and development of intrastate commerce and industry.” [112 L Ed 2d 912, quoting Boston Stock Exchange, 429 US 336.]
Such sweeping language, if taken out of context and in isolation, would seem to flash a green light to economic protectionism. But this language can only properly be understood in context. In the first place, the Court in Trinova, in the passage containing the quoted language, was simply disposing of a claim that the three-factor sbt apportionment, although otherwise nondiscriminatory on its face and in its effect, had an unconstitutional discriminatory purpose as revealed in a speech by former Governor Blanchard, who stated "that the sbt was *435enacted ' "to promote the development and investment of business within Michigan.” ’ ” Trinova, 112 L Ed 2d 912. The Court was simply holding that such a broadly stated beneficial purpose, without more, did not establish unconstitutional discrimination.
It is inappropriate to read such generalized language endorsing a state’s right to promote in-state economic development as a license to discriminate against interstate commerce, when the Court has otherwise emphatically and uniformly condemned such discrimination. There are many ways in which a state might promote domestic development without discriminating in any way against interstate commerce. To take the easiest example in the tax area, a state could simply reduce its uniform rate of taxation on all business activity conducted in, or fairly apportioned to, the state, with regard to all economic entities, both in state and out of state. Given the long and emphatic line of United States Supreme Court case law condemning state taxes that discriminate against interstate commerce, I think the only fair conclusion that can be drawn is that, however legitimate in general terms it may be for a state to promote domestic development, it may not pursue that goal by means of taxes that discriminate against out-of-state economic entities or interstate economic activities. Boston Stock Exchange, on which the above-quoted passage in Trinova relied, stated:
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 discrimi*436natorily tax the products manufactured or the business operations performed in any other State. [429 US 336-337. Emphasis added.]
In Armco, the Court addressed a West Virginia gross receipts sales tax that exempted companies engaged in manufacturing in West Virginia, thereby disfavoring manufacturers based out of state that wished to sell their products in West Virginia. The asserted justification for the exemption was that West Virginia imposed a separate and higher tax on manufacturing conducted in West Virginia. West Virginia argued that, unless an out-of-state company subject to the gross receipts tax could demonstrate that it was also subject to a manufacturing tax in the state or states where it manufactured its goods, to the extent that the overall tax burden on the out-of-state company exceeded the overall burden on the instate company, no improper discrimination would be established. See 467 US 639-644. The Court rejected this argument and struck down the tax as discriminatory on its face, stating:
Any other rule would mean that the constitutionality of West Virginia’s tax laws would depend on the shifting complexities of the tax codes of 49 other States, and that the validity of the taxes imposed on each taxpayer would depend on the particular other States in which it operated. [Id. at 644-645.]
Most relevant to present purposes, the Court continued:
It is true, as the . . . amicus curiae points out, that Armco would be faced with the same situation that it complains of here if Ohio (or some other State) imposed a tax only upon manufactur*437ing, while West Virginia imposed a tax only upon wholesaling. In that situation, Armco would bear two taxes, while West Virginia sellers would bear only one. But such a result would not arise from impermissible discrimination against interstate commerce but from fair encouragement of in-state business. [467 US 645.][5]
Thus, the Court indicated that a state may indeed fashion its tax laws to promote its domestic economy and "compete with other States for a share of interstate commerce,” Boston Stock Exchange, 429 US 336-337, but only in ways uniformly affecting a given type of economic activity, without any discriminatory treatment of out-of-state entities or activities. In other words, according to Armco, West Virginia could repeal its manufacturing tax altogether in order to compete, but it could not grant domestic manufacturers a discriminatory exemption from its gross receipts tax.6
This conclusion has been repeatedly emphasized *438in other United States Supreme Court opinions. Quotations from two cases decided in the Court’s most recent term should suffice to underscore my point. In Chemical Waste Management, Inc v Hunt, 504 US —; 112 S Ct 2009; 119 L Ed 2d 121 (1992), the Court, after reciting a number of its earlier decisions condemning discrimination under the Commerce Clause, stated:
To this list may be added cases striking down a tax discriminating against interstate commerce, even where such tax was designed to encourage the use of ethanol and thereby reduce harmful exhaust emissions, New Energy Co of [Indiana v Limbach, supra], or to support inspection of foreign cement to ensure structural integrity. For in all of these cases, "a presumably legitimate goal was sought to be achieved by the illegitimate means of isolating the State from the national economy.” [119 L Ed 2d 131-132. Some citations omitted; emphasis added.]
And in Kraft General Foods, Inc v Iowa Dep’t of Revenue & Finance, 505 US —; 112 S Ct 2365; 120 L Ed 2d 59 (1992), the Court, in striking down yet another discriminatory state tax, declared:
Absent a compelling justification, ... a State may not advance its legitimate goals by means that facially discriminate against foreign commerce. [120 L Ed 2d 69. Emphasis added.][7]
C. DIRECTLY APPLICABLE CASE LAW
The principle that a state may not impose a tax that discriminates against interstate commerce *439has been reaffirmed repeatedly by a long line of United States Supreme Court decisions. See, e.g., Amerada Hess Corp v New Jersey Dep’t of the Treasury, 490 US 66; 109 S Ct 1617; 104 L Ed 2d 58 (1989); New Energy Co of Indiana v Limbach, supra; American Trucking Ass’ns, Inc v Scheiner, 483 US 266; 107 S Ct 2829; 97 L Ed 2d 226 (1987); Bacchus Imports, Ltd v Dias, 468 US 263; 104 S Ct 3049; 82 L Ed 2d 200 (1984); Armco, Inc v Hardesty, supra; Westinghouse Electric Corp v Tully, 466 US 388; 104 S Ct 1856; 80 L Ed 2d 388 (1984); Maryland v Louisiana, 451 US 725; 101 S Ct 2114; 68 L Ed 2d 576 (1981); Boston Stock Exchange v State Tax Comm, supra; Halliburton Oil Well Cementing Co v Reily, 373 US 64; 83 S Ct 1201; 10 L Ed 2d 202 (1963); Nippert v Richmond; Welton v Missouri, supra.
The instant case, of course, like all the cases cited above, presents this familiar issue within its own unique factual context. The two cases most closely on point would appear to be Westinghouse Electric Corp v Tully, supra, and the very recent decision in Kraft General Foods, Inc v Iowa Dep’t of Revenue & Finance, supra. Each of those cases, like the instant case, involved a state tax that discriminated through the operation of certain tax credits or deductions.
Westinghouse involved a challenge to a New York franchise income tax imposed on export companies.8 A company’s New York tax base is *440generally apportioned according to a three-factor formula analogous to that upheld in Trinova.9 The Court in Westinghouse noted that New York’s apportionment formula (its "business allocation percentage”) was not at issue in Westinghouse, and, indeed, had previously been upheld. See 466 US 398-399. At issue in Westinghouse was an amendment to the New York law providing for a tax credit "limited to gross receipts from export products 'shipped from a regular place of business of the taxpayer within [New York].’ ” Id. at 393. As the Court explained, "[t]he result of the credit is to lower the effective tax rate on the accumulated . . . income ... to 30% of the otherwise applicable franchise tax rate.” Id. Because the benefits of the tax credit increased or decreased in proportion to the percentage of the company’s gross receipts derived from exporting goods from New York, as compared to the company’s total gross receipts from exporting goods, the company argued, and the Court agreed, that the credit resulted in higher effective tax rates on New York-apportioned income for those companies exporting a smaller percentage of their products from New York, thereby discriminating against companies with a greater proportion of out-of-state business. See id. at 400-401, and n 9.
Most significantly for present purposes, the state argued in Westinghouse that limiting the tax credit to exports shipped from New York was *441justified as a way to ensure that the tax credit only applied to income that, was taxable by New York in the first place. This is similar to the argument primarily relied upon by the state in this case: that the apportionment of the cad is a fair, if rough, way of ensuring that taxpayers like Caterpillar benefit from the cad only to the extent that they actually do business in Michigan. The Court in Westinghouse rejected New York’s argument because the calculation of the tax credit already took into account New York’s business allocation percentage.
In'computing the allowable credit, the statute requires the [company] to factor in its business allocation percentage. . . . This procedure alleviates the State’s fears that it will be overly generous with its tax credit, for once the adjustment of multiplying the allowable . . . export credit by the [company’s] business allocation percentage has been accomplished, the tax credit has been fairly apportioned to apply only to the amount of the accumulated . . . income taxable to New York. From the standpoint of fair apportionment of the credit, the additional adjustment of the credit to reflect the . . . New York export ratio is both inaccurate and duplicative. [Id. at 399.]
In this case, of course, the apportionment formulas applied to the cad are not "duplicative” of any other formulas. But Caterpillar contends that they are nevertheless "inaccurate” in the sense condemned by Westinghouse. Caterpillar contends that if the state’s concern is to ensure that the benefits of the cad are limited in proportion to the amount of business that a company does in Michigan, the state could satisfy that concern by simply applying the same three-factor apportionment formula to the cad that is already applied to the *442sbt.10 Thus, as I discuss more fully in part n, to the extent the state’s asserted justification for the cad apportionment is to apportion the benefits of the cad to Michigan-related business, Westinghouse indicates that this asserted state interest simply does not justify the discriminatory nature and effect of the chosen formulas.
Kraft involved a challenge to Iowa’s business income tax. While the challenge alleged only discrimination against foreign commerce rather than domestic interstate commerce, the relevant Commerce Clause analysis is fully applicable for present purposes. In defining the income subject to taxation, Iowa generally chooses, for purposes of convenience, to follow the definitions of federal tax law. One of the results of applying the federal definitions to Iowa’s tax structure was that Iowa allowed a parent company doing business in Iowa to deduct from its Iowa-apportioned tax base dividends received from subsidiaries incorporated in the United States, but not dividends received from subsidiaries incorporated in foreign countries, unless the dividends reflected business activity in the United States. See Kraft, 120 L Ed 2d 65-66.
Because the inevitable effect of Iowa’s deduction scheme was to increase the effective rate of taxation on a company’s Iowa-apportioned income when it received dividends from foreign subsidiaries reflecting foreign business activity, as compared to when it received dividends from domestic subsidiaries,11 the Court concluded that the Iowa *443tax "facially discriminates against foreign commerce and therefore violates the Foreign Commerce Clause.” 120 L Ed 2d 69.12
Taken together, Westinghouse and Kraft indicate that a state tax discriminates in violation of the Commerce Clause if, as a result of the operation of credits or deductions, the effective tax rate imposed on the income or other tax base apportioned to a state varies on the basis of the out-of-state (or foreign) status of the taxpayer or related business entity, or on the basis of the degree of activity in interstate (or foreign) commerce, so as to favor in-state (or domestic) commerce and disfavor out-of-state (or foreign) commerce. As I hope to demonstrate in part ii and in the appendix, these are precisely the discriminatory effects of the cad apportionment at issue in this case.
II. APPLICATION OF THE ANALYSIS TO THIS CASE
The majority in this case correctly cites Complete Auto Transit, Inc v Brady, 430 US 274; 97 S Ct 1076; 51 L Ed 2d 326 (1977), for the general framework of analysis applied to a challenge to a state tax under the Commerce Clause. As the United States Supreme Court recently reaffirmed, a court
will sustain a tax against a Commerce Clause challenge so long as the "tax [1] is applied to an activity with a substantial nexus with the taxing State, [2] is fairly apportioned, [3] does not discriminate against interstate commerce, and [4] is fairly *444related to the services provided by the State.” [Quill Corp v North Dakota, 504 US —; 112 S Ct 1904; 119 L Ed 2d 91, 105 (1992), quoting Complete Auto, 430 US 279.]
Caterpillar does not contend before this Court, however, that the sbt, as modified by the cad, taxes any activity lacking a "substantial nexus” with Michigan, nor does it contend that the tax is not "fairly related to the services provided by” Michigan. Caterpillar also does not challenge the apportionment formulas applied to the personal property and real property components of the cad on the ground that either of those formulas, taken alone, would not constitute a fair method of apportioning Caterpillar’s business activity attributable to Michigan.13 Thus, the first, second, and fourth prongs of the Complete Auto analysis are not at issue in this case.14
*445Caterpillar’s only contention before this Court is that the cad apportionment formulas, in conjunction with the underlying three-factor apportionment of the sbt itself, improperly discriminate against interstate commerce, and specifically against Caterpillar itself as a predominantly out-of-state commercial entity engaged in interstate commerce.15 This issue is governed by the principles and case law set forth in part i.
Under the personal property cad, the taxpayer is, generally speaking, allowed to deduct from its Michigan-apportioned tax base the costs of depreciable personal property accrued during the tax year. The personal property cad for a given year is apportioned to Michigan according to the average of the taxpayer’s property and payroll factors.16 Leaving aside the effect of apportionment, the personal property cad is available without regard to whether the personal property is acquired or placed into service in state or out of state. Because the property factor is based on all real and personal property owned or rented during the tax year,17 however, it will necessarily be affected — and the apportionment formula resulting from the *446average of the property and payroll factors will thus also be affected — by whether newly acquired personal property subject to the cad is placed into service in state or out of state.
Thus, it is clear, on the face of the statute, that two otherwise similarly situated companies that invest in equal-value amounts of new personal property during the tax year will receive different deductions under the cad, depending on the degree to which they are physically based in Michigan to begin with (as measured by the property and payroll factors), and depending on whether they invest the newly acquired personal property in state or out of state. Furthermore, it is clear that a greater deduction, resulting in a lower effective tax rate on the Michigan-apportioned tax base, is afforded both to (1) a company that is more predominantly based in Michigan to begin with, as compared to a company more predominantly based out of state, and (2) a company investing the new personal property in state, as compared to a company investing the new personal property out of state. These discriminatory effects are illustrated by the hypothetical numerical examples set forth in the appendix, tables i(a) and ii(a).18
The first effect needs little explanation. Because the apportionment of the personal property cad is directly tied to the average proportion of property and payroll situated in Michigan, it is obvious that a predominantly Michigan-based company will reap a far greater benefit from any investment in personal property (whether in state or out of state) than will a predominantly non-Michigan-based company (with the same Michigan-apportioned tax *447base) making an identical investment.19 The second effect is more subtle and indirect, but no less inevitable. Because an in-state investment in personal property will always increase (however slightly) the property factor and thus the personal property cad apportionment formula, while an out-of-state investment will always decrease both numbers, a company investing in personal property in state will always end up reaping a greater personal property cad than will a .similarly situated company making an equivalent investment out of state.20
*448Under the real property cad, the taxpayer is, generally speaking, allowed to deduct from its Michigan-apportioned tax base the costs of depreciable real property accrued during the tax year. The real property cad, however, is limited to property "physically located in Michigan.”21 The "apportionment” of the real property cad to Michigan is thus strictly dependent on the in- or out-of-state location of the property in which the taxpayer invests, and does not depend on the relative in- or out-of-state status of the taxpayer.22
It is clear, on the face of the statute, that two otherwise similarly situated companies that invest in real property of equal value during the tax year will receive either a substantial deduction or no deduction at all, depending on whether that property is located in state or out of state. Furthermore, the deduction, resulting in a substantially lower effective tax rate on the Michigan-apportioned tax base, is afforded only to a company investing in Michigan real property, as compared to a similarly situated company investing in out-of-state real property. This discriminatory effect is illustrated by the hypothetical numerical examples set forth in the appendix, tables i(b) and ii(b).23
Thus, both the personal property and real prop*449erty cad apportionment formulas, when applied in conjunction with the three-factor apportionment of the sbt itself, result in the imposition of higher effective tax rates on the Michigan-apportioned tax base with regard to companies that are either predominantly non-Michigan based or that direct their investments outside Michigan, as compared to companies that are predominantly Michigan based or that direct their investments inside Michigan. These discriminatory effects converge so as to afford an especially preferential tax rate to a Michigan-based company that invests in Michigan, as compared to a non-Michigan-based company that invests outside Michigan.
These facial and inevitable discriminatory effects contravene the Commerce Clause as interpreted by the United States Supreme Court, most notably in Westinghouse and Kraft See part i(c).24 That the disputed tax, as in this case, is a general tax on income, value-added, or other business activity, rather than a transactional tax directly targeting interstate activities or out-of-state products, is
irrelevant to our analysis. The franchise tax [at issue in Westinghouse] is a tax on the income of a business from its aggregated business transactions. It cannot be that a State can circumvent the *450prohibition of the Commerce Clause against placing burdensome taxes on out-of-state transactions by burdening those transactions with a tax that is levied in the aggregate — as is the franchise tax— rather than on individual transactions. [Westinghouse, 466 US 404.]
Nor is it relevant that a discriminatory effective tax rate results indirectly from the operation of tax credits or deductions, rather than being directly imposed. "We have declined to attach any constitutional significance to such formal distinctions that lack economic substance.” Id. at 405; see also Kraft, supra. Finally, the magnitude of the discriminatory effect is irrelevant; any measurable discriminatory effect, however small, is unconstitutional. See Wyoming v Oklahoma, 117 L Ed 2d 23; Westinghouse, 466 US 407 ("the Court 'need not know how unequal the Tax is before concluding that it unconstitutionally discriminates’ ”).25
"When a state statute clearly discriminates against interstate commerce, it will be struck down, unless the discrimination is demonstrably justified by a valid factor unrelated to economic protectionism.” Wyoming v Oklahoma, 117 L Ed 2d 22 (citations omitted; emphasis added). As the Court stated even more recently in the context of discrimination against foreign commerce: "Absent a compelling justification, . . . a State may not advance its legitimate goals by means that facially discriminate . . . .” Kraft, 120 L Ed 2d 69 (emphasis added). The Court struck down the discrimina*451tory tax in Krañ because "this is not a case in which the State’s goals 'cannot be adequately served by reasonable nondiscriminatory alternatives.’ ” Id.
The primary state interest asserted in support of the chosen apportionment formulas for both the personal property and real property cad is the need to apportion the cad to Michigan, consistent with the apportionment of a company’s overall tax base to Michigan for purposes of the sbt. While this goal is certainly legitimate (and even, it may be assumed, compelling), it completely fails to justify the discriminatory nature and effect of the apportionment formulas the state has chosen to achieve that goal. All of the demonstrated discriminatory effects could easily have been avoided by simply apportioning both components of the cad by the same three-factor formula used to apportion the sbt itself. The state has not argued, and could not reasonably argue, that applying the sbt three-factor apportionment to the cad would fail to achieve its asserted goal in this regard. Indeed, the state has already amended the cad statute in response to the lower court decisions in this case to provide for precisely such an apportionment of the cad for tax years beginning after September 30, 1989.26
*452The state asserts an additional goal limited to the real property cad apportionment: the encouragement of investment in Michigan real property. This goal, however, is clearly not "unrelated to economic protectionism.” On the contrary, the goal of encouraging both in- and out-of-state companies to direct their investments in real property toward Michigan as opposed to outside Michigan bears a strong and obvious relationship to economic protectionism.
I agree with Justice Brickley, of course, that this asserted goal is not, generally speaking, a categorically impermissible purpose. Cf. Brickley, J., post, p 480. As I have discussed in part i(b), it is perfectly permissible for a state to promote instate investment and economic development, but only as long as the state does not attempt to do so by means of discriminating against interstate commerce. It would turn logic and more than a century of United States Supreme Court precedent upside down to imply, as my Brother Brickley comes close to doing, that a state may discriminate against interstate commerce whenever doing so serves (as it inevitably would) the goal of promoting in-state investment and economic development. That goal, while not categorically invalid, is simply not, by any stretch of the imagination, sufficiently "unrelated to economic protectionism” to justify a state tax that discriminates against interstate commerce.27
*453It is important to keep in mind that the issue in this case is not the validity of the state’s goal, but rather the validity of the cad apportionment at issue. Just as generalized assertions of "interstate economic protectionism” do not suffice to demonstrate the invalidity of the cad apportionment, generalized endorsements of the goal of "providing incentives for the growth of intrastate industry,” post, p 480, upon which my Brother Brickley relies so heavily, go no further to support its validity.
In conclusion, it is useful to step back and consider the discriminatory effect of the cad apportionment in broad, practical terms. A company like Caterpillar that is physically based primarily out of state, but that has a more significant proportion of sales in Michigan, is taxed to some extent under Michigan’s sbt on the value added to its products in its non-Michigan plants, on the basis of its Michigan sales as incorporated into the three-factor formula. While such taxation might, at first glance, seem to be improperly "extraterritorial,” the United States Supreme Court upheld the sbt in Trinova on the theory that the "true” geographical origin of value-added, like that of business income, cannot be determined with any meaningful precision. See 112 L Ed 2d 904-911.
Rather, the Court held that . Michigan could reasonably assume that the Michigan-related sales activities of a company physically based primarily outside Michigan add significantly to the value of *454the products sold. See 112 L Ed 2d 905-906. Thus, while it is impossible-to identify precisely how much value is added by sales activities, see 112 L Ed 2d 905-908, the sbt may properly be apportioned in part on the basis of where sales occur. The theory is that it would be artificial and unrealistic to geographically assign a company’s value-added solely on the basis of where the company’s productive activities physically take place, as measured by the location of property and payroll. See 112 L Ed 2d 910 ("[we] reject the complete exclusion of sales as somehow resulting in more accurate apportionment”).
The problem is that Michigan, having chosen to tax with one hand a non-Michigan-based company’s productive activities conducted at out-of-state factories with out-of-state employees and equipment, on the basis of Michigan sales as calculated under the three-part formula, then turns around and refuses, with the other hand, to allow the company a deduction for acquisitions of property that would also reflect, to an equivalent degree, the company’s Michigan sales. On the contrary, Michigan limits the availability of the personal property cad strictly according to the degree to which the company’s overall property and payroll are physically located in Michigan. And Michigan limits the availability of the real property cad according to whether the property obtained is physically located in Michigan. Thus, a company that purchases or builds a factory outside Michigan, and hires employees and places equipment into service in that factory to engage in production, will be taxed by Michigan on the productive activities that take place in that factory, to the extent, as reflected in the three-factor formula, that the products manufactured are sold in Michi*455gan.28 And yet the company will not receive any deduction for its acquisition of the factory, and will receive a deduction for its ácqúisition of the equipment only to the extent (small or nonexistent, by hypothesis) that the company’s overall property and payroll are based in Michigan.29
By relying in part on Michigan sales for initial taxation purposes, while relying exclusively on Michigan property and payroll for relevant deduc*456tion purposes, the combined apportionment scheme of the sbt and the cad results in classic economic protectionism. Predominantly non-Michigan-based companies that import heavily into Michigan have the worst of both worlds: relatively higher tax bases due to their higher proportion of sales in Michigan, and relatively lower (or nonexistent) deductions pursuant to the cad. In stark contrast, predominantly Michigan-based companies that export heavily to other states have the best of both worlds: relatively lower tax bases due to their lower proportion of sales in Michigan, and much higher deductions pursuant to the cad. At risk of beating a dead horse, let me quote once again from Wyoming v Oklahoma, 117 L Ed 2d 22: "[W]hen the state statute amounts to simple economic protectionism, a 'virtually per se rule of invalidity’ has applied.”
III. THE ANALYSIS OF JUSTICE BRICKLEY AND THE MAJORITY
I agree with my Brother Brickley’s conclusion that the personal property cad apportionment is invalid under the Commerce Clause. With regard to the real property cad apportionment, however, I believe, with all due respect, that Justice Brickley and the majority misconstrue the governing case law of the United States Supreme Court. Justice Brickley suggests that the real property cad is valid simply because it "is provided wholly independent of a company’s interstate character.” Post, p 471. The majority, likewise, relies on a law review article published in 1976 that asserts:
"The [sbt] does not contain provisions aimed at imposing adverse tax consequences upon multistate taxpayers as a class. Generally speaking, the overall tax consequences to a multistate taxpayer *457will be dependent upon the nature of its business activities . . . [Ante, p 425, quoting Pollock, Multistate taxpayers under the Single Business Tax Act, 22 Wayne L R 1101, 1113 (1976).]
In fact, as I have attempted to demonstrate in part ii, the cad apportionment does "impos[e] adverse tax consequences upon multistate taxpayers as a class,” as compared to taxpayers primarily or exclusively based in Michigan. More fundamentally, however, it is not necessary to demonstrate that a tax discriminates against interstate or multistate taxpayers as a group in order for it to violate the Commerce Clause. As I have discussed, even holding constant the in- or out-of-state character of the company, the cad apportionment discriminates against interstate economic activities. This alone would be sufficient to invalidate the scheme. The author of the quoted law review article did not have the benefit of Boston Stock Exchange, supra, decided the following year, in which the Court clarified that even when both the favored and disfavored business activities involve out-of-state entities and interstate commerce, the Commerce Clause is violated by discrimination designed to "direct [such] commerce to businesses within the State . . . .” 429 US 334-335, quoted more fully in part i(a).
In view of that unequivocal language in Boston Stock Exchange, I disagree with Justice Brickley’s assertion that "it is entirely permissible to grant a credit using in-state activity as a criterion.” Post, p 480. In fact, relying on the in-state status of an economic transaction or activity was precisely what the Court struck down as invalid in both Boston Stock Exchange and Westinghouse, supra. My colleague relies heavily on the analogies between Westinghouse and this case with regard to *458the personal property cad, but seems to overlook the even more obvious analogies with regard to the real property cad. While the parallels with Westinghouse should not be overdrawn, as that case involved a tax credit operating differently from the tax deduction at issue here, Westinghouse squarely rejected New York’s decision to tie the benefits of its tax credit to the geographical location (inside New York) from which the taxpayer exported goods. Similarly, Michigan has chosen to tie the benefits of its real property cad to the geographical location (inside Michigan) of the real property potentially subject to the deduction.
I think it is incorrect, in light of Boston Stock Exchange and Westinghouse, to suggest that facial discrimination under the Commerce Clause results only
when a statute creates two categories of jurisdictional activity, one that is composed of intrastate activity and one that is composed of interstate activity, and imposes a burden on the interstate activity not shared by intrastate taxpayers. [Brickley, J., post, p 478.]
In both Boston Stock Exchange and Westinghouse, both the favored and disfavored activities could be characterized as "interstate commerce,” and both the favored and disfavored entities could be characterized as "interstate taxpayers.” And yet the Court struck down the taxes at issue because they discriminated in favor of activities directed toward the taxing state. Such discrimination, after all, is the very essence of "interstate economic protectionism.”
Justice Brickley states that "the cad for real property treats all acquisitions of real property in Michigan without regard to a company’s interstate *459activity . . . Post, p 478. But the very acquisition of property outside Michigan, as opposed to inside Michigan, constitutes a type of "interstate activity” protected against discrimination by the Commerce Clause. Obviously, the real property cad does have "regard” to — indeed, it relies exclusively upon — whether the property acquired is inside Michigan or outside Michigan. Relying exclusively on that in-state geographical criterion is no more valid in this case than was New York’s reliance on the in-state location from which exports were shipped in Westinghouse, or New York’s reliance on the in-state location of securities sales in Boston Stock Exchange.30
Finally, I must take issue with Justice Brickley’s assertion that my analysis with regard to the real property cad "hinges on a faulty comparison of in-state, jurisdictional activity and out-of-state, nonjurisdictional activity,” and that "[f]or the purposes of the Commerce Clause, these activities are noncomparable.” Post, p 481. As I believe my analysis makes perfectly clear, the unlawful dis*460crimination that I discern in this case consists of the different and discriminatory effective tax rates imposed on a company’s sbt tax base concededly within Michigan’s jurisdiction. The effective tax rate hinges in part on a company’s choice to direct its commerce toward Michigan or away from Michigan. Whether Michigan would have "jurisdiction” for tax purposes over the commerce directed away from Michigan is irrelevant; this case does not involve a transaction tax aimed directly at the disfavored commerce. Rather, as the governing case law indicates, Michigan may not discriminate against such commerce by varying the effective rate of tax imposed on that portion of the company’s value-added that is concededly within Michigan ’s jurisdiction.
My difficulties with the majority’s analysis run even deeper. The majority does not come to grips with the facial discriminatory effect of the cad apportionment. As my Brother Brickley points out, the mere fact that "[t]he cad is available for any taxpayer,” Riley, J., ante, p 422 (emphasis added), wholly fails to alleviate the infirmity of the cad apportionment formulas, which render the cad "available” only on terms that facially discriminate against interstate commerce. See Brickley, J., post, pp 476-477.
The majority correctly states that
[t]he United States Supreme Court has held that when the different effects of a tax provision on different companies result solely from the differences between the nature of these companies’ businesses and not from the location of their activities (i.e., in state or out of state), there exists no discriminatory effect on interstate commerce. [Ante, p 425.]
*461But as I have attempted to demonstrate in part n, the "different effects” of the tax scheme at issue do result "from the location of [the companies’] activities,” and not just from the different nature of the taxed business activities. Indeed, I have postulated, in my analysis and in the hypothetical examples in the appendix, similarly situated companies engaged in identical types of business activity, with the only differences being the in- or out-of-state character of the companies or their activities.
IV. THE RETROACTIVITY ISSUE AND THE REMEDY ISSUE
In view of my dissenting posture, I will not attempt to reach a definitive conclusion with regard to the retroactivity or remedy issues. I would note only the general principle set forth in McKesson Corp v Florida Dep’t of Business Regulation, 496 US 18, 43, n 27; 110 S Ct 2238; 110 L Ed 2d 17 (1990):
In order to cure the illegality of [a] tax as originally imposed, the State must ultimately collect a tax for the contested tax period that in no respect impermissibly discriminates against interstate commerce.
V. CONCLUSION
For the reasons I have stated, I respectfully dissent.
Levin, J., concurred with Cavanagh, C.J.
*462APPENDIX
I. A HYPOTHETICAL, PREDOMINANTLY NON-MICHIGAN-BASED IMPORT COMPANY
A. EFFECT OF PERSONAL PROPERTY INVESTMENTS
At the outset Following $100,000 personal property investment,
in state out of state
Total sbt Tax Base $1,000,000 $1,000,000 $1,000,000
Total Real Property $1,000,000 $1,000,000 $1,000,000
In Michigan 300.000 300.000 300.000
Outside Michigan 700.000 700.000 700.000
Total Personal Property $1,000,000 $1,100,000 $1,100,000
In Michigan 300.000 400.000 300.000
Outside Michigan 700.000 700.000 800.000
Total Payroll $1,000,000 $1,000,000 $1,000,000
In Michigan 300.000 300.000 300.000
Outside Michigan 700.000 700.000 700.000
Sales Percentage:
In Michigan 90% 90% 90%
Outside Michigan 10% 10% 10%
Sbt Property Factor 0.3 0.3333 0.2857
Sbt Payroll Factor 0.3 0.3 0.3
Sbt Sales Factor 0.9 0.9 0.9
3-Factor'Apportionment 0.5 0.5111 0.4952
Apportioned Tax Base $500,000 $511,111 $495,238
Apportioned cad:
Real Property $0 $0 $0
Personal Property $0 $31,667 $29,286
Adjusted Tax Base $500,000 $479,444 $465,952
Tax (at 2.35% rate) $11,750 $11,267 $10,950
Effective Tax Rate31 2.3500% 2.2044% 2.2111%
Discriminatory advantage of in-state investments:32 0.0067% or $34
*463B. EFFECT OF REAL PROPERTY INVESTMENTS
At the outset Following $100,000 real property investment,
in state out of state
Total sbt Tax Base $1,000,000 $1,000,000 $1,000,000
Total Real Property $1,000,000 $1,100,000 $1,100,000
In Michigan 300.000 400.000 300.000
Outside Michigan 700.000 700.000 800.000
Total Personal Property $1,000,000 $1,000,000 $1,000,000
In Michigan 300.000 300.000 300.000
Outside Michigan 700.000 700.000 700.000
Total Payroll $1,000,000 $1,000,000 $1,000,000
In Michigan 300.000 300.000 300.000
Outside Michigan 700.000 700.000 700.000
Sales Percentage:
In Michigan 90% 90% 90%
Outside Michigan 10% 10% .10%
Sbt Property Factor 0.3 0.3333 0.2857
Sbt Payroll Factor 0.3 0.3 0.3
Sbt Sales Factor 0.9 0.9 0.9
3-Factor Apportionment 0.5 0.5111 0.4952
Apportioned Tax Base $500,000 $511,111 $495,238
Apportioned cad:
Real Property $0 $100,000 $0
Personal Property $0 $0 $0
Adjusted Tax Base $500,000 $411,111 $495,238
Tax (at 2.35% rate) $11,750 $9,661 $11,638
Effective Tax Rate 2.3500% 1.8902% 2.3500%
Discriminatory advantage of in-state investment: 0.4598% or $2,350
*464II. A HYPOTHETICAL, PREDOMINANTLY MICHIGAN-BASED EXPORT COMPANY
A. EFFECT OF PERSONAL PROPERTY INVESTMENTS
At the outset Following $100,000 personal property investment,
in state out of state
Total sbt Tax Base $1,000,000 $1,000,000 $1,000,000
Total Real Property $1,000,000 $1,000,000 $1,000,000
In Michigan 700.000 700.000 700.000
Outside Michigan 300.000 300.000 300.000
Total Personal Property $1,000,000 $1,100,000 $1,100,000
In'Michigan 700.000 800.000 700.000
Outside Michigan 300.000 300.000 400.000
Total Payroll $1,000,000 $1,000,000 $1,000,000
In Michigan 700.000 700.000 700.000
Outside Michigan 300.000 300.000 300.000
Sales Percentage:
In Michigan 10% 10% 10%
Outside Michigan 90% 90% 90%
Sbt Property Factor 0.7 0.7143 0.6667
Sbt Payroll Factor 0.7 0.7 0.7
Sbt Sales Factor 0.1 0.1 0.1
3-Factor Apportionment 0.5 0.5048 0.4889
Apportioned Tax Base $500,000 $504,762 $488,889
Apportioned cad:
Real Property $0 $0 $0
Personal Property $0 $70,714 $68,333
Adjusted Tax Base $500,000 $434,048 $420,556
Tax (at 2.35% rate) $11,750 $10,200 $9,883
Effective Tax Rate 2.3500% 2.0208% 2.0215%
Discriminatory advantage of in-state investment: 0.0007% or $4
Discriminatory advantage of Michigan-based status,
(1) with regard to in-state investment: 0.1836% or $927
(2) with regard to out-of-state investment: 0.1896% or $92733
*465B. EFFECT OF REAL PROPERTY INVESTMENTS
At the outset Following $100,000 real property investment,
in state out of state
Total sbt Tax Base $1,000,000 $1,000,000 $1,000,000
Total Real Property $1,000,000 $1,100,000 $1,100,000
In Michigan 700.000 800,000 700.000
Outside Michigan 300.000 300.000 400.000
Total Personal Property $1,000,000 $1,000,000 $1,000,000
In Michigan 700.000 700.000 700.000
Outside Michigan 300.000 300.000 300.000
Total Payroll $1,000,000 $1,000,000 $1,000,000
In Michigan 700.000 700.000 700.000
Outside Michigan 300.000 300.000 300.000
Sales Percentage:
In Michigan 10% 10% 10%
Outside Michigan 90% 90% 90%
Sbt Property Factor 0.7 0.7143 0.6667
Sbt Payroll Factor 0.7 0.7 0.7
Sbt Sales Factor 0.1 0.1 0.1
3-Factor Apportionment 0.5 0.5048 0.4889
Apportioned Tax Base $500,000 $504,762 $488,889
Apportioned cad:
Real Property $0 $100,000 $0
Personal Property $0 $0 $0
Adjusted Tax Base $500,000 $404,762-$488,889
Tax (at 2.35% rate) $11,750 $9,512 $11,489
Effective Tax Rate 2.3500% 1.8845% 2.3500%
Discriminatory advantage of in-state investment: 0.4655% or $2,350
Discriminatory advantage of Michigan-based status with regard to in-state investment: 0.0057% or $2934

 MCL 208.45; MSA 7.558(45), as enacted before 1991 PA 77. The Legislature amended the three-factor formula in 1991 PA 77, but this would not appear to be relevant to the issue in this case.

 MCL 208.23(a), (c); MSA 7.558(23)(a), (c), as enacted before 1991 PA 77. For the sake of convenience, I henceforth refer in this opinion to the challenged cad apportionment in the present tense, even though it has now been superseded by amendments adopted by the Legislature in response to the lower court decisions in this case. See 1991 PA 77; 1991 PA 128; see also n 10.

 The majority appears to suggest that the United States Supreme Court may have already upheld the cad apportionment against Commerce Clause challenge, as part of the overall scheme of the sbt, in Trinova. See ante, pp 423, n 31, and 426, n 32. If this is what the majority intends to suggest, the suggestion is plainly erroneous. It is true that the Court in Trinova addressed and rejected a claim that the three-factor apportionment of the sbt itself discriminated against interstate commerce. See Trinova, 112 L Ed 2d 911-912. The Court clearly was not presented with any challenge to the apportionment of the cad, however, and the majority’s citation of Trinova in this regard is thus plainly inapposite.

 I do not suggest that there is any bright-line division between *433these two broad types of discrimination. On the contrary, they ultimately amount to much the same thing. The ultimate concern of the Commerce Clause is with discrimination against interstate commerce as such — that is, with interstate economic protectionism. Interstate commerce cannot be carried out without interstate commercial entities, however — which will inevitably be "out-of-state” entities from the viewpoint of some state — and discriminatory burdens on the latter inevitably burden the former.

5 The Court then went on to quote, verbatim, the passage from Boston Stock Exchange that I have quoted above. Id. at 645-646.

 Metropolitan Life Ins Co v Ward, 470 US 869; 105 S Ct 1676; 84 L Ed 2d 751 (1985), although cited by Justice Brickley in this regard, see post, pp 480-481, clearly supports my argument and conclusion. While Ward involved Equal Protection Clause rather than Commerce Clause analysis, the Court noted that both analyses involve a consideration of the legitimacy of the state’s asserted interest. The only difference is that Equal Protection Clause analysis is less demanding in that the state law, if supported by a legitimate interest, is upheld if the law bears any rational relationship to that interest, whereas under Commerce Clause analysis the state interest, if legitimate, is weighed against the burden imposed on interstate commerce. See Ward, 470 US 881. In Ward, the Court struck down a state tax discriminating against out-of-state insurance companies and rejected the state’s reliance on its asserted interest in promoting domestic business, holding:
[The] promotion of domestic business within a State, by discriminating against foreign corporations that wish to compete by doing business there, is not a legitimate state purpose. [Id. at 880.]

7 While Kraft involved a state tax found to discriminate against foreign commerce rather than interstate commerce, the relevant analysis, for present purposes, is identical.

 Specifically, the tax was imposed on corporate entities defined under the federal tax code as "Domestic International Sales Corporations” or "discs.” "A corporation qualifies as a disc if substantially all its assets and gross receipts are export-related.” 466 US 390-391. As the Court explained, a disc is not subject to federal income tax; rather, a portion of the disc’s income is attributed to the disc’s shareholders for federal tax purposes. Because of the different structure of New York’s tax laws, however, New York either had to subject discs to its state franchise tax, or else not tax discs at all. See id. at 391-392. At the same time, New York was concerned "that state *440taxation of discs would discourage their formation in New York and also discourage the manufacture of export goods within the State.” Id. at 392-393. In order to accommodate these conflicting concerns, New York imposed its franchise tax on discs, but attempted to offset the tax burden with the tax credit described in the text. See id. at 393-394.

 A company’s New York-apportioned tax base is calculated on the basis of "the average of the percentages of the corporation’s property situated, income earned, and payroll distributed within the State.” 466 US 394, n 5.

 In fact, the Legislature has already responded to the lower court decisions in this case by amending the cad provision so that the cad is apportioned in precisely this manner, beginning with tax years after September 30, 1989. See 1991 PA 77, MCL 208.23(c); MSA 7.558(23)(c), and 1991 PA 128, MCL 208.23(c), (d); MSA 7.558(23)(c), (d).

 Obviously, the ultimate effective tax rate on a given tax base is relatively lower whenever a deduction from that tax base is allowed, and relatively higher whenever a deduction is not allowed.

 Kraft illustrates how discrimination on the basis of the out-of-state (or foreign) status of a business entity is tied inextricably to discrimination against interstate (or foreign) commerce as such. As the Court noted: "The flow of value between Kraft and its foreign subsidiaries clearly constitutes foreign commerce; this flow includes the foreign subsidiary dividends, which, as Iowa acknowledges, themselves constitute foreign commerce.” 120 L Ed 2d 66.

 That is, Caterpillar does not appear to contend that it would be impermissible for Michigan to apportion both the sbt and the cad on the basis of whether the relevant economic activity physically takes place in Michigan, consistent with the strict geographical apportionment of the real property cad. Nor does Caterpillar appear to contend that it would be impermissible to apportion both the sbt and the cad on the basis of a two-factor formula including only the property and payroll factors, consistent with the apportionment of the personal property cad. Rather, the essence of Caterpillar’s argument is that Michigan, having chosen to apportion the sbt itself on the basis of the three-factor formula (including the sales factor), cannot apportion the cad on the basis of different and inconsistent formulas, where the result is discrimination against interstate commerce.

 The discussion of issues regarding "fair apportionment,” "taxing extraterritorial values,” "substantial nexus,” and "fair relation to services provided,” by both the majority and Justice Brickley, see Riley, J., ante, pp 416-422, 427-429; Brickley, J., post, pp 471, 479-480, 483-484, is therefore beside the point and only confuses the precise issue properly before us. Whether the cad is "fairly apportioned” is a separate question from whether the cad apportionment, considered in light of the underlying sbt apportionment, facially and inevitably discriminates against interstate commerce in the manner alleged by Caterpillar. See, e.g., Amerada Hess, 490 US 75 ("[e]ven if a tax is fairly apportioned, it may discriminate against interstate commerce”); Westinghouse, 466 US 399 (“ '[f]airly apportioned’ and 'nondiscriminatory’ are not synonymous terms”).
*445Furthermore, while it is true that a prohibition of extraterritorial taxation is part of the broad reach of the Commerce Clause, as well as the Due Process Clause, see, e.g., Trinova, 112 L Ed 2d 913 (Scalia, J., concurring in the judgment), no plausible claim of extraterritorial taxation is or could be presented by this case. The sbt itself was upheld against precisely such a claim in Trinova. This case involves only the apportionment of certain deductions from the sbt. Obviously, if a tax itself is not improperly extraterritorial in reach, related tax deductions cannot render it so. They can, however, as a result of the apportionment formulas used, cause it to discriminate against interstate commerce.

 Of course, Caterpillar also contends that any decision striking down the cad apportionment should apply retroactively and that it should be entitled to an appropriate remedy. But I am addressing here only the central constitutional issue.

 See MCL 208.23(a); MSA 7.558(23)(a), as enacted before 1991 PA 77.

 See MCL 208.46; MSA 7.558(46).

 My reliance on hypothetical examples like those set forth in the appendix is supported by Westinghouse, where the Court relied on similar hypothetical examples to illustrate the inevitably discriminatory character and effect of a state tax. See 466 US 400, n 9 (tables a, b, and c).

 Of course, even if the personal property cad were apportioned according to the three-factor sbt formula, a more predominantly "Michigan-based company” as measured by the three-factor formula would likewise gain a greater deduction from a given investment in personal property than would a more predominantly "non-Michigan-based company” as measured by the three-factor formula. But in that case, by definition, the amount of the deduction would vary in precise proportion to the amount of the tax base apportioned to Michigan, thus resulting in identical effective tax rates following any given deduction, regardless of the in- or out-of-state character of the company as measured by any factors.
The problem with the personal property cad apportionment, and the source of the primary discriminatory effect identified in the text, is the fact that the apportionment of the deduction is divorced from the apportionment of the tax base and structured so as to focus exclusively on the location of the company’s physical base as measured by the property and payroll factors. The problem is not simply that different companies are allowed to deduct different amounts, but that the difference persists even when the tax base apportioned to Michigan is held constant, thus resulting in a discriminatory difference in effective tax rates hinging solely on the location of the company’s physical base. See appendix, tables i(A) and 11(A) (hypotheticals holding constant the Michigan-apportioned tax base while varying the physical base of the company as measured by the property and payroll factors).

 Of course, even if the personal property cad were apportioned according to the three-factor sbt formula, investing in personal property in state would (to a lesser degree) increase the apportioned deduction, just as investing out of state would (to a lesser degree) reduce it. But in that case, both the deduction and the Michigan-apportioned tax base would increase or decrease in equal proportion, resulting in identical effective tax rates following either an in- or out-of-state investment. The problem with the personal property cad apportionment in this regard, and the source of this second discriminatory effect, is that it causes the deduction, following any given *448investment, to increase or decrease in a proportion greater than the increase or decrease in the Michigan-apportioned tax base, thus causing the final effective tax rate to vary depending on whether the investment is made in state or out of state.

 MCL 208.23(c); MSA 7.558(23)(c) as enacted before 1991 PA 77.

 But see n 23.

 Furthermore, the hypothetical examples reveal a second discriminatory effect, analogous to the first discriminatory effect identified with regard to the personal property cad, that is not initially obvious. It appears that a predominantly Michigan-based company will gain a slightly greater benefit from a given investment in Michigan real property, in terms of effective tax rate, than will a predominantly non-Michigan-based company (with the same Michigan-apportioned tax base) making an identical investment in Michigan real property. See appendix, tables 1(b) and ii(b), and n 34.

 The United States Supreme Court has held that "a tax may violate the Commerce Clause if it is facially discriminatory, has a discriminatory intent, or has the effect of unduly burdening interstate commerce.” Amerada Hess, 490 US 75. Because the tax at issue is discriminatory both on its face and in its inevitable effect, I need not consider whether it was enacted with an illicit discriminatory purpose. But see n 29. Nor do I need to consider whether it has any indirect discriminatory effect implicating the "deeper meaning” of the Commerce Clause "embodied in the requirement of fair apportionment.” Trinova, 112 L Ed 2d 912; cf. Brickley, J., post, p 483. As I have already noted, I do not believe Caterpillar even alleges any impropriety in the cad apportionment related to the "fair apportionment” prong of Commerce Clause analysis, and I therefore believe that any discussion of that issue is extraneous and serves only to distract us from the issue properly presented. See n 14.

 Furthermore, I agree with Justice Brickley that when a tax is shown to be facially discriminatory by abstract analysis, the United States Supreme Court has never required further empirical evidence of discriminatory effect, nor has it permitted a showing of facial discrimination to be overcome by empirical evidence purporting to demonstrate. that the overall practical effect of the tax, taking into account other variable factors, is not discriminatory. See post, p 470, n 3.

 See n 10 and accompanying text. The majority’s contention that "[formulas used in apportioning a value-added tax base and a deduction provided for acquisitions of capital are not constitutionally required to be identical,” ante, p 423, while possibly true, is beside the point. I am not sure whether it would be possible to devise an apportionment formula for the cad different from that applied to the sbt, that would avoid the discrimination created by the combination currently before us. The state, however, is perfectly free to attempt to do so. My conclusion in this case does not rest on any abstract requirement that the apportionment formulas be "symmetrical.” Cf. Riley, J., ante, p 423. Regardless of whether the formulas used are symmetrical or different, they may not operate, as they do in this case, to discriminate against interstate commerce.
Furthermore, any argument that the two-factor personal property *452cad apportionment might be justified as a way to relieve taxpayers of "burdensome accounting problems,” Riley, J., ante, p 411, is obviously unfounded. The three-factor apportionment formula is equally convenient for taxpayers to use.

 A useful analogy arises from First Amendment doctrine as applied in the famous flag-burning case. See Texas v Johnson, 491 US 397; 109 S Ct 2533; 105 L Ed 2d 342 (1989). The state there had asserted, as an interest in support of its prohibition of flag burning, the goal of "preserving the flag as a symbol of nationhood and national unity.” Id. at 410. The Court had little difficulty concluding *453that this asserted goal was not "[un]related 'to the suppression of free expression’ within the meaning of [United States v O’Brien, 391 US 367, 377; 88 S Ct 1673; 20 L Ed 2d 672 (1968)],” 491 US 410, and therefore could not support the disputed restriction on expressive conduct, even though that goal, like the asserted goal in this case, was clearly not inherently impermissible, and could validly be pursued in any number of ways. See id. at 418 ("we do not doubt that the government has a legitimate interest in making efforts to 'preserv[e] the national flag as an unalloyed symbol of our country’ ”).

 I disagree with Justice Bkickley’s assertion that "Michigan does not tax any of those [physically out-of-state] activities.” Post, p 483, n 13. A company is subject to taxation under. Michigan’s sbt, even if it has virtually no property, payroll, or production within Michigan, as long as it has some Michigan sales. Of course, sales themselves are deemed by Trinova to be a form of "productive activity” that adds some value to the products sold. See 112 L Ed 2d 905-906. But Trinova clearly rejected any requirement that the precise amount of value actually added by in-state sales be calculated for taxation purposes. Rather, as discussed in the text above, Trinova concluded that value-added is not “subject to geographic ascertainment,” 112 L Ed 2d 911, and, therefore, that all of a company’s value-added, including that which may be assignable to out-of-state production, may properly be apportioned to a state on the basis of the three-factor formula, relying in part on the proportion of in-state sales. See 112 L Ed 2d 908 ("we [have] rejected outright the idea that geographically assignable costs of production must be excluded from an apportionment of income”).

 Thus, it is apparent that the chosen apportionment formulas for the cad not only discriminate against interstate commerce, but also violate the basic economic logic of apportioning a value-added tax according to a three-factor formula including sales. Of course, economic illogic is not itself a ground for finding that a tax violates the Commerce Clause. But it indirectly supports my conclusion by suggesting that the Legislature’s enactment of the cad, apportionment could only have been motivated by economic protectionism. See, e.g., Haughey, The economic logic of the single business tax, 22 Wayne L R 1017, 1027 (1976) (emphasis added):
The deduction for capital acquisitions necessary to compute net capital costs and avoid double taxation is an approximation purposefully designed to favor investments located in Michigan. This was made necessary by the decision to use the standard, but arbitrary, property-payroll-sales apportionment factor for multistate businesses. The desire to stimulate the state economy was also a factor.
Significantly, the author was, at the time, the Assistant Director of the Office of Revenue and Tax Analysis in the Michigan Department of Management and Budget. Id. at 1017, n †.

 While it is obviously true that "any credit necessarily creates a difference between those who qualify for it and those who do not qualify for it,” Brickley, J., post, p 481, it is untenable to suggest that the kinds of discriminatory differences in treatment that exist in this case — and that render the cad apportionment invalid under the Commerce Clause — would necessarily exist with regard to any tax credit or deduction. The Court’s statement in Westinghouse that "it is not the provision of the credit that offends the Commerce Clause,” 466 US 406, n 12, is precisely analogous to the proposition, undisputed in this case, that there is nothing wrong with the cad itself under the Commerce Clause. The only problem is that the cad, analogously to the tax credit in Westinghouse, is apportioned "on an impermissible basis.” Id. Just as New York could not justify as a neutral "subsidy to export commerce” a tax credit that actually discriminated against exports shipped from outside New York, see id., so Michigan cannot justify as a neutral investment incentive a tax deduction apportioned so as to discriminate against companies choosing not to direct their investments toward Michigan, and against companies based more predominantly outside Michigan, by imposing a higher effective tax rate on such companies’ Michigan-apportioned value-added.

 I.e., amount of tax divided by apportioned tax base.

 This comparison, as used in this table and the following tables, compares the effective tax rates in columns two and three; the dollar figure equals the difference between the amount of tax paid in column two and the amount that would have been paid if the tax rate in column three applied to the apportioned tax base in column two.

 These comparisons, as used in this table and the following table, compare the effective tax rates in columns two and three with the equivalent rates in the corresponding table (either i[A] or i[b], as appropriate). The dollar amounts represent the difference between the amounts of tax in columns two and three of the instant table and the amounts that would result if the corresponding effective tax rates from the corresponding table were applied to the relevant apportioned tax bases in the instant table.

 Both a Michigan-based and a non-Michigan-based company enjoy the same tax-rate advantage (which is to say, none) from investing in out-of-state real property. It might seem odd, thus, that a Michigan-based company would reap a greater benefit than a non-Michigan-based company from a given instate real property investment, given that the real property cad apportionment does not depend on Michigan-based status as reflected in the property and payroll factors, but rather depends exclusively on the location of the investment itself. *466But as the effective tax rates in column two of this table and in table I(B) demonstrate, a slight discriminatory advantage in that regard does undeniably exist.
While I am not sure of the precise mechanism underlying this unexpected discriminatory effect, it clearly cannot "derive[ ] from . . . the general multistate apportionment formula.” Brickley, J., post, p 479, n 10. If the three-factor formula were applied uniformly to apportion both the tax base and the cad, the effective tax rates following any given real property investment would be identical, regardless of the in- or out-of-state character of the company. Thus, contrary to Justice Brickley’s suggestion, this discriminatory effect neither "condemn[s] the three factor formula,” nor can the validity of the three-factor formula be used to justify or explain away the effect. Cf. id.