*1 INC., ASSOCIATIONS, TRUCKING AMERICAN et al. DEPARTMENT OF SECRETARY, SCHEINER, PENNSYLVANIA, OF REVENUE et al. Argued April 1987 Decided June
No. 86-357. *2 Court, in Brennan, J., opinion of the which delivered the Stevens, J., JJ., joined. filed a O’Connor, Blackmun, White, Marshall, J., J., joined, Rehnquist, Powell, C. dissenting opinion, which opinion, in Rehnquist, J., dissenting which p. filed Scalia, post, J., p. 303. joined, post, C. for appellants. the cause argued M. Shapiro
Stephen Andrew L. Kenneth S. him were Frey, on the briefs With Jr., Daniel R. Robert Getter, Barney, Digges, I. Levy, Mark Busker, and Hellerstein. Walter William S. of Penn Attorney M. Chief General Wolfe, Deputy
Suellen her on the the cause for With appellees. sylvania, argued Zimmerman, An General, Attorney S. LeRoy brief were E. Gordon, General, Deputy Attorney Bryan Chief drew S. Roman, General, A. Attorneys Michael Deputy Barbin and *3 and Allen C. Warshaw.* delivered the of the Court. opinion Stevens
Justice whether state taxes as ap- are “asked to decide we Again run afoul of the commerce interstate motor carrier to an plied Federal Aero I, §8, May- Art. of the Constitution.” clause, Comm’rs, Railroad v. Board U. S. Transit Co. of flower urging reversal were filed for the State of North *Briefs of amici curiae Attorney by Lacy Thornburg, H. General of North Caro- et al. Carolina General, lina, Gray, Special Deputy Attorney and David L. Wil- P. Jane by kinson, Utah; of Michael Attorney General of for the State Oklahoma Mildren, General, Attorney Attorney and Richard Assistant Turpén, C. by H. General; Trucking Association William Shawn and for the Canadian Inc., Mann; System, by M. Freight Yellow et al. Lester Kim D. and for Bridgeman. of Ar- urging curiae affirmance were filed for the State Briefs of amici Parker, Goodloe; Clark, General, Attorney Chris and Ted by
kansas Steve Edwards, General, Jersey by Cary Attorney and of New W. for the State Hamill, Attorneys General; Clancy Mary Deputy R. Michael R. and Gottesman, by Jeffrey Amestoy, H. L. At- Michael the State of Vermont Schwartz, General, torney Thomas R. Viall and Robert C. Assistant General; Attorneys Transportation the Cabinet of the Common- and for Kentucky, by Armstrong, Attorney of Kentucky David General wealth of General, Cox, Reeder, Attorney R. Special Assistant James Stephen A. P. and Janet Jakubowicz. question presented That of the statement
might equally opinion well have introduced the Court’s Spector Service, O’Connor, either Motor Inc. v. (1951), Complete Brady, Transit, or Auto Inc. v. (1977), Spector.
U. S. 274 which overruled In this case we Supreme Pennsylvania’s judgment up- review the Court of holding constitutionality Pennsylvania of two statutes impose lump-sum operation which annual taxes on the easy; trucks and truck tractors. Our task is no means uneven course of decisions in this field reflects the difficulties reconciling unrestricted access to the national market with authority each State’s to collect its fair share of revenues activity. from interstate commercial Appellants claim these statutes violate principle may that no State discriminate by enacting provides competitive commerce a tax which advantage Pennsylvania Supreme to local business.1 The upheld interpreting facially taxes, Court them as neutral pre-Spector and in accord with a line of our decisions approving era flat taxes on interstate truckers for privilege using highway system. a State’s Before turning judgment Supreme to the Court, State we first challenged describe the taxes some detail in the context revenue-gathering system explain why the State’s we persuasive appellants’ Despite find claims of discrimination. appellees’ provisions compen- *4 defense of the revenue as valid satory, judgment flat user-fee, taxes, or the of the State Supreme Court must be reversed. State, Clause, may
1“No with ‘impose consistent the Commerce a tax by providing which discriminates interstate commerce ... a direct [Northwestern States advantage commercial commercial business.’ Minnesota, (1959)]. Portland Cement Co. v. 450, 358 U. S. 458 . . . Per mitting enterprises the individual to enact laws that States favor local at expense multiplication pref of out-of-state businesses ‘would invite a pro erential trade areas destructive’ of the free trade which the Clause Madison, (1951).” tects. Dean Milk Co. 349, Boston Comm’n, Exchange Stock v. State Tax 318, S.U. I large Pennsylvania spends sums of The Commonwealth bridges.2 highways improve and money its maintain and cargo miles on these Passenger travel vehicles billions and large Operators every year.3 and trac- highways trucks particu- engaged make commerce in interstate trailers tor highways. heavy larly vehicles, Their use of the State’s by by may of their axles or the number classified be which pounds gross weight ranging 5,000 from less than their — pounds 25th class for the 79,001-80,000 class to the smallest Pennsylvania cargo only transport out-of- and between —not highways Pennsylvania’s exten- use locations, but also state connecting sively Northeast, the States of as corridors weight Because of their Midwest.4 and the Southeast, require using roads the State the State’s trucks size, expenditures higher than would use of the road-related make hilly App. 30. The alone. State’s vehicles roads smaller frequently conditions enhance severe weather terrain 1, 1981, through April November during period from example, For Pennsylvania’s Motor License Fund from expenditures Pennsylvania at least operating in were carriers directly benefited motor App. $1,551,088,000. period for which detailed year the most recent “During calendar available, miles travelled currently vehicle figures are approximately as follows: were Travelled, 1979 Miles “Total Vehicle 58,600,811,505 Passenger
“Total Vehicles 57,291,004,547 Auto 911,913,897 Cycle Motor 124,376,972 Bus School 273,516,089 Bus Commercial 12,844,167,335 Cargo Vehicles “Total 6,381,130,943 2 Axle/4 tire 2,806,356,994 Single Trucks All other 3,656,679,398” Trucks Combination Id., 31-32. Delaware, Mary York, Jersey, New example, of New the States 4 For Pennsylvania. with land, share borders Virginia, and Ohio West *5 highway 433, 509 A. 2d 430, maintenance. Pa. costs of 838, 840 part, expenditures financed, in are substantial
These Pennsylvania’s highways: types of of ve- levies users three lump-sum consumption registration fees, taxes, fuel and hicle Although which we describe as “flat taxes.” annual fees will — litigation flat a issue in this are both taxes the two taxes at August through 18, 1980, from “marker fee” assessed $25 reg- and an “axle tax” 31, 1983, March thereafter — principal fees fuel taxes are sources of revenue istration purposes the of and therefore mechanics for road-related analy- necessary background provide for our their collection validity significance of and constitutional sis of the economic challenged the flat taxes.
Registration Fees are of motor vehicles that based
Owners Department Transportation register them with must weight registration pay fee. The truck an annual the amount of the annual fee. or truck tractor5 determines weight classifications, and the Prior to there were ranged per corresponding vehicle. fees from to $39 $606 registration App. were increased and 260. In fees weight were added to classes for heavier vehicles five new reg- statutory from 1980 1982 maximum schedule; weighing 79,001 $1,125, fee for a vehicle istration was registration pounds. fees for ve- Ibid. 80,000 9-25) (classes pounds weighing 26,000 were more than hicles by multiples ranging up reduction; $180 $36 reduced Ibid. fee thereafter, $945. the máximum was many Pennsylvania, States, and Provinces Canada other apportioned registration participate called the scheme an (IRP). Participants Registration Plan” “International plan fees for vehicles based share this cargo equipped cargo to haul carry but is A truck tractor does not itself trailers. *6 in the vehicles IRP which
their States with other States registration percentage total of each vehicle’s travel. The than the in to each IRP State other State fee that is allocated by dividing the total the vehicle is based is determined which traveled within the IRP State number of miles the vehicle mileage. during preceding year by The total fee its total product payable total fee each State is the of each State’s to percent- registration that full of each vehicle and State’s mileage. age if of the mile- Thus, the vehicle’s 30% share of Pennsylvania-based age in vehicle was accrued other of a Pennsylvania’s registration share of the fee would be States, specified statutory in amount its schedule. 70% of the full in if a vehicle based another IRP State hand, On the other Pennsylvania, logged mileage in its owner would 40% of its portion Pennsylvania required pay that fee sched- be Pennsylvania registration Pennsylvania.6 collects no ule to in and, motor carriers based non-IRP States con- fees from Pennsylvania-based pay registration versely, vehicles no fees to non-IRP States.7 stipulated example: parties to this Pennsylvania, in
“[A]ssuming a motor carrier vehicle based state A or Commonwealth, A, B of its miles in the 40% state and state traveled 50% B, assuming registration the full fees for those states 10% state $400, $300, respectively, registration paid by $200 were fees that (if jurisdic- B as follows states A and are IRP-member vehicle would be ): tions . . . = Pennsylvania: $400 50% x $200 “To = x $300 $120 To state A: 40% = x 10[%] $200 $ To state B: registration $340” fee:
Total App. 38-39. 7Thus, supra, example by assuming if in n. used is modified State, fee, $360, Pennsylvania’s or $400 A is not an IRP 90% of would State event, Pennsylvania; registration payable be in that the total would be $380, payable would be to State B. $20 of which
Pennsylvania nonapportioned reciprocity agreements has with non- also Pennsylvania-based pays registration A carrier fee IRP States. registration fee is de- of each truck’s sum, amount by weight if travels and, of the vehicle the truck termined mileage. part vehi- IRP its in-state No States, in other required pay than one full fee. cle is more Consumption Fuel Taxes ways. consumption a fuel tax two collects purchased imposes per-gallon fuel tax on fuel within
It *7 requires less The also trucks that travel the State. State Pennsylvania pay a tax on of their miles in based than 90% by Pennsylvania, the amount miles traveled in reduced their Pennsylva actually paid through purchased fuel at the tax pumps. §§ 2611d,2614.4, Tit. Ann., nia See Pa. Stat. 1987). (Purdon Supp. 1964 and The 2617.1-2617.26 depend not on the vehicle’s State amount of these taxes does registration. Flat Taxes The by
Pennsylvania requires an identification marker issued every Department motor car- to be affixed to of Revenue trac- “truck, A carrier vehicle is truck rier vehicle. motor weight registered gross having gross or combination tor or § pounds.” weight 75 Pa. 17,000 in excess of Cons. Stat. of this marker 1980, the fee for the issuance Until year $25, In fee was increased to but vehi- was $2. exempted Pennsylvania registered the fee. were from cles exemption by providing that for this The statute effected Pennsylvania registered shall the “marker fee vehicle each operating the vehicle over the Pennsylvania privilege obtains Pennsylvania registration with which has highways of “all other states Id., Likewise, 42. respecting registration.” reciprocity that vehicle Pennsylvania pay registration with which has fees to States carriers privilege operating their vehicles reciprocity agreements receive the states, includ- and “the roads of all other the roads of their home state on registration reciprocity.” Pennsylvania, which the home state has ing with Ibid. part registration deemed a of and in the vehicle
be included 2102(b). § fee.” parties stipulated have that the administrative costs
associated with the issuance of the identification markers approximately per App. total vehicle. when $5 Pennsylvania tax, it enacted the axle reduced the annual 2102(b). § per marker fee from vehicle. Since $25 $5 only 1982, then, the marker fee is sufficient to meet the specific issuing cost of marker, but effect of the impose marker fee from 1980to 1982was to a flat tax $25 on registered in vehicles other States. This tax was, at least nominally, Pennsylvania-registered not vehicles. It noted, however, should be that the in- same statute that creased the marker fee 1980to for out-of-state vehicles $25 weighing pounds Pennsylva- 17,000 more than also increased nia’s fees for such vehicles amounts substan- tially larger than $25.
In 1982, enacted its axle tax and, noted, as per ap- reduced the marker fee to vehicle. The axle tax $5 plies weighing trucks, to all truck tractors, combinations *8 pounds, registered Pennsylva- 26,000 more than whether in requires payment per nia or it elsewhere; an annual ve- $36 § example, hicle axle. 75 Pa. Cons. Stat. 9902 For the tax is for a two-axle vehicle and for a $72 $180 five-axle Pennsyl- vehicle. If a truck 2,000 travels less than miles in paid vania, however, it is entitled to a rebate: the axle tax multiplied by by the ratio of the amount which the vehicle’s mileage 2,000 in-state was short of miles 2,000 to determines § the rebate amount. Moreover, the axle tax is ex- pays trip permit period cused when a trucker for a a $25 2102(d). § exceeding days. not five The same statute that enacted the axle tax in 1982also re- registration weight duced the fees for all classes of vehicles of pounds. generally more than In 26,000 9-12, classes which required pay include two-axle vehicles a axle tax, $72 usually in reduction amounted to classes $72; 13-17, which subject tax, axle it to a $108 vehicles include three-axle usually four-axle in and 18, 19, classes $108; amounted subject and $144, it amounted to tax, to a axle $144 vehicles exceeding weights classes—vehicle in the five heaviest weight permissible amounted for four-axle vehicles—it in all classes the reductions the amounts of brief, $180.8 per multiple the meas- axle which is used as of the $36 awere App. 260. tax. for the axle ure
II represent Appellants carriers a class of interstate motor Pennsylvania registered outside of are whose vehicles paid in marker fee while it was effect who who the $25 brought subject They to the axle tax. been have thereafter Pennsylvania separate in the Commonwealth Court of actions constitutionality challenging fee and of the marker $25 appellants separate In each made two case, tax. of the axle arguments the Commerce of the Federal Clause based Constitution. they argued that the entire economicburden of each
First, vehicles because the 1980 statute out-of-state tax fell on Pennsylvania a fee for vehicles to be the marker “deemed” granted legislation part registration and the fee, registration reduction in fees vehicles congruence the substantial between the amount of explanation for fee and the amount of axle tax lies registration the reductions may given that a truck with a number of axles statutory requirement weight. explained As Chief Justice Nix his dis specified not exceed correspond axles sent, fee “reductions to the number of minimally required by weight law in each class. commonly used and most instances, [registration reductions created Except fee] . . in a few . exactly impact did the Axle Tax to and offset the the Act were intended registered Pennsylvania.” 510 Pa. upon motor carrier vehicles *9 (1986). 838, 858, 467, 1, n. The Commonwealth Court had n. 509 A. 2d registration “generally offset the tax the reductions fees also found that ordinarily axles required number of of vehicles within owed based on the Assns., Bloom, American Trucking Inc. weight class.” each affected 465, 382, 487 A. 2d 87 Pa. Commw. they newly imposed neatly Second, axle tax. ar- offset the registered Pennsylva- gued if of vehicles that even owners through payment of shared the burden fees, nia, elsewhere, owners of vehicles based the two flat taxes with of discriminatory taxes were nevertheless because both the taxes per highway usage charge mile of a much heavier average, Pennsylvania- vehicles. On the out-of-state subject five times to the flat taxes travel about based vehicles Pennsylvania many the out-of-state on roads as do as miles correspondingly, per mile of of the flat the cost each vehicles; high approximately for out-of-state ve- five times as taxes is Although and in- out-of-state hicles as for local vehicles.9 approximately subject the axle tax traveled state vehicles Pennsylvania’s highways, less same number of miles total axle tax revenues were the State’s than one-sixth years by Pennsylvania-based generated in fiscal 1982- vehicles 1983and 1983-1984.10 tax case the Com-
In marker fee case and the axle both the argument accepted appellants’ first monwealth Court case, In the first the court the second. did not consider reasoned: fee was more than lh cent per mile for all In 1981 the cost the marker per for and about Vwcent mile all
foreign-based motor carrier vehicles App. Pennsylvania-based motor carrier vehicles. summary appellee’s judgment, supporting motion for an affidavit Secretary Department of Revenue stated: year year 1983-84 are as for fiscal 1982-83 fiscal “Axle tax revenues follows:
“Trucks Trucks registered
registered Temporary other Total than Pa. Permits Fines - $55,124,235 $45,292,372 $1,147,855 8,684,008 $ $4,547,849 $1,448,872 $80,399,849 $62,088,820 $12,314,308 process paying is in axle tax rebates Department Revenue “The period rebates April 1983 to March and estimates that $6,000,000.” App. 207. total about will
277 not “A tax on commerce does offend state interstate the Commerce Clause ... if that tax [1] is applied to an taxing activity state, a nexus with the with substantial [2] is fairly apportioned, [3] does not discriminate against commerce, and [4] fairly related to the serv Complete provided Auto Transit, ices state. m U. S. (1977). Brady, 279] . . . 274[, Inc. Section 2102(b)facially Complete prong Auto fails the third of the prohibits discrimination inter standard which legerde Notwithstanding legislative commerce. state obfuscating term ‘deemed,’ main the insertion of the exempted Pennsylvania-registered from, were vehicles subject foreign-registered to, vehicles were ‘The commerce clause forbids dis marker decal fee. forthright ingenious.’ or Best & crimination, whether (1940)(footnote Maxwell, 455 454, omit Co. v. U. S. ted).” Trucking Bloom, Assns., Inc. v. American (1983). 466 A. 2d 575, 581, Pa. Commw. marker ordered refund of fee The Commonwealth Court April payments Id., 581-582, 466 made after 1982. at A. Sitting en Court over 2d, banc, Commonwealth at judge’s exceptions to the trial order. Amer defendants’ ruled Trucking Bloom, 345, 487 Assns., Inc. v. Pa. Commw. ican legisla A. The en banc court inferred from 2d 468 pace registration keep fees to nonenactment increased ture’s levy imposed on outside of marker vehicles based with the Pennsylvania- legislative exempt Pennsylvania intent to “a payment registered carriers from marker $25.00 motor Id., 2d, A. at 471. fee.” represent challenging Appellants tax in the case the axle regis- interstate motor carriers who own vehicles of all class subject are be who or will tered outside consisting interstate motor and a subclass such tax, any registered in or the are the States Prov- carriers who Appel- IRP. not members of the of Canada are inces together tax, that the axle with simulta- lants contended substantially offsetting reduction in neous fees Pennsylvania-registered facially tax the axle vehicles, is discriminatory practice imposes only the axle tax *11 registered Pennsylvania. interstate motor carriers outside of argued Appellants also that the axle tax is an invalid flat tax wholly by unrelated to the benefits received interstate motor Sitting en the banc, carriers. Commonwealth Court declared that the axle tax violated the Commerce Clause and ordered payments by axle tax a refund of made affected class mem- April 1, bers after 1983. 87 Pa. Commw. 487 A. 379, 2d 465 (1985). operators foreign-registered The court found that vehicles bore the “full brunt of the tax” and concluded that protectionism the axle tax therefore “constitutes economic facially Id., 383, and invalid.” at 487 A. at 2d, 467. Supreme Pennsylvania The Court of the considered two together cases (1986).11 and reversed. 510 Pa. 509 A. 430, 2d 838 began analysis by noting
The
its
Court
that the
prohibition against discrimination was included in the four-
part
Complete
Brady,
in
Auto
Inc. v.
Transit,
test stated
(1977),
that it was
S. 274
essential to focus on the “ef-
U.
consequences
upon
fect or economic
of the state tax
inter-
Pa.,
at
509 A.
at
2d,
state commerce.”
Pursuing
inquiry,
Supreme
rejected
this
the State
Court
trial court’s conclusionthat the full burden of both taxes
the
foreign-registered
respect
vehicles.
With
was
legisla-
the Court considered irrelevant the
fee,
the marker
contrary
history supporting inference, because the
tive
portion
language
reg-
plain
of the statute “deemed” a
years
case, involving a refund claim for the two
$25
11Athird
the
effect, presented
legal
the same
was in
issue as the other two.
marker fee
jurisdiction
held that
it did not have
Court
over the
The Commonwealth
initially sought
had not
refunds from the
appellants
Board of
case because
87 Pa. Commw.
The court viewed *12 highways. equally using The court the State’s on all vehicles why discrimina- flat tax was not offered two reasons this imposition greater per tory despite mile on non- cost its of relying Pennsylvania registered on our First, vehicles. Authority Evansville-Vanderburgh Airport opinions Dis- (1972), and Com- Airlines, Inc., Delta 405 U. S. trict v. 707 (1981), Montana, Edison 609 monwealth Co. v. U. S. privi- may impose that a tax for Court reasoned a State charged long lege using highways as fee of its “so the flat manifestly disproportionate rendered.” not the services found 457, 2d, at 509 A. at 852. the Court Pa., Second, protest motor could not that the bur- that interstate carriers they heavily upon “are them, den the flat fee fell too for highways and for free to use the Commonwealth’s as often they distances Ibid. whatever wish.” In the axle tax the Court found that the tax was col- case, non-Pennsylvania-registered lected from presented question vehicles alike thus no of discrimina- operation.” “[o]n Id., 459, tion its face and in actual at difficulty acknowledged 2d,A. at 853. The that a Court together statutory it arose when considered the tax with the by Pennsylvania- registration paid fees reduction subject tax, to the axle but concluded based vehicles registration though the axle the reduction in fees offset even Pennsylvania-based had to vehicles, taxes this reduction against the earlier increase 1980of be viewed Supreme According net effect Court, to the fees. State system 2-year period restructuring the tax over the partially compensatory tax to neutralize or was “to enact a previously enjoyed by advantage an inter- offset economic disadvantage of local commerce state commerce to taxing by operation Id., state’s scheme.” was caused of that Taking provisions 509A. at 855. all of the State’s 462, 2d, at highway system account, user-fee into the court reasoned appellants’ less of the tax that members of class bore burden Pennsylvania-registered Id., at 460- than motor vehicles. “in A. concluded that 2d, at 854-855. Court easing Pennsylvania registered vehicles, the the burden on disadvantaged com- Commonwealth has neither not, merce nor favored local and the axle tax does commerce, Id., therefore, discriminate interstate commerce.” 2d, 509 A. at 855.
Ill Although have our in this area we described own decisions “quagmire” judicial responses specific as a state tax Min- measures, Northwestern States Portland Cement Co. v. (1959), steadfastly nesota, 457-458 we have *13 “by adhered to the central tenet that the Commerce Clause its own force created an area free from interfer- of trade by Exchange Tax ence the States.” Boston Stock v. State (1977). Comm’n, Armco Inc. 328 also See (1984). Hardesty, primary v. con- U. S. One sequence taxing of this state constitutional restriction on powers, frequently may litigation, asserted in is that “a State heavily not tax a transaction or incident more when it crosses entirely state lines than when it the occurs within State.” Tully, Westinghouse Corp. Ibid.; also see Electric v. area of a free trade In its guarantee U. S. deeper has a the Commerce Clause States, however, among even state provi- implicated though be meaning may tax do not allocate here, reviewed sions, such as the ones in a manner that is insiders and outsiders burdens between facially discriminatory.12 in this the state constitutional parties broadly question flat in a blan- taxes result Pennsylvania’s as whether
appeal The oper- commerce. against ket discrimination inter- in a vehicle that engages ator of Pennsylvania-based has with the commerce, however, apparent no quarrel state the marker taxes; $25 flat he is “deemed” to challenged pay paid axle taxes he fee, his and the fee through re- statutory in 1982 were offset the beginning generally early an series repeat a that recurred in more recent cases theme Our solicitors, or invalidating facially neutral taxes on nonresident decisions taxing jurisdiction. “drummers,” in the seeking engage to business within Richmond, (1946), explained: Nippert S. 416 we 327 U. require seems to constant “As has been so often stated but nevertheless commerce, only or upon all but undue discrimina- repetition, not burdens ones, For, pay its though business must tory are forbidden. ‘interstate put consistently a barrier way,’ a with the commerce clause cannot State bring States and thus to around its borders to bar out trade from other Congress purpose giving the naught great the constitutional fathers Nations, among regulate the power foreign Commerce with ‘To may accomplished in the prohibition Nor be ...[.]’ several States discriminatory guise produces excluding or effect.” of taxation which Id., at 425-426. weight their political power and local are at maximum
“Provincial interests forces bringing acceptance type legislation. about of this With the put it, very this is the kind of barrier commerce clause was behind may be, guard against. It as the Court said the fundamental law to case, municipal free allow subdi- Berwind-White the State is its other, extent, as to the visions to erect such barriers each some commerce has exclusive It cannot so outlaw over which State control. or commerce of the United States. burden the figure representative by-gone day. his mod-
“The drummer But persists euphonious appellations. prototype ern under more So endure protection brought about his from the of local the basic reasons which kind Id., typify.” this favoritism the facts of case 434-435. *14 registration operators in duction vehicle fees. But some in vehicles based other States or Provinces have neither con- they paid registration ju- have solation, for fees their own Pennsylvania’s pre- still risdictions and face axle taxes. The cise issue is therefore more do subtle: the methods which partici- the flat are taxes assessed discriminate some pants way in in interstate commerce that contradicts the purpose dispos- central of the Commerce Clause? findWe precedents itive our those of which make it clear that the prohibits imposing Commerce Clause a State from a heavier compete tax burden on out-of-state that businesses an in- imposes terstate market than it on its own residents who also engage among in commerce States.13 way participants in which a tax levied on in inter- directly state commerce is measured and assessed bears on implicates whether it central Commerce Clause values. The assessing method of marker axle taxes this case Pennsylvania-based and on vehicles other vehicles estab- treating types lishes that the State is not the two of vehicles important with an hand. even There are and obvious differ- magnitude reg- ences of a constitutional between the State’s istration fees and fuel on the taxes, hand, one and its flat taxes, on the other. counterpart
The State’s vehicle fee has its every other and the State District Columbia. See CCH (2d 1986). ¶¶ State Tax 50-200 — 50-940 It Guide ed. is a tax readily consistency” satisfies test “internal purpose “This free trade [of the Commerce is not Clause] confined to only State; the freedom with to trade one it is a trade any freedom to with State, engage in commerce all across state boundaries. prior expressly question
“There has been no occasion to address the may whether a State tax in a types manner that two discriminates between of interstate transactions order to favor local commercial interests over businesses, import out-of-state but the clear of our Commerce Clause cases Boston constitutionally is that such impermissible.” discrimination is Comm’n, Exchange Stock v. State Tax S., 429 U. at 335. *15 applied in we have other test, contexts.14 Under this even though registration fee is as indeed assessed, been, it has by every jurisdiction, impermissible it causes no interference every respects registration free with trade because State every Payment registration other State. of one fee en- operate locally a ables carrier to a vehicle either or in in- Having paid terstate market. one a fee, vehicle may pass among freely may the States as as it roam the State in which it is based; Commerce Clause is not offended economically when state boundaries are irrelevant. jurisdiction applies charge if Yet even more than one a participants in interstate commerce, Commerce Clause may if be satisfied the revenue measures maintain state decisionmaking. boundaries as a neutral factor in economic Pennsylvania’s consumption example, fuel taxes, for do not among hinder the maintenance of a free trade area States. consumption directly apportioned The fuel taxes are to the mileage Pennsylvania; they simply traveled in are therefore payments traveling happens a certain distance that to be Pennsylvania. within When a vehicle uses other States’ may subject it roads, taxes, be to their fuel but the free trade unimpaired; sovereign if area is one controlled the entire free authority equivalent impose area, trade it would have the charge a for the use of all of its roads.15 Industries, Revenue, Tyler ante, Pipe Washington Dept. Inc. v. See Hardesty, Armco Inc. v. 247; Container (1984); at 467 U. S. 644-645 Board, (1983). Corp. America Tax v. Franchise 463 U. S. might objected impose 15 It be if other States lower fuel taxes or forgo entirely, Pennsylvania’s them then tax is inconsistent with a free trade area it a throughout because furnishes disincentive to travel But the pre State. disincentive affects local and out-of-state vehicles in cisely way, implicate the same and thus does not the Commerce Clause. treatment, however, When a tax does establish a difference in the “immu implicit in potential taxing power nities the Commerce Clause and the aof hardly affairs, depend, practical State can be made to in the world of on the shifting varying particu incidence of the tax laws various States at a Hewit, lar moment.” Freeman The adverse unapportioned penalize flat taxes, however, sometravel only
within the free trade area. Whether the full brunt, or major portion, of their burden is on the out-of-state their carriers, inevitable effect is to threaten the free move- by placing ment of commerce a financial barrier around the Pennsylvania. pass consistency” State of To the “internal applied by every test, state tax must be of a “if that, kind jurisdiction, impermissible there would be no interference Hardesty, with free trade.” Armco Inc. v. 467 U. S., *16 privilege If each State flat taxes for the of making territory, commercial entrances into its there is no among conceivable doubt that commerce the States would be deterred.16 impact
economic
in
upon participant
dollars and cents
in interstate com-
crossing
boundary
merce for
a state
becoming subject
and thus
to another
taxing jurisdiction
necessary
State’s
is neither
to establish a Commerce
violation,
Clause
see Armco Inc. Hardesty,
S.,
644,
467 U.
nor suffi-
cient,
Transit,
Complete
(1977)
see
Auto
Brady,
274,
Inc. v.
430 U. S.
(taxes
se).
on interstate business
per
are not invalid
16A line of
invalidating unapportioned
eases
provided
flat
gen
taxes that
eral
principle
revenue also
very
illustrates the
that the
nature of the mar
operators
ket that
prevents
interstate
serve
them from making full use of
privilege
doing
the
they
paid
business for which
Thus,
have
the State.
we found that a tax
city
on drummers in the
Memphis
privilege
for the
doing business there on behalf of out-of-state
firms discriminated
out-of-state manufacturers. We reasoned
competitors,
their local
“having regular licensed
Memphis],
houses of business [in
have no occasion
and,
agents,
they had, they
for such
if
subject
are
any
not
tax therefor.
They
houses,
are
true;
taxed for their licensed
so,
it is
but
presumable,
it is
are the merchants and manufacturers of other
in
places
states
where
they reside; and the tax
operates greatly
on drummers
to their disad
vantage
comparison
with the merchants and manufacturers of Mem
phis.”
Shelby County
District,
Robbins v.
Taxing
120 U. S.
(1887).
Maxwell,
(1940)(an
See
also Best & Co. v.
456-457
nual flat tax on those
regular
who were not
retail
merchants
the State
invalid because its actual effect “is to discriminate in favor of intrastate
businesses,
may
whatever
be the ostensible
language”);
reach of the
Nip
Richmond,
(1946).
pert v.
Although imposition is not to sustain the Commerce Clause necessary dictions flat the “internal taxes under challenge Pennsylvania’s flat taxes other test, ju- these consistency” adoption suits were resolved Pennsylvania risdictions even before flat taxes would these surely suggests acquiescence to the free trade area. occasion manifold threats national fee, marker 1980 when authorized Pennsylvania $25 Since also flat taxes17 and seven adopted six other States have retaliatory have levies that are assessed on adopted States or carrier vehicles that are based an- motor taxes19 divide obviously other flat-tax State.18 Such can services.20 market disrupt transportation “True, highways, imposed upon each fee is the use of different states’ but traveled, mileage from the cumulative effect does not result or distance mileage journey. The same in one but from the interstate character Lockhart, only result in tax.” Tax Barriers to In- state would one State Trade, 53 Harv. L. Rev. terstate 75-817.2, (a)(3), Arkansas, §§ Ark. Ann. 75-817.3 17 TheStates are Stat. (Burns (5) Indiana, § (4), (Supp. 1985); Supp. Ind. Code Ann. 6-6-8-6 138.660(4)-(7) 1986); Maryland, § 1986); Kentucky, Ky. (Supp. Rev. Stat. *17 13-423(a) (1984); Transp. Jersey, § N. Stat. Code Ann. New J. Ann. Md. (West Vermont, Ann., 23, §§ 415, 1986); Tit. § 54.39 A-10 and Vt. Stat. 1986-1987). (1978 Supp. 3010 and 18 207.004(5)(d) (1986); § Florida, Georgia, The are Fla. Stat. Ga. States 29, § 2243 Maine, Ann., § 40-2-111 Tit. (1985); Ann. Me. Rev. Stat. Code. (1984); 1986-1987); Nebraska, § 60-305.03 Rev. (Supp. Neb. Stat. New (West Oklahoma, Stat., 1973); § 39:3-6 Okla. Tit. Jersey, N. J. Stat. Ann. 23, § 417 Vermont, Ann., (Supp. 1986); (Supp. § Vt. Tit. 1120 and Stat. 1986-1987). 19 appellant parties stipulated that if all the States in which Old The fee, Lines, operated impose $25 were a marker Freight Inc. Dominion every operates it in in which its qualifying the cost of its vehicles State many larger that is than the figure would amount to a times com vehicles year App. pretax net in fiscal 27-28. pany’s income 20 states, taxes, adopted by many and license “if cities bear Flat-rate many places heavily aggregate on a firm sells in than much more in the that (and particular, quan in the same total firm otherwise with on a identical sales) place.” Supreme tity only Regan, that in one Court sells 286 they practical impose per appel- effect, since cost a mile on heavy approximately
lants’ trucks that is
five times as
as the
per
by
plainly
cost mile borne
local trucks, the taxes are
dis-
criminatory.21 Under our consistent course
in
of decisions
years a
recent
state tax that
in-state
favors
business over
no
out-of-state business for
other
than
reason
the location of
prohibited
Tyler
its
business
the Commerce Clause.
Pipe
Washington Dept.
Industries,
Revenue, ante,
Inc. v.
p.
Imports,
(1984);
Bacchus
Ltd. v.
232;
Dias,
U. S. 263
(1984);
Hardesty,
Westinghouse
Armco Inc. v.
than States.” several cl. 3.
IV invalidating precedents Notwithstanding vari- our recent consis- that failed the “internal ous state taxation measures arguments tency” in de- three test, advances They are to reflect a reasonable fense of its flat taxes. said using charge privilege considered its roads when for the pay Pennsylvania-based alongside high price trucks Appellees argue that the flat taxes fees. also recently fees this Court has from the flat user are no different invoking Finally, talismanically upheld. in which decisions doing privilege upheld business within flat taxes for the we per-mile disparity appellees that a mere contend State, provides no and intrastate truckers between interstate costs persuaded, upon are to strike down a tax. We basis which upon by appellees con- relied that none of the cases however, disposition. our trols Restructuring”
The “Rational Defense acknowledge Appellees expressly the axle tax cannot previously equalizes compensatory tax that as a be defended by offsetting specific unequal tax “a tax burdens substantially equivalent only commerce for a on intrastate Pipe Tyler Appellees Indus 18. See event.” Brief for Washington Dept. ante, at Revenue, 242-244; tries, Inc. v. Hardesty, v. S., 642-643; Inc. 467 U. Armco Henneford they Instead, Co., 300 U. Mason S. Silas argue inter- tax does not discriminate that the axle Pennsylva- part “it a small commerce because is but state designed to fi- and fees multi-tiered scheme of taxes nia’s system.” Appellees highway Brief for an extensive nance higher pay Appellees trucks that domestic contend registered highways Pennsylvania’s price those than to use totality specifically, of the tax and that the States, and other higher changes relative taxes 1980 has resulted fee since *19 Pennsylvania. registration registered fee in on trucks only partially We offset these increases. reductions in 1982 unavailing. argument find this premise reasoning
Appellees’ is the based on erroneous constitutionally Pennsylvania-based is trucks that relief for they subject higher permissible a financial to because are Pennsylvania’s trucks of roads than for their use burden pay the must for use of same roads. in other based States Pennsylvania- premise flawed for three reasons. This is throughout to the United trucks are allowed travel based registration paying the fee; more than one States without solely they pay registration Penn- are not the use of fees reg- sylvania’s highways. it is addition, while true that they higher States, in also istration fees are lower some are g., App. impor- See, in e. Most some other States. tantly, registration even if the relative amounts of the States’ competitive advantage trucks in other confer on based fees a permit compensatory the Clause does not States, Commerce disparities result from each State’s measures for the competitive of tax To the that a disad- choice levels. extent vantage is carriers the relative conferred remedy in fees, amounts of the lies States’ enlargement participation change in level, their through IRP,22 or the collection revenues valid taxes. restructuring “rational The axle tax cannot be vindicated as a simply arguably of burdens” because it benefits a class appear participation flat to to 22 The taxes would create disincentive IRP the statute is unclear as to whether trucks based IRP because only Pennsylvania’s required pay registra are not their share of States fees, but marker fee and the axle tax as well. See 75 Pa. $25 tion (d)(1) (1984) (“The 2102(b), §§ fee for issuance an identifica Cons. Stat. prior including there $25 marker March 1983 shall be tion Secretary may by regulation . . . The of Revenue $5. after the fee shall be exempt requirement display from the identification marker motor opinion clearly effec carrier which in his are identifiable such that vehicles (“all chapter thereby”); § will suffer motor tive enforcement of this not axle”). per $36 annual tax the amount of pay carriers shall an highways pays use the than truckers more to State’s highway another class of users. As one commentator does “[implementation observed, has of a rule of law that a tax nondiscriminatory because other taxes of at least the same *20 magnitude imposed by taxing are State on other tax payers engaging plunge in different transactions would weighing comparative Court into the morass of tax burdens.” Corporate 1 Hellerstein, J. State Taxation: Income and Fran (1983). p. ¶ 4.12[5], chise Taxes 150 The flat taxes must stand or fall on their own.
The User-Fee Defense wholly own,
Taken on their the marker fee and axle tax are upheld Evansville-Vanderburgh unlike the user fees we Airport Authority Airlines, Inc., District v. Delta 405 (1972), upon by 707 a case relied U. S.
Supreme
Evansville-Vanderburgh
ques-
Court.
involved the
municipal airport authority
tion whether a
could collect a flat
passenger boarding
each
service fee of
for
commercial
$1
reviewing
operating
airport.23
aircraft
from the
After
our
highway
concerning
well as the
hold-
tolls,
decisions
as
cases
ing
may impose
privilege
that a State
a flat fee for the
of
by
using
regard
particular
its roads without
to the actual use
long
vehicles,
excessive,
so
as the fee is not
we stated:
long
approxi-
“At least so
as the toll is based on some fair
privilege
as was that before us
use,
mation of use or
[Lines
Capitol Greyhound
Brice,
v.
We then fee the two $1 essential satisfied discriminatory it be conditions that neither nor excessive: Hampshire charges “The Indiana and New meet those against First, standards. neither fee in- discriminates majority terstate commerce and travel. While the vast flights passengers airports who board involved traveling are interstate, both interstate and intrastate flights subject charges. are to the same Furthermore, showing any there is no inherent difference between flights, application these two classes such that the fee same to both amount would to discrimination Nippert or the one other. Richmond, See U. S. 416 *21 charges imperfect, ap-
“Second, these reflect a if fair, proximation they of the use of facilities for whose benefit imposed.” Id., are at 717.
Pennsylvania’s satisfy flat taxes neither of these conditions: They by subjecting discriminate out-of-state vehicles higher charge per them to a much mile in the State, traveled they purport approximate fairly even do not to the cost Pennsylvania’s or value of the use of roads. Pennsylvania Supreme
The Court also relied on Common- wealth Montana, Edison Co. U. S. 609 imposed State of Montana a severance tax on coal the same rate final whether the of the destination coal was local or in- rejected taxpayer’s terstate. We the discrimination claim, premised which was on the fact that 90%of Montana coal was shipped to other States under contracts that shifted the tax principally utility companies burden outside Montana imposed and that therefore the bulk the tax burden on out- of-state consumers of Montana coal. We held that “there is no real discrimination in case; this the tax is burden borne ac- cording according amount of the coal consumed and not
any and out-of-state consumers.” between in-state distinction percentage the value of was a Id., at 619. Because the tax impose only tax, Montana could contract, and because paid every equivalently the same valued contract holder of an shipment was irrele- crossed a state border whether the tax; by magnitude Mon- tax of the burden vant to distinguishable in two case are The flat taxes this tana. Pennsylvania’s ways. axle marker and the amount of First, vary directly by miles with a trucker does not taxes owed proxy from for value obtained some other traveled or with “[W]hen relation- of a tax bears no the measure the State. taxpayers’ presence ship State, in a or activities to the prong may properly the fourth conclude under court imposing Complete an Auto Transit test that State Id., at 629. As commerce.” on interstate undue burden Grey Capitol argued dissent his Frankfurter Justice (1950): Brice, 542, 557 Lines v. hound long measure tax on a relevant as a State bases its “So obviously and intra- both interstate use, road of actual pro- pay according in fact to the facilities state carriers privilege by But a tax levied for the vided State. may, using in the normal use, not their actual roads, and hypothesis, operations in- a fanciful and not as course of carriers. While on interstate volve an undue burden privilege form, is unlimited a State extended theoretically in- vehicles, whether for all the same thus can and will the intrastate vehicle intrastate, or terstate *22 operation, privilege while it is whenever exercise necessarily forego privi- must interstate vehicle simply interstate lege of its the time because some of operates States as e., in other i. because it character, privilege average general instances, In the well. the intrastate as to the interstate is not as valuable to carrier.” highway use taxes tax, coal the Montana
Second, unlike imposed other States. can be operates in there is dan- other States
“And because it danger ger car- the interstate not a fanciful —that —and rier will be privilege subject taxes of several to highways though is not his entire use of the States, even operators greater significantly than that of intrastate Ibid, (foot- subject only privilege tax.” to one who are omitted). note that a illuminated the reason State’s Frankfurter thus
Justice unapportioned imposition the neutral tax, flat unlike of an Evansville-Vanderburgh and the neutral sever- fee in user against Co., Edison discriminates in Commonwealth ance tax commerce. interstate
The Flat-Tax Defense authority support of the State’s to the cases
Third, lending support appellees’ impose taxes, flat use while uphold longer argument, flat taxes with the can no suffice to discriminatory consequences blatantly with the associated tax. marker fee and axle (1927), Poor, the Court held that Clark exclusively “although engaged highways, of a State’s
users
may
required
contribute to their
be
commerce,
suggestion
upkeep.
that the tax dis-
. . There is no
.
cost
Id., at 557. A
interstate commerce.”
criminates
Mayflower
Georgia
years
in Aero
Transit Co. v.
later
few
(1935), the Court sus-
Comm’n,
“The by engaged Georgia is than that other carriers less charge. yet they pay The fee business, the same is local mileage by a vehicle. There would not for the covered collecting difficulties on that basis. be administrative privilege of as the The for the a use as extensive fee is nothing that it shall be. There unreason- carrier wills imposed. oppressive in Cf. Clark v. or a burden so able (1933)]. [290 Coney, supra; Poor, Hicklin v. U. S. privilege without limit is not receives a One who freely by enjoy wronged as it as he his own refusal may.” 295 at 289. S.,U. brought by carrier, the same interstate
In a second case principle again Poor to on of Clark v. relied Court consistently proposition support state, “a with the may lay upon engaged ex motor vehicles clause, commerce clusively upon or own and commerce, those who interstate nondiscriminatory operate tax them, fair and reasonable so highways.” May compensation of Aero as for the use its Comm’rs, U. S., Board Railroad Transit Co. v. of flower Mayflower held that two flat taxes at 503. Aero operated by on its commercial vehicle Montana each highways commerce; did not discriminate exclusively wholly apply operations “[b]oth within levies proceeds operations, although such those state or the ” operations Id., at in character. 502. are interstate identify the taxes was careful to consideration Court highways,24 point privilege using and to as the State’s failing distinguish appellant be had erred out that the privilege privilege en and a tax on the tween a tax on that gaging in interstate commerce: present their face are exacted ‘in consideration “The taxes on is, state,’ they privilege are for the of this laid highways
use of the S.,U. using highways.” those
“Appellant therefore confuses a tax ‘assessed for a proper purpose objectionable and . . . not in amount,’ supra, affirmatively Poor, Clark v. a is, tax privilege using highways, laid for the of the state’s with privilege upon a tax not on that but some other privilege doing such as the of the interstate business. Though necessarily in related, view of the nature of in privileges terstate motor traffic, the two are not identi cal, and it is useless to confuse Id., them . . . .” at 504. opinion, again emphasized Later in the the Court the fact gross that the revenue fee was exacted consideration for privilege using highways, privi- of the State’s not for the lege doing of interstate Id., business. at 506. privilege distinction using between a tax on the of highways privilege
State’s engaging and a tax on the of dispositive interstate Spector commerce was also Motor (1951), Service, Inc. just O’Connor, 340 U. S. decided years Again addressing four later. a tax on an interstate motor carrier, the Court this time it, invalidated distin- guishing Mayflower Aero Transit Co. v. Board Railroad Spector Comm’rs because the tax was “not levied as com- pensation highways,” for the use of S.,U. at 607, and placed was not a tax on sales or use. “It is a ‘tax or excise’ unequivocally upon corporation’s privi- franchise for the lege carrying exclusively transportation on explained: the State.” We though
“Even the financial burden on interstate com- might question merce be the same, the whether a state pay way may validly make interstate commerce its de- pends upon through first of all the constitutional channel attempts which it to do so. Hewit, Freeman v. U. S. 249 [1946]; McLeod Co., v. Dilworth 322 U. S. 327 [1944].” Id., at 608. rejected
In our more recent decisions we have this some metaphysical approach what to the Commerce Clause that fo privilege primarily rather than character of the on the cused consequences we practical tax.25 while privilege- in- recognized taxes had invalidated that we part activity commerce, we of interstate to be deemed state permis- toward a standard we had “moved also noted that upon sibility rather its actual effect taxation of state based Complete terminology.” legal Transit, Inc. v. Auto than its Brady, decisions have considered at 281. “These S., 430 U. language rather its the tax statute but the formal not practical a tax Commerce and have sustained effect, activity applied *25 challenge an with a the tax is when Clause fairly apportioned, taxing State, the is nexus with substantial against commerce, and is interstate not discriminate does provided by Id., fairly at State.” related to the services only Complete Transit, not observed Inc., In Auto we privilege against Spector ofinterstate rule a tax on that the relationship realities,” to economic “has no commerce Spector expressly itself, case overruled S., at U. philosophy un- that “the but also concluded S., 430 U. derlying [that is immune from interstate commerce the rule ruling rejected.” has] Id., that at 288. taxation been state underpinnings eroded, this rule had been we the theoretical vitality question necessarily future of earlier called into facially upheld chal- neutral flat taxes had cases that immunity lenges premised com- rule of for interstate on the away challenges had then been turned merce. Unsuccessful taxing theory not the conduct that the State was on the taxing unitary, a for- commerce, but instead was part mally privilege of intrastate that was sometimes defined part Now of interstate commerce. and sometimes commerce Transit, Lindsey, Inc. v. g., e. Interstate 283 U. S. Compare, (1931) carriers’ car exclusively interstate motor (invalidating state tax on commerce), in interstate privilege engaging rying capacity as a tax (1933) carry Coney, (upholding tax on Hicklin state with proceeds highway for which earmarked ing capacity of interstate carriers tax). highway maintenance as use firmly
that it has established that interstate commerce been immunity longer from state it is taxation, as such has no no appropriate uphold merely particular a flat tax because the by charges formula which its are reckoned extends the same privilege interstate commerce that it nominal extends to “merely activities. formalism obscures the in-state Such produces question the tax a effect.” whether forbidden Ibid. upholding precedents longer flat can Thus, the taxes no by support proposition, appellees, advanced broad every privilege using highways flat tax for the State’s upheld clearly discriminatory if must be even it has a effect on by commerce reason of that commerce’sinterstate character. Although privilege out-of-state carriers obtain a to use Penn- sylvania’s highways nominally equivalent that is to that which imposition privi- receive, local carriers of the flat taxes lege that is several times more valuable to a local business competitors unquestionably than to its out-of-state natory discrimi- great and thus offends the Commerce Clause. The purpose constitutional of the Fathers cannot be defeated using apparently “guise produces an neutral of taxation which excluding discriminatory Nippert or effect.” v. Rich- precedents mond, 327 U. S. Those are still recognition valid, however, their the Commerce *26 require does not the Clause States to avoid flat taxes when they only practicable collecting are the means of revenues finely gradated from users and the use of a more user- pose genuine fee schedule would administrative burdens.26 Mayflower Comm’rs, In Aero Transit Co. v. Board Railroad of (1947), disposing appellant’s claims, after of U. S. the main the Court summarily rejected appellant’s in a footnote alternative claim that the gross receipts minimum $15 fee of on was unreasonable it because roughly greater required a tax 10 times than would be if percentage the (0.5% revenues) gross operating standard set forth in the statute of were used. We that require observed the “Federal Constitution does not the system state to elaborate a of motor vehicle taxation which will reflect with precision every gradation in appellant exact use. return for the fee $15 $3,000 grossing per annually operations can business do vehicle for on Mon- machinery revenue collection for of administrative taking obviously capable highways of into account at is now highway usage per gross- unit of in cost variations least Pennsylvania-based out-of-state carriers that between Pennsylvania, presented by noted, as uses facts. are these figures apportion mileage carriers’ fees motor jurisdictions, among from trucks to collect fuel taxes IRP Pennsylvania, of their miles less than 90% that travel apportions also tax rebates. calculate axle imposes corporate on carriers income tax it in the Pa. Stat. miles traveled State. carrier’s total 1987).27 § 7401(3)2(b)(Purdon Supp. While flat Tit. Ann., may perfectly administrative difficulties valid when taxes be- finely charges im calibrated user of more make collection justification practicable, is unavailable we conclude that this Pennsylvania’s unapportioned fee and marker case of tax. axle
V request Appellees decision, an in the event of adverse Pennsylvania Supreme Court the case to the the Court remand retroactively ruling applied should be whether our to consider having agree We decide other remedial issues. and to wronged by full use Appellant not its failure make the was tana roads. Id., disposition 506, n. was thus permitted.” 19. Our highways collecting taxes for vehi- the costs the State would encounter based $3,000 empha- annually in than Montana. We also cles that earned less impossibility precise apportionment according administrative sized the Brice, 542, 546 Capitol Greyhound Lines to road use upheld a tax the fair market of motor vehicles ease we 2% on value In that approximation of use highways rough as a because for the use of state vary applying a tax formula that would “with administrative burden of every affecting appropriate compensation road use.” factor as Amici Curiae et also Brief for State North Carolina al. See (each States, recoup highway through registration which costs of these *27 pur- through IRP and motor fuel mileage under the apportioned fees State, directly to miles within the ex- taxes related traveled chase and use difficulties). administrative periences no 298 presented
decided constitutional issue to us, we should proceedings remand further in the marker axle fee, tax, Tyler Pipe and marker fee refund suits. Industries, See Washington Dept. Revenue, Inc. ante, v. at 251-253. judgment Pennsylvania Supreme The Court is re- proceedings and the versed, case is remanded for further not opinion. inconsistent with this
It is so ordered. Justice with O’Connor, whom Chief Justice and Justice Powell join, dissenting. finding Pennsylvania’s highway “flat” use taxes uncon- today
stitutional under Clause, the Commerce the Court di- rectly holdings Capitol overrules the of at least three cases: Greyhound (1950); May- Brice, Lines v. 339 542 U. S. Aero Corp. Transit v. Comm’rs, Board Railroad 332 flower (1947); Mayflower Georgia U. Aero S. Transit Co. v. (1935). Comm’n, Public Service U. S. These cases apparently approval recently were with cited as as Massa- (1978), States, v. chusetts United U. S. 463-464 Evansville-Vanderburgh Airport Authority District Delta Airlines, Inc., 715-717 In Massachu- opinion setts the states:
“[W]e argument turn to consider the Commonwealth’s § that 4491 not be should treated as a user fee because the amount of tax is a flat annual fee and hence is not directly degree airways. related to the of use of the argument rejected This been has confronted and anal- ogous Capitol Greyhound Brice, contexts. Lines v. (1950) Noting U. S. is illustrative. . . . that the tax judged by ‘shouldbe its result, not its formula, and must proven stand unless to be unreasonable amount for the privilege granted,’ rejected id., at Court argument: carrier’s “‘Complete require fairness would that a tax state for- vary every affecting appropriate mula with factor com-
299
pensation
factors,
for road use. These
like those rele-
constitutionality
considering
vant
of other state
are so countless that
taxes,
we must be content with
approximation
“rough
precision.”
rather than
. . . Each
additional factor adds to administrative burdens of en-
taxpayers
govern-
fall alike on
forcement, which
recognized
may
ment. We have
such burdens
be
justify
ignoring
key
sufficient to
states
even such a
mileage, although
may
factor as
the result
be a tax which
appears
unequal weight upon
on its face
to bear with
dif-
Upon
type
reasoning
ferent carriers.
. . .
this
rests
general
Maryland
our
rule that taxes like that of
here are
valid unless the amount is shown to
inbe
excess of fair
compensation
privilege
using
for the
state roads.’
(Citations
omitted).
Id., at 546-547.
and footnotes
Mayflower
Aero
Transit
“See also
Co. v. Board Rail-
(1947)
Comm’rs,
road
I am aware of the criticism Mayflower g., Capitol of the Aero line of decisions. e. See, supra, (Frankfurter, Greyhound Brice, Lines v. at 548-560 Economy: dissenting); Open J., Brown, The Justice Frank- Judiciary, furter and the Position of the 67 Yale L. J. (1957);Lockhart, Trade, State Tax Barriers to Interstate (1940). highway 53 Harv. L. Rev. 1267-1270 Flat use may potentially pose practical in- taxes serious burden for Certainly, ante, commerce. at 284-287. terstate See as impression constitutionality high- first matter of way of flat differently. use taxes could have been resolved None- particular theless, this issue has been settled now for over 50 Congress pre-empt years has not seen fit to these taxes by exercising power, though, course, its commerce it has problems had recent occasion to consider and reconsider the trucking industry. See Motor Carrier Act of § seq., seq.; et et amended, as U. S. C. 10101 see Stat. generally Rollin’ ... To a Free Market: Motor Thoms, On Regulation 1935-1980, 13 Trans. L. If
Carrier J. practical problems and when the that the Court envisions may Congress them. occur, Indeed, correct as the Brief for as Amicus 3-8 State of Vermont Curiae sets out some de Congress, tail, recently Executive, and the have, fact, States *29 actively considered the issue. See H. R. 4518, Cong., (1983); Transportation 98th 1st Sess. Surface Issues: Hearings Transporta before the Subcommittee on Surface Transpor tion of House Committee on Public Works and (1984) (hereinafter Cong., tation, 98th 2d Sess. 1984 Hear ings); Oversight Hearings of the Motor Carrier Act of 1980: Transportation on before Subcommittee Surface Transportation, House Committee on Public Works and 98th Cong., 1st Sess. Federal action has been deferred attempts while the National Governors’ Association to de velop uniform national standards for taxation of interstate Hearings motor carriers. 1984 1201-1213;see National Gov Policy Experi Research, ernors’ Association Center for An Improve inment Federalism: Can the States the Interstate (Feb. System?, Capital Motor Carrier Taxation Ideas 1986). sought pro-
In the meantime, reliance interest to be by grown up tected the doctrine of stare decisis has around example, Pennsylvania the settled rule. For has collected spent highway some million axle taxes to be $300 im- provements largely that, of benefit course, the interstate trucking industry. Appellees my Brief for In view, Pennsylvania, structuring program financing high- its way repair, every rely upon construction and had reason to understanding highway reasonably the settled that flat taxes related to extent of the benefit conferred do not violate Similarly, appearing Clause. Arkansas, Commerce as opened highways here, amicus curiae its to the heaviest only upon understanding might trucks that it collect suffi- cient revenue from those trucks means of flat taxes to compensate damage they for the do to its roads. See Ameri- Trucking Gray, Assns., 488, 503-504, 288 Ark. Inc. v. can (1986), pending, No. 86-358. 2d 766-767 cert. 707 W. S. Arkansas left unconstitutional, then is If flat tax is also this damage for State of the taxes. Brief but without with the (estimating dam incremental as Amicus Curiae Arkansas heavy annually). light age by million trucks at $53 my if a rule is to be view, new interests, reliance these Capitol Greyhound Congress it. Lines do declared, should at 547. Brice, S., 339 U. suggestion, ante, that the Aero 294-296, The Court’s intimately up Mayflower bound with cases somehow line of is Spector Service, O’Connor, Inc. v. Motor the rule of (1951), sub silentio and therefore was overruled U. S. Brady, Complete Spector along Transit, Inc. v. Auto with (1977), easily The fact of the mat- refuted. S.U. Complete Spector Auto Transit involved ter is that entirely doing privilege business, an differ- tax on the state *30 Spector that that found form taxation, ent of state form distinguish and therefore had taxation unconstitutional Spector Mayflower Motor decisions, line of see Serv- the Aero supra, n. and this ice, O’Connor, 4, and that Inc. v. Mayflower explicitly line on Aero Com- relied Court after plete States, 435 in v. United Auto Transit Massachusetts Similarly, upon reliance the Court’s S.,U. at 463-464. (1946), inappropriate. Nippert Richmond, 416 is v. Again in different form of taxation was involved a somewhat predates Mayflower Nippert Transit both Aero and the case (1947), Comm’rs, U. and Board Railroad S. Co. v. Greyhound supra. Capitol Brice, Lines v. substantially argue
Appellants have so that circumstances days Mayflower progeny changed its Aero since the they they if had basis when were even some cases, that the growth They point basis now. decided, have no industry trucking and the increased reliance the interstate argue mileage apportioned time and taxes our presently on interstate commerce the extent of the burden greater, and the administrative inconvenience associated apportioned arguments with taxes less. These are not with- Significantly changed out some force. circumstances can make an inappro- older rule, defensible when formulated, priate, and we have reconsidered cases the dormant g., Commerce Clause area before. e. See, Commonwealth (1981), Edison Montana, Co. v. 453 U. S. 614-617 dis- approving Colliery statements in Heisler v. Co., Thomas (1922); Hughes U. S. 245 Oklahoma, v. U. S. (1979),overruling 326-336 Connecticut, Geerv. 161U. S. 519 (1896);Complete supra, Transit, Inc., Auto at 278-289, over- ruling Spector supra. changes Service, Inc., Motor But the appellants point degree, to are of not kind. Interstate trucking mileage-based certainly taxes were not oddities Capitol Greyhound when supra, Brice, Lines v. was decided g., Corp. Blodgett, See, e. Interstate Busses (1928)(upholding mileage-based U. S. 245 noting tax and ex- tax). istence of fuel contemporane- Indeed, the substantial Mayflower ous criticism of the Aero line of cases makes clear potential that the burden on interstate commerce that flat posed, taxes and the existence of feasible alternatives, were fully understood at the time these cases were decided. evolutionary I changes short, do not believe that the we have trucking industry enough seen the are substantial to defeat strong resulting stare decisis concerns, and the reliance present interests of the States, here. Hardesty,
Neither does Armco Inc. v. 467 U. S. 638 (1984), Virginia dictate a different result. The West tax- ation scheme in that case on its face discriminated *31 property out-of-state “if manufacturers: was manufac- imposed. tured the State, no tax on the sale is If the property imported was manufactured out of the State and for price.” sale, a tax of 0.27% is on the sale Id., at facially discriminatory justi- Since this tax could not be compensatory fied under the id., tax doctrine, at 642-643, it Maryland was held unconstitutional. See Louisiana, v. (1981). nothing in is Armco to 758-760 There U. S. being Mayflower suggest im- line of was the Aero cases that disapproved plicitly these cases were considered or even that do I the Court. Nor read at all to the case before relevant establishing grandiose version of the “internal Armco as consistency all test” measure of state as the constitutional ante, cf. 282-284; See taxes under the Commerce Clause. Washington Tyler Dept. Pipe Revenue, Industries, Inc. v. dissenting). my In J., view, the ante, at 254-259 (Scalia, facially discriminatory tax in Armco suffi- fact that the was ciently supports holding that invalid under the Commerce tax may proposition At Armco be read for the most, Clause. discriminatory facially if that is is unconstitutional tax way “internally it no does stand for it is not consistent.” nondiscriminatory proposition state taxes must also “internally pass generally be consistent” constitutional consistency” general Creating rule of an “internal muster. entirely enterprise application un- is an novel that the Court gives time case. Yet the Court dertakes for first this why necessary desirable, a rule is or nor does no reason such courts or commentators. it discuss the views of lower scholarly application general limited work Indeed, the consistency negative. largely See, of the internal test g., Duffy, Opportunity Armco, An Inc. e. & Missed: Judson Reality Analysis Hardesty, A From Economic Retreat (1985); 739-740 Taxes, W. Va. L. Rev. of State Puzzling Lathrop, Test for Discrimi Armco — A Narrow and natory Clause, Taxes the Commerce Taxes Under State unwilling simply follow the I am Court 551, greater understanding path without some down this authority, doing respectfully I dissent. need, so. The Chief Justice Scalia, joins, Justice with whom dissenting. consistency” agree test
I with the Court that the “internal requires adopts axle tax invalidation of it unapportioned any flat in- tax fee—as it would and marker *32 given my volving in the reasons activities. For multistate Washington Dept. Tyler Pipe Industries, Inc. v. dissent p. test can be de ante, I do not believe that Revenue, compelled by past our deci the Constitution or is rived from imposed on tax on in-state as out-of-state The same sions. Greyhound require. Capitol I See trucks; that is all would (1950); Mayflower Transit Aero Brice, Lines v. 339 U. S. (1947);Aero Comm’rs, 332U. S. 495 v. Board Railroad
Co. Georgia Mayflower Comm’n, Public Transit Co. v. Service 295 U. S. disposition to address relieves it of need
The Court’s facially appellants’ the axle tax is narrower contention that discriminatory it re- the same law that introduced because by, Pennsylvania-based registration trucks fees for duced purposes, precisely practical the amount of the axle taxes. all reject challenge im- as well. The axle tax is I would uniformly posed vehicles, on in-state and out-of-state both discriminatory. registra- facially not and is therefore only imposed trucks, in-state and its reduction tion fee is on facially against com- likewise does not discriminate reg- tax and the reduction both the axle merce. Since nondiscriminatory, independently I would fees are istration them. sustain
Appellants rely Maryland Louisiana, (1981), tax on off invalidated Louisiana’s use which we payments gas of that tax the State credited shore because against such as commerce, on local other taxes exempted gas production, tax on in-state the severance Id., from the tax. at 732- for certain in-state activities used distinguishable. Pennsylva readily 756. That case is exemption provides tax for in-state truck from its axle nia no payments permit tax to be used as not axle ers, does fee. The axle tax alone— credits Maryland gas face v. Louisiana — is on its tax unlike the nondiscriminatory. *33 exclusively lowering may of the intra- be that the
It well registration tax net effect as would a fee has the same state have the establishment the axle tax. But so would credit for registration tax at their current levels fee and the axle facially discriminatory place. the To determine the first on the alone, the of the tax but of a tax not on basis character extend our code, of a tax is to of the structure State’s basis principled distinc- and one which field, law into a new case registra- example, impossible. if,What tions become Pennsylvania-based barges, rather than trucks, tion fees for compensated precisely in an amount that had been reduced from the increased revenues to be derived for the additional if had enacted the axle tax what axle fees? Or year reducing registration then one later fees, and without registration corresponding in truck fees? reduction made a examples, than those course, is more difficult case, This apply to the same tax reduction and axle tax both because the simultaneously. transport enacted How- and were mode enough inquire is close whether a tax reduction ever, to “in latter tax so that effect” the or in mode to another time facially discriminatory ques- a is to ask treated as should be that has no answer. tion adjusting
Legislative intra taxes on interstate and action obviously ranging spans spectrum, from the activities state discriminatory ambiguous manipulative to the to the to wholly in their re can avoid arbitrariness innocent. Courts (which impossi spectrum only by policing the entire view subject by adopting ble), by policing rules which it, none of or thought scrutiny classes of actions certain well-defined to discriminatory spec likely end of the to come at or near traditionally course, last confin followedthe We have trum. ing clearly designed disapproval seem to forms of tax that our accepting amount the fact that some and discriminate,* based our decisions less area where we seem to have *There is one activity taxed: the “drum- tax than on the character of the form of the invalidated, inquiry, facially cases, elaborate we have without ming” where may slip through our net. A credit of discrimination highly suspect readily intrastate taxes falls within the cate- gory; take in- a reduction of intrastate taxes to account of nondiscriminatory from a axle tax does not. creased revenue acknowledge a credit I distinction between purely straight one, is a it reduction formal but seems be to if abandon me less absurd than what we will driven we tax in this it. The axle fee reduction case appeared in Extend rule treat that as the same bill. “in tax and the next case will involve two dif- credit, effect” a day, apart, enacted the same or a week or at ferent bills *34 beginning same A line must and end session. be (in any from somewhere, drawn the absence direction text) it I would draw here. authoritative Nippert Richmond, e. See, g., soliciting on activities.
neutral taxes (1946). “Everybody single that these laws have but a U. S. knows” (and protect merchants from out-of-town hence out-of- purpose, local state) temptation great presume that competition. The was whole class taxes, form, proved nondiscriminatory guilty until in- regardless their an I not think those eases are attractive model which nocent. do general jurisprudence. base a more Commerce Clause