LUNDING ET UX. v. NEW YORK TAX APPEALS TRIBUNAL ET AL.
No. 96-1462
Supreme Court of the United States
Argued November 5, 1997—Decided January 21, 1998
522 U.S. 287
Christopher H. Lunding, pro se, argued the cause for petitioners. With him on the briefs was John E. Smith.
Andrew D. Bing, Assistant Attorney General of New York, argued the cause for respondents. With him on the brief for respondent Commissioner of Taxation and Finance were Dennis C. Vacco, Attorney General, Barbara G. Billet, Solicitor General, and Peter H. Schiff, Deputy Solicitor General.*
JUSTICE O‘CONNOR delivered the opinion of the Court.
The Privileges and Immunities Clause,
I
A
New York law requires nonresident individuals to pay tax on net income from New York real property or tangible personalty and net income from employment or business, trade, or professional operations in New York. See
Computation of the income tax nonresidents owe New York involves several steps. First, nonresidents must compute their tax liability “as if” they resided in New York.
B
In 1990, petitioners Christopher Lunding and his wife, Barbara, were residents of Connecticut. During that year, Christopher Lunding earned substantial income from the practice of law in New York. That year, he also incurred alimony expenses relating to the dissolution of a previous marriage. In accordance with New York law, petitioners filed a New York Nonresident Income Tax Return to report the New York earnings. Petitioners did not comply with the limitation in
The Audit Division of the New York Department of Taxation and Finance denied that deduction and recomputed petitioners’ tax liability. After recalculation without the pro rata alimony deduction, petitioners owed an additional $3,724 in New York income taxes, plus interest. Petitioners appealed the additional assessment to the New York Division of Tax Appeals, asserting that
The Appellate Division held that
Respondents appealed to the New York Court of Appeals, which reversed the lower court‘s ruling and upheld the constitutionality of
Applying those principles to
Based on those justifications for
As to
Recognizing that the ruling of the New York Court of Appeals in this case creates a clear conflict with the Oregon Supreme Court‘s decision in Wood v. Department of Revenue, 305 Ore. 23, 749 P. 2d 1169 (1988), and is in tension with the South Carolina Supreme Court‘s ruling in Spencer v. South Carolina Tax Comm‘n, 281 S. C. 492, 316 S. E. 2d 386 (1984), aff‘d by an equally divided Court, 471 U. S. 82 (1985), we granted certiorari. 520 U. S. 1227 (1997). We conclude that, in the absence of a substantial reason for the difference in treatment of nonresidents,
II
A
The object of the Privileges and Immunities Clause is to “strongly ... constitute the citizens of the United States one people,” by “plac[ing] the citizens of each State upon the same footing with citizens of other States, so far as the advantages resulting from citizenship in those States are concerned.” Paul v. Virginia, 8 Wall. 168, 180 (1869). One right thereby secured is the right of a citizen of any State to “remove to and carry on business in another without being subjected in property or person to taxes more onerous than the citizens of the latter State are subjected to.” Shaffer, supra, at 56; see also Toomer v. Witsell, 334 U. S. 385, 396 (1948); Ward v. Maryland, 12 Wall. 418, 430 (1871).
Of course, nonresidents may “be required to make a ratable contribution in taxes for the support of the govern-
Because state legislatures must draw some distinctions in light of “local needs,” they have considerable discretion in formulating tax policy. Madden v. Kentucky, 309 U. S. 83, 88 (1940). Thus, “where the question is whether a state taxing law contravenes rights secured by [the Federal Constitution], the decision must depend not upon any mere question of form, construction, or definition, but upon the practical operation and effect of the tax imposed.” Shaffer, supra, at 55; see also St. Louis Southwestern R. Co. v. Arkansas, 235 U. S. 350, 362 (1914) (“[W]hen the question is whether a tax imposed by a State deprives a party of rights secured by the Federal Constitution, ... [w]e must regard the substance, rather than the form, and the controlling test is to be found in the operation and effect of the law as applied and enforced by the State“). In short, as this Court has noted in the equal protection context, “inequalities that result not from hostile discrimination, but occasionally and incidentally in the application of a [tax] system that is not arbitrary in its classification, are not sufficient to defeat the law.” Maxwell, supra, at 543.
We have described this balance as “a rule of substantial equality of treatment” for resident and nonresident taxpay-
“discrimination against citizens of other States where there is no substantial reason for the discrimination beyond the mere fact that they are citizens of other States. But it does not preclude disparity of treatment in the many situations where there are perfectly valid independent reasons for it. Thus the inquiry in each case must be concerned with whether such reasons do exist and whether the degree of discrimination bears a close relationship to them. The inquiry must also, of course, be conducted with due regard for the principle that the States should have considerable leeway in analyzing local evils and in prescribing appropriate cures.” 334 U. S., at 396.
Thus, when confronted with a challenge under the Privileges and Immunities Clause to a law distinguishing between residents and nonresidents, a State may defend its position by demonstrating that “(i) there is a substantial reason for the difference in treatment; and (ii) the discrimination practiced against nonresidents bears a substantial relationship to the State‘s objective.” Piper, 470 U. S., at 284.
Our concern for the integrity of the Privileges and Immunities Clause is reflected through a “standard of review substantially more rigorous than that applied to state tax distinctions, among, say, forms of business organizations or different trades and professions.” Austin, supra, at 663. Thus, as both the New York Court of Appeals, 89 N. Y. 2d, at 290, 675 N. E. 2d, at 820, and the State, Brief for Respondent
B
Our review of the State‘s justification for
“The difference ... is only such as arises naturally from the extent of the jurisdiction of the State in the two classes of cases, and cannot be regarded as an unfriendly or unreasonable discrimination. As to residents, it may, and does, exert its taxing power over their income from all sources, whether within or without the State, and it accords to them a corresponding privilege of deducting their losses, wherever these accrue. As to nonresidents, the jurisdiction extends only to their property owned within the State and their business, trade, or profession carried on therein, and the tax is only on such income as is derived from those sources. Hence there is no obligation to accord to them a deduction by reason of losses elsewhere incurred.” 252 U. S., at 57.
In so holding, the Court emphasized the practical effect of the provision, concluding that “the nonresident was not treated more onerously than the resident in any particular, and in fact was called upon to make no more than his ratable contribution to the support of the state government.” Austin, supra, at 664.
Shaffer involved a challenge to the State‘s denial of business-related deductions. The record in Shaffer dis-
In Travis v. Yale & Towne Mfg. Co., a Connecticut corporation doing business in New York sought to enjoin enforcement of New York‘s nonresident income tax laws on behalf of its employees, who were residents of Connecticut and New Jersey. In an opinion issued on the same day as Shaffer, the Court affirmed Shaffer‘s holding that a State may limit the deductions of nonresidents to those related to the production of in-state income. See Travis, 252 U. S., at 75-76 (describing Shaffer as settling that “there is no unconstitutional discrimination against citizens of other States in confining the deduction of expenses, losses, etc., in the case of non-resident taxpayers, to such as are connected with income arising from sources within the taxing State“). The record in Travis clarifies that many of the expenses and losses of nonresidents that New York law so limited were business related, such as ordinary and necessary business expenses, depreciation on business assets, and depletion of natural resources, such as oil, gas, and timber. At the time that Travis was decided, New York law also allowed nonresidents a pro rata deduction for various nonbusiness expenses, such as interest paid (based on the proportion of New York source income to total income), a deduction for taxes paid (other than income taxes) to the extent those taxes were connected with New York
Another provision of New York‘s nonresident tax law challenged in Travis did not survive scrutiny under the Privileges and Immunities Clause, however. Evincing the same concern with practical effect that animated the Shaffer decision, the Travis Court struck down a provision that denied only nonresidents an exemption from tax on a certain threshold of income, even though New York law allowed nonresidents a corresponding credit against New York taxes in the event that they paid resident income taxes in some other State providing a similar credit to New York residents. The Court rejected the argument that the rule was “a case of occasional or accidental inequality due to circumstances personal to the taxpayer.” 252 U. S., at 80. Nor was denial of the exemption salvaged “upon the theory that non-residents have untaxed income derived from sources in their home States or elsewhere outside of the State of New York, corresponding to the amount upon which residents of that State are exempt from taxation [by New York] under this act,” because “[t]he discrimination is not conditioned upon the existence of such untaxed income; and it would be rash to assume that non-residents taxable in New York under this law, as a class, are receiving additional income from outside sources equivalent to the amount of the exemptions that are accorded to citizens of New York and denied to them.” Id., at 81.
In Austin, a more recent decision reviewing a State‘s taxation of nonresidents, we considered a commuter tax imposed by New Hampshire, the effect of which was to tax only nonresidents working in that State. The Court described its previous decisions, including Shaffer and Travis, as “establishing a rule of substantial equality of treatment for the citizens of the taxing State and nonresident taxpayers,” under which New Hampshire‘s one-sided tax failed. 420 U. S., at 665.
Travis and Austin make clear that the Privileges and Immunities Clause prohibits a State from denying nonresidents a general tax exemption provided to residents, while Shaffer and Travis establish that States may limit nonresidents’ deductions of business expenses and nonbusiness deductions based on the relationship between those expenses and in-state property or income. While the latter decisions provide States a considerable amount of leeway in aligning the tax burden of nonresidents to in-state activities, neither they nor Austin can be fairly read as holding that the Privileges and Immunities Clause permits States to categorically deny personal deductions to a nonresident taxpayer, without a substantial justification for the difference in treatment.
III
In this case, New York acknowledges the right of nonresidents to pursue their livelihood on terms of substantial equality with residents. There is no question that the issue presented in this case is likely to affect many individuals, given the fact that it is common for nonresidents to enter
A
Looking first at the rationale the New York Court of Appeals adopted in upholding
There is no analogous provision in
In this case, the New York Court of Appeals similarly described petitioners’ alimony expenses as “wholly linked to personal activities outside the State,” but did not articulate any policy basis for
In its reliance on Goodwin, the New York Court of Appeals also failed to account for the fact that, through its broad 1987 tax reforms, New York adopted a new system of nonresident taxation that ties the income tax liability of nonresidents to the tax that they would have paid if they were residents. Indeed, a nonresident‘s “as if” tax liability, which determines both the tax rate and total tax owed, is based on federal adjusted gross income from all sources, not just New York sources. In computing their “as if” resident tax liability, nonresidents of New York are permitted to consider every deduction that New York residents are entitled to, both business and personal. It is only in the computation of the apportionment percentage that New York has chosen to isolate a specific deduction of nonresidents, alimony paid, as entirely nondeductible under any circumstances. Further, after Goodwin but before this case, the New York Court of Appeals acknowledged, in Friedsam, supra, that the State‘s policy and statutes favored parity, on a pro rata basis, in the allowance of personal deductions to residents and nonresidents. Accordingly, in light of the questionable relevance of Goodwin to New York‘s current system of taxing nonresidents, we do not agree with the New York Court of Appeals that “substantial reasons for the disparity in tax treatment are apparent on the face of [§ 631(b)(6)],” 89 N. Y. 2d, at 291, 675 N. E. 2d, at 821.
We also take little comfort in the fact, noted by the New York Court of Appeals, that
In summarizing its holding, the New York Court of Appeals explained that, because “there can be no serious argument that petitioners’ alimony deductions are legitimate business expenses[,] ... the approximate equality of tax treatment required by the Constitution is satisfied, and greater fine-tuning in this tax scheme is not constitutionally mandated.” 89 N. Y. 2d, at 291, 675 N. E. 2d, at 821. This Court‘s precedent, however, should not be read to suggest that tax schemes allowing nonresidents to deduct only their business expenses are per se constitutional, and we must accordingly inquire further into the State‘s justification for
B
Turning to respondents’ arguments to this Court, as an initial matter, we reject the State‘s suggestion that this Court‘s summary dismissals in several other cases should be dispositive of the question presented in this case. See Brief for Respondent Commissioner of Taxation and Finance 15-
In the context of New York‘s overall scheme of nonresident taxation,
The policy expressed in Friedsam, which acknowledged the principles of equality and fairness underlying the Privileges and Immunities Clause, was not merely an “impairment,” however. Although the State has considerable freedom to establish and adjust its tax policy respecting nonresidents, the end results must, of course, comply with the Federal Constitution, and any provision imposing disparate taxation upon nonresidents must be appropriately justified. As this Court has explained, where “the power to tax is not unlimited, validity is not established by the mere imposition of a tax.” Mullaney v. Anderson, 342 U. S. 415, 418 (1952).
To justify
Moreover, to the extent that the cited testimony suggests that no circumstances exist under which a State‘s denial of personal deductions to nonresidents could be constrained, we reject its premise. Certainly, as the Court found in Travis, 252 U. S., at 79-80, nonresidents must be allowed tax exemptions in parity with residents. And the most that the Court has suggested regarding nonresidents’ nonbusiness expenses is that their deduction may be limited to the proportion of those expenses rationally related to in-state income or activities. See Shaffer, 252 U. S., at 56-57.
As a practical matter, the Court‘s interpretation of the Privileges and Immunities Clause in Travis and Shaffer implies that States may effectively limit nonresidents’ deduction of certain personal expenses based on a reason as simple as the fact that those expenses are clearly related to residence in another State. But here,
There is no doubt that similar circumstances could arise respecting the apportionment for tax purposes of income or expenses based on in-state activities without a violation of the Privileges and Immunities Clause. Such was the case in Shaffer, despite the petitioner‘s attempt to argue that he should be allowed to offset net business income taxed by Oklahoma with business losses incurred in other States. See 252 U. S., at 57. It is one thing, however, for an anomalous situation to arise because an individual has greater profits from business activities or property owned in one particular State than in another. An entirely different situation is presented by a facially inequitable and essentially unsubstantiated taxing scheme that denies only nonresidents a tax deduction for alimony payments, which while surely a personal matter, see United States v. Gilmore, 372 U. S. 39, 44 (1963), arguably bear some relationship to a taxpayer‘s overall earnings. Alimony payments also differ from other types of personal deductions, such as mortgage interest and property tax payments, whose situs can be determined based on the location of the underlying property. Thus, unlike the expenses discussed in Shaffer, alimony payments cannot be so easily characterized as “losses elsewhere incurred.” 252 U. S., at 57. Rather, alimony payments reflect an obligation of some duration that is determined in large measure by an individual‘s income generally, wherever it is earned. The
Accordingly, contrary to the dissent‘s suggestion, post, at 321, 326-327, we do not propose that States are required to allow nonresidents a deduction for all manner of personal expenses, such as taxes paid to other States or mortgage interest relating to an out-of-state residence. Nor do we imply that States invariably must provide to nonresidents the same manner of tax credits available to residents. Our precedent allows States to adopt justified and reasonable distinctions between residents and nonresidents in the provision of tax benefits, whether in the form of tax deductions or tax credits. In this case, however, we are not satisfied by the State‘s argument that it need not consider the impact of disallowing nonresidents a deduction for alimony paid merely because alimony expenses are personal in nature, particularly in light of the inequities that could result when a nonresident with alimony obligations derives nearly all of her income from New York, a scenario that may be “typical,” see Travis, supra, at 80. By requiring nonresidents to pay more tax than similarly situated residents solely on the basis of whether or not the nonresidents are liable for alimony payments,
C
Respondents also propose that
In the federal system, when one resident taxpayer pays alimony to another, the payer‘s alimony deduction is offset by the alimony income reported by the recipient, leading to parity in the allocation of the overall tax burden. Section 631(b)(6), however, disallows nonresidents’ entire alimony expenses with no consideration given to whether New York income tax will be paid by the recipients. Respondents explain that such concerns are simply irrelevant to New York‘s taxation of nonresidents, because “[e]xtending the benefit of income splitting to nonresidents is inappropriate on tax policy grounds because nonresidents are taxed by New York on only a slice of their income—that derived from New York sources.” Brief for Respondent Commissioner of Taxation and Finance 15. Such analysis, however, begs the question whether there is a substantial reason for the difference in treatment, and is therefore not appreciably distinct from the State‘s assertion that no such justification is required because
Indeed, we fail to see how New York‘s disregard for the residence of the alimony recipient does anything more than point out potential inequities in the operation of
D
Finally, several States, as amici for respondents, assert that
IV
In sum, we find that the State‘s inability to tax a nonresident‘s entire income is not sufficient, in and of itself, to justify the discrimination imposed by
Although the Privileges and Immunities Clause does not prevent States from requiring nonresidents to allocate income and deductions based on their in-state activities in the manner described in Shaffer and Travis, those opinions do not automatically guarantee that a State may disallow nonresident taxpayers every manner of nonbusiness deduction on the assumption that such amounts are inevitably allocable to the State in which the taxpayer resides. Alimony obligations are unlike other expenses that can be related to activities conducted in a particular State or property held there. And as a personal obligation that generally correlates with a taxpayer‘s total income or wealth, alimony bears some relationship to earnings regardless of their source. Further, the manner in which New York taxes nonresidents, based on an allocation of an “as if” resident tax liability, not only imposes upon nonresidents’ income the effect of New York‘s graduated tax rates but also imports a corresponding element of fairness in allowing nonresidents a pro rata deduc
Under the circumstances, we find that respondents have not presented a substantial justification for the categorical denial of alimony deductions to nonresidents. The State‘s failure to provide more than a cursory justification for
Accordingly, the decision of the New York Court of Appeals is reversed, and the case is remanded for proceedings not inconsistent with this opinion.
It is so ordered.
JUSTICE GINSBURG, with whom THE CHIEF JUSTICE and JUSTICE KENNEDY join, dissenting.
New York and other States follow the Federal Government‘s lead1 in according an income tax deduction for alimony to resident taxpayers only.2 That tax practice, I
I
To put this case in proper perspective, it is helpful to recognize not only that alimony payments are “surely a personal matter,” ante, at 310; in addition, alimony payments are “unlike other . . . personal obligation[s],” ante, at 314. Under federal tax law, mirrored in state tax regimes, alimony is included in the recipient‘s gross income,
Explaining why New York must so favor Connecticut residents over New York residents, Lunding invites comparisons with other broken marriages—cases in which one of the former spouses resides in New York and the other resides elsewhere. First, had Lunding‘s former spouse moved from Connecticut to New York, New York would count the alimony payments as income to her, but would nonetheless deny him, because of his out-of-state residence, any deduction. In such a case, New York would effectively tax the same income twice, first to the payer by giving him no deduction, then to the recipient, by taxing the payments as gross income to her. Of course, that is not Lunding‘s situation, and one may question his standing to demand that New York take nothing from him in order to offset the State‘s arguably excessive taxation of others.
More engagingly, Lunding compares his situation to that of a New York resident who pays alimony to a former spouse living in another State. In such a case, New York would permit the New Yorker to deduct the alimony payments,
The Court‘s condemnation of New York‘s law seems to me unwarranted. As applied to a universe of former marital partners who, like Lunding and his former spouse, reside in the same State, New York‘s attribution of income to someone (either payer or recipient) is hardly unfair. True, an occasional New York resident will be afforded a deduction though his former spouse, because she resides elsewhere, will not be chased by New York‘s tax collector. And an occasional New York alimony recipient will be taxed despite the nonresidence of her former spouse. But New York could legitimately assume that in most cases, as in the Lundings’ case, payer and recipient will reside in the same State. Moreover, in cases in which the State‘s system is overly generous (New York payer, nonresident recipient) or insufficiently generous (nonresident payer, New York recipient), there is no systematic discrimination discretely against nonresidents, for the pairs of former spouses in both cases include a resident and a nonresident.
In reviewing state tax classifications, we have previously held it sufficient under the Privileges and Immunities Clause that “the State has secured a reasonably fair distribution of burdens, and that no intentional discrimination has been made against non-residents.” Travellers’ Ins. Co. v. Connecticut, 185 U. S. 364, 371 (1902). In Travellers, the Court upheld a state tax that was facially discriminatory: Nonresidents who held stock in Connecticut corporations owed tax to the State on the full value of their holdings, while resident stockholders were entitled to a deduction for their proportionate share of the corporation‘s Connecticut real estate.
Travellers held that tax classifications survive Privileges and Immunities Clause scrutiny if they provide a rough parity of treatment between residents and nonresidents. See also Austin v. New Hampshire, 420 U. S. 656, 665 (1975) (Privileges and Immunities Clause precedents “establis[h] a rule of substantial equality of treatment“). That holding accords with the Court‘s observation in Baldwin v. Fish and Game Comm‘n of Mont., 436 U. S. 371, 383 (1978), that “[s]ome distinctions between residents and nonresidents merely reflect the fact that this is a Nation composed of individual States, and are permitted; other distinctions are prohibited because they hinder the formation, the purpose, or the development of a single Union of those States.” A tax classification that does not systematically discriminate against nonresidents cannot be said to “hinder the formation, the purpose, or the development of a single Union.” See McIntyre & Pomp, Post-Marriage Income Splitting through the Deduction for Alimony Payments, 13 State Tax Notes 1631, 1635 (1997) (urging that the Privileges and Immunities Clause does not require New York to forgo the income-splitting objective served by its alimony rules when both payer and recipient are residents of the same State simply because “results may be less than ideal” “when one of the
I would affirm the judgment of the New York Court of Appeals as consistent with the Court‘s precedent, and would not cast doubt, as today‘s decision does, on state tax provisions long considered secure.
II
Viewing this case as one discretely about alimony, I would accept New York‘s law as a fair adaptation, at the state level, of the current United States system. The Court notes but shies away from this approach, see ante, at 311-313, expressing particular concern about double taxation in the “extreme” case not before us—the “New York resident [who] receives alimony payments from a nonresident New York taxpayer,” ante, at 313.4 Instead, the Court treats alimony as one among several personal expenses a State makes deductible.
Significantly, the Court‘s approach conforms to no historic pattern. “Historically, both alimony and child support were treated as personal expenses nondeductible [by the payer]
Accepting, arguendo, the Court‘s “personal expense deduction” in lieu of “income attribution” categorization of alimony, however, I do not read our precedent to lead in the direction the Court takes. On Lunding‘s analysis, which the Court essentially embraces, the core principle is that “personal deductions, no matter what they are . . . must be allowed in the proportion that the New York State income bears to total income.” Tr. of Oral Arg. 19. That has never been, nor should it be, what the Privileges and Immunities Clause teaches.
A
“[E]arly in this century, the Court enunciated the principle that a State may limit a nonresident‘s expenses, losses, and other deductions to those incurred in connection with the production of income within the taxing State.” 2 J. Hellerstein & W. Hellerstein, State Taxation 20-47 (1992). In two companion cases—Shaffer v. Carter, 252 U. S. 37 (1920), and Travis v. Yale & Towne Mfg. Co., 252 U. S. 60 (1920)—the Court considered, respectively, Oklahoma‘s and New York‘s schemes of nonresident income taxation. Both had been challenged as violating the Privileges and Immunities Clause.
Upholding the Oklahoma scheme and declaring the New York scheme impermissibly discriminatory, the Court established at least three principles. First, “just as a State may impose general income taxes upon its own citizens and residents whose persons are subject to its control, it may, as a necessary consequence, levy a duty of like character, and not more onerous in its effect, upon incomes accruing to nonresidents from their property or business within the State,
Second, a State may not deny nonresidents personal exemptions when such exemptions are uniformly afforded to residents. See id., at 79-81. Personal exemptions, which are typically granted in a set amount “to all taxpayers, regardless of their income,” Hellerstein, Some Reflections on the State Taxation of a Nonresident‘s Personal Income, 72 Mich. L. Rev. 1309, 1343 (1974) (hereinafter Hellerstein), effectively create a zero tax bracket for the amount of the exemption. See Chirelstein, p. 3. Denial of those exemptions thus amounts to an across-the-board rate increase for nonresidents, a practice impermissible under longstanding constitutional interpretation. See, e. g., Chalker v. Birmingham & Northwestern R. Co., 249 U. S. 522, 526-527 (1919); Ward v. Maryland, 12 Wall. 418, 430 (1871); see also Austin v. New Hampshire, 420 U. S., at 659 (Privileges and Immunities Clause violated where, “[i]n effect, . . . the State taxe[d] only the incomes of nonresidents working in New Hampshire“). Because New York denied nonresidents the personal exemption provided to all residents, the Travis Court held the State‘s scheme an abridgment of the Privileges and Immunities Clause. 252 U. S., at 79-81.
Finally, deductions for specific expenses are treated differently from the blanket exemptions at issue in Travis: A State need not afford nonresidents the same deductions it extends to its residents. In Shaffer, the Court upheld Oklahoma‘s rules governing deduction of business losses. Oklahoma residents could deduct such losses wherever incurred, while nonresidents could deduct only losses incurred within the State. The Court explained that the disparate treatment was “only such as arises naturally from the extent of the jurisdiction of the State in the two classes of cases, and cannot be regarded as an unfriendly or unreasonable discrimination.” 252 U. S., at 57. A State may tax its residents on “their income from all sources, whether within or without
B
Shaffer and Travis plainly establish that States need not allow nonresidents to deduct out-of-state business expenses. The application of those cases to deductions for personal expenses, however, is less clear. On the one hand, Travis’ broad language could be read to suggest that in-state business expenses are the only deductions States must extend to nonresidents. On the other hand, neither Shaffer nor Travis upheld a scheme denying nonresidents deductions for personal expenses.5 A leading commentator has concluded that “nothing in either the Shaffer or Travis opinions indicates whether the Court was addressing itself to personal as well as business deductions.” Hellerstein 1347, n. 165.
Goodwin further reasoned that a State may accord certain deductions “[i]n the exercise of its general governmental power to advance the welfare of its residents.” Ibid. But it does not inevitably follow that the State must “extend similar aid or encouragement to the residents of other states.” Ibid. A State need not, in short, underwrite the social policy of the Nation. Cf. Martinez v. Bynum, 461 U. S. 321, 328 (1983) (State may provide free primary and secondary education to residents without extending the same benefit to nonresidents).
Other lower courts, upholding a variety of personal expense deductions for residents only, have agreed with Goodwin‘s analysis. Challenges to such rulings, like the appeal
C
Goodwin‘s Privileges and Immunities Clause analysis is a persuasive elaboration of Shaffer and Travis. Whether Goodwin‘s exposition is read broadly (as supporting the view that a State need not accord nonresidents deductions for any personal expenses) or more precisely (as holding that a State may deny nonresidents deductions for personal expenditures that are “intimately connected with the state of [the taxpayer‘s] residence,” Goodwin, 286 App. Div., at 701, 146 N. Y. S. 2d, at 180), Christopher Lunding is not entitled to the relief he seeks.
The majority is therefore wrong to fault the Court of Appeals for insufficient articulation of a “policy basis for
III
Although Lunding‘s alimony payments to a Connecticut resident surely do not facilitate his production of income in New York or contribute to New York‘s riches, the Court relies on this connection: “[A]s a personal obligation that generally correlates with a taxpayer‘s total income or wealth, ali
The Court does not suggest that alimony correlates with a taxpayer‘s total income more closely than does the run of personal life expenses. Indeed, alimony may be more significantly influenced by other considerations, for example, the length of the marriage, the recipient‘s earnings, child custody and support arrangements, an antenuptial agreement.7 In
*
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For the reasons stated, I do not agree that the Privileges and Immunities Clause of Article IV, § 2, mandates the result Lunding seeks—the insulation of his 1990 alimony payments from any State‘s tax. Accordingly, I would affirm the judgment of the New York Court of Appeals, and I dissent from this Court‘s judgment.