OKLAHOMA TAX COMMISSION v. JEFFERSON LINES, INC.
No. 93-1677
Supreme Court of the United States
Argued November 28, 1994—Decided April 3, 1995
514 U.S. 175
Stanley P. Johnston argued the cause and filed a brief for petitioner.
Steven D. De Ruyter argued the cause for respondent. With him on the brief was Loren A. Unterseher.*
JUSTICE SOUTER delivered the opinion of the Court.
This case raises the question whether Oklahoma‘s sales tax on the full price of a ticket for bus travel from Oklahoma to another State is consistent with the Commerce Clause,
I
Oklahoma taxes sales in the State of certain goods and services, including transportation for hire.
*Richard Ruda and Lee Fennell filed a brief for the National Conference of State Legislatures et al. as amici curiae urging reversal.
Briefs of amici curiae urging affirmance were filed for the American Bus Association by Richard A. Allen; and for Greyhound Lines, Inc., by John B. Turner, Rebecca M. Fowler, Oscar R. Cantu, and Debra A. Dandeneau.
Respondent Jefferson Lines, Inc., is a Minnesota corporation that provided bus services as a common carrier in Oklahoma from 1988 to 1990. Jefferson did not collect or remit the sales taxes for tickets it had sold in Oklahoma for bus travel from Oklahoma to other States, although it did collect and remit the taxes for all tickets it had sold in Oklahoma for travel that originated and terminated within that State.
After Jefferson filed for bankruptcy protection on October 27, 1989, petitioner, Oklahoma Tax Commission, filed proof of claims in Bankruptcy Court for the uncollected taxes for tickets for interstate travel sold by Jefferson.2 Jefferson cited the Commerce Clause in objecting to the claims, and argued that the tax imposes an undue burden on interstate commerce by permitting Oklahoma to collect a percentage of the full purchase price of all tickets for interstate bus travel, even though some of that value derives from bus travel through other States. The tax also presents the danger of multiple taxation, Jefferson claimed, because any other State through which a bus travels while providing the services sold in Oklahoma will be able to impose taxes of their own upon Jefferson or its passengers for use of the roads.
The Bankruptcy Court agreed with Jefferson, the District Cоurt affirmed, and so did the United States Court of Appeals for the Eighth Circuit. In re Jefferson Lines, Inc., 15
II
Despite the express grant to Congress of the power to “regulate Commerce . . . among the several States,”
The command has been stated more easily than its object has been attained, however, and the Court‘s understanding of the dormant Commerce Clause has taken some turns. In its early stages, see 1 J. Hellerstein & W. Hellerstein, State Taxation ¶¶ 4.05-4.08 (2d ed. 1993) (hereinafter Hellerstein & Hellerstein); Hartman, supra n. 3, §§ 2:9-2:16, the Court held the view that interstate commerce was wholly immune from state taxation “in any form,” Leloup v. Port of Mobile, 127 U. S. 640, 648 (1888), “even though the same amount of tax should be laid on [intrastate] commerce,” Robbins v. Shelby County Taxing Dist., 120 U. S. 489, 497 (1887); see also Cooley v. Board of Wardens of Port of Philadelphia ex rel. Soc. for Relief of Distressed Pilots, 12 How. 299 (1852); Brown v. Maryland, 12 Wheat. 419 (1827). This position gave way in time to a less uncompromising but formal approach, according to which, for example, the Court would invalidate a state tax levied on gross receipts from interstate commerce, New Jersey Bell Telephone Co. v. State Bd. of Taxes and Assessments of N. J., 280 U. S. 338 (1930); Meyer v. Wells, Fargo & Co., 223 U. S. 298 (1912), or upon the “freight carried” in interstate commerce, Case of the State
In 1938, the old formalism began to give way with Justice Stone‘s opinion in Western Live Stock v. Bureau of Revenue, 303 U. S. 250, which examined New Mexico‘s franchise tax, measured by gross receipts, as applied to receipts from out-of-state advertisers in a journal produced by taxpayers in New Mexico but circulated both inside and outside the State. Although the assessment could have been sustained solely on prior precedent, see id., 258; Lockhart 66, and n. 122, Justice Stone added a dash of the pragmatism that, with a brief interlude, has since become our aspiration in this quarter of the law. The Court had no trouble rejecting the claim that the “mere formation of the contract between persons in different states” insulated the receipts from taxation, Western Live Stock, 303 U. S., at 253, and it saw the business of “preparing, printing and publishing magazine advertising [as] peculiarly local” and therefore subject to taxation by the
“So far as the value contributed to appellants’ New Mexico business by circulation of the magazine interstate is taxed, it cannot again be taxed elsewhere any more than the value of railroad property taxed locally. The tax is not one which in form or substance can be repeated by other states in such manner as to lay an added burden on the interstate distribution of the magazine.” Id., 260.
The Court explained that “[i]t was not the purpose of the commerce clause to relieve those engaged in interstate commerce from their just share of state tax burden even though it increases the cost of doing the business.” Id., 254. Soon after Western Live Stock, the Court expressly rested the invalidation of an unapportioned gross receipts tax on the ground that it violated the prohibition against multiple taxation:
“The vice of the statute as applied to receipts from interstate sales is that the tax includes in its measure, without apportionment, receipts dеrived from activities in interstate commerce; and that the exaction is of such a character that if lawful it may in substance be laid to the fullest extent by States in which the goods are sold as well as those in which they are manufactured.” J. D. Adams Mfg. Co. v. Storen, 304 U. S. 307, 311 (1938).
After a brief resurgence of the old absolutism that proscribed all taxation formally levied upon interstate commerce, see Freeman v. Hewit, 329 U. S. 249 (1946); Spector Motor Service, Inc. v. O‘Connor, 340 U. S. 602 (1951), the Court returned to Western Live Stock‘s multiple taxation rule in Northwestern States Portland Cement Co. v. Minnesota, 358 U. S. 450 (1959), and we categorically abandoned the latter-day formalism when Complete Auto Transit, Inc. v. Brady, 430 U. S. 274 (1977), overruled Spector and Freeman. In Complete Auto, a business engaged in transporting cars manufactured outside the taxing State to dealers within it challenged a franchise tax assessed equally on all gross income derived from transportation for hire within the State. The taxpayer‘s challenge resting solely on the fact that the State had taxed the privilege of engaging in an interstate commercial activity was turned back, and in sustaining the tax, we explicitly returned to our prior decisions that
“considered not the formal language of the tax statute but rather its practical effect, and have sustained a tax against Commerce Clause challenge when the tax is applied to an activity with a substantial nexus with the taxing State, is fairly apportioned, does not discriminate against interstate commerce, and is fairly related to the services provided by the State.” 430 U. S., at 279.
Since then, we have often applied, and somewhat refined, what has come to be known as Complete Auto‘s four-part test. See, e. g., Goldberg v. Sweet, 488 U. S. 252 (1989) (tax on telephone calls); D. H. Holmes Co. v. McNamara, 486 U. S. 24 (1988) (use tax); Container Corp. of America v. Franchise Tax Bd., 463 U. S. 159 (1983) (franchise tax); Commonwealth Edison Co. v. Montana, 453 U. S. 609 (1981) (severance tax). We apply its criteria to the tax before us today.
A
It has long been settled that a sale of tangible goods has a sufficient nexus to the State in which the sale is consummated to be treated as a local transaction taxable by that State. McGoldrick v. Berwind-White Coal Mining Co., 309 U. S. 33 (1940) (upholding tax on sale of coal shipped into taxing State by seller). So, too, in addressing the interstate provision of services, we recently held that a State in which an interstate telephone call originates or terminates has the requisite Commerce Clause nexus to tax a customer‘s purchase of that call as long as the call is billed or charged to a service address, or paid by an addressee, within the taxing State. Goldberg, supra, at 263. Oklahoma‘s tax falls comfortably within these rules. Oklahoma is where the ticket is purchasеd, and the service originates there. These facts are enough for concluding that “[t]here is ‘nexus’ aplenty here.” See D. H. Holmes, supra, at 33. Indeed, the taxpayer does not deny Oklahoma‘s substantial nexus to the in-state portion of the bus service, but rather argues that nexus to the State is insufficient as to the portion of travel outside its borders. This point, however, goes to the second prong of Complete Auto, to which we turn.
B
The difficult question in this case is whether the tax is properly apportioned within the meaning of the second prong of Complete Auto‘s test, “the central purpose [of which] is to ensure that each State taxes only its fair share of an interstate transaction.” Goldberg, supra, at 260-261. This principle of fair share is the lineal descendant of Western Live Stock‘s prohibition of multiple taxation, which is threatened whenever one State‘s act of overreaching combines with the possibility that another State will claim its fair share of the value taxed: the portion of value by which
For over a decade now, we have assessed any threat of malapportionment by asking whether the tax is “internally consistent” and, if so, whether it is “externally consistent” as well. See Goldberg, supra, at 261; Container Corp., supra, at 169. Internal consistency is рreserved when the imposition of a tax identical to the one in question by every other State would add no burden to interstate commerce that intrastate commerce would not also bear. This test asks nothing about the degree of economic reality reflected by the tax, but simply looks to the structure of the tax at issue to see whether its identical application by every State in the Union would place interstate commerce at a disadvantage as compared with commerce intrastate. A failure of internal consistency shows as a matter of law that a State is attempting to take more than its fair share of taxes from the interstate transaction, since allowing such a tax in one State would place interstate commerce at the mercy of those remaining States that might impose an identical tax. See Gwin, White & Prince, 305 U. S., at 439. There is no failure of it in this case, however. If every State were to impose a tax identical to Oklahoma‘s, that is, a tax on ticket sales within the State for travel originating there, no sale would be subject to more than one State‘s tax.
External consistency, on the other hand, looks not to the logical consequences of cloning, but to the economic justification for the State‘s claim upon the value taxed, to discover whether a State‘s tax reaches beyond that portion of value that is fairly attributable to economic activity within the taxing State. See Goldberg, supra, at 262; Container Corp., supra, at 169-170. Here, the threat of real multiple taxation (though not by literally identical statutes) may indicate a State‘s impermissible overreaching. It is to this less tidy world of real taxation that we turn now, and at length.
The very term “apportionment” tends to conjure up allocation by percentages, and where taxation of income from interstate business is in issue, apportionment disputes have often centered around specific formulas for slicing a taxable pie among several States in which the taxpayer‘s activities contributed to taxable value. In Moorman Mfg. Co. v. Bair, 437 U. S. 267 (1978), for example, we considered whether Iowa could measure an interstate corporation‘s taxable income by attributing income to business within the State “‘in that proportion which the gross sales made within the state bear to the total gross sales.‘” Id., at 270. We held that it could. In Container Corp., we decided whether California could constitutionally compute tаxable income assignable to a multijurisdictional enterprise‘s in-state activity by apportioning its combined business income according to a formula “based, in equal parts, on the proportion of [such] business’ total payroll, property, and sales which are located in the taxing State.” 463 U. S., at 170. Again, we held that it could. Finally, in Central Greyhound, we held that New York‘s taxation of an interstate bus line‘s gross receipts was constitutionally limited to that portion reflecting miles traveled within the taxing jurisdiction. 334 U. S., at 663.
In reviewing sales taxes for fair share, however, we have had to set a different course. A sale of goods is most readily viewed as a discrete event facilitated by the laws and amenities of the place of sale, and the transaction itself does not readily reveal the extent to which completed or anticipated interstate activity affects the value on which a buyer is taxed. We have therefore consistently approved taxation of sales without any division of the tax base among different States, and have instead held such taxes properly measurable by the gross charge for the purchase, regardless of any activity outside the taxing jurisdiction that might have preceded thе sale or might occur in the future. See, e. g., McGoldrick v. Berwind-White Coal Mining Co., supra.
So conceived, a sales tax on coal, for example, could not be repeated by other States, for the same coal was not imaginеd ever to be delivered in two States at once. Conversely, we held that a sales tax could not validly be imposed if the purchaser already had obtained title to the goods as they were shipped from outside the taxing State into the taxing State by common carrier. McLeod v. J. E. Dilworth Co., 322 U. S. 327 (1944). The out-of-state seller in that case “was through selling” outside the taxing State. Id., at 330. In other words, the very conception of the common sales tax on goods, operating on the transfer of ownership and possession at a particular time and place, insulated the buyer from any threat of further taxation of the transaction.
In deriving this rule covering taxation to a buyer on sales of goods we were not, of course, oblivious to the possibility of successive taxation of related events up and down the stream of commerce, and our cases are implicit with the understanding that the Commerce Clause does not forbid the
2
A sale of services can ordinarily be treated as a local state event just as readily as a sale of tangible goods can be located solely within the State of delivery. Cf. Goldberg v. Sweet, 488 U. S. 252 (1989). Although our decisional law on sales of services is less developed than on sales of goods, one category of cases dealing with taxation of gross sales receipts in the hands of a seller of services supports the view that the taxable event is wholly local. Thus we have held that the entire gross receipts derived from sales of services to be performed wholly in one State are taxable by that State, notwithstanding that the contract for performance of the services has been entered into across state lines with customers who reside outside the taxing State. Western Live Stock v. Bureau of Revenue, 303 U. S. 250 (1938). So, too, as we have already noted, even where interstate circulation contributes to the value of magazine advertising purchased by the customer, we have held that the Commerce Clause does not preclude a tax on its full value by the State
Cases on gross receipts from sales of services include one falling into quite a different category, however, and it is on this decision that the taxpayer relies for an analogy said to control the resolution of the case before us. In 1948, the Court decided Central Greyhound Lines, Inc. v. Mealey, 334 U. S. 653, striking down New York‘s gross receipts tax on transportation services imposed without further apportionment on the total receipts from New York sales of bus services, almost half of which were actually provided by carriage through neighboring New Jersey and Pennsylvania. The Court held the statute fatally flawed by the failure to apportion taxable receipts in the same proportions that miles traveled through the various Stаtes bore to the total. The similarity of Central Greyhound to this case is, of course, striking, and on the assumption that the economic significance of a gross receipts tax is indistinguishable from a tax on sales the Court of Appeals held that a similar mileage
We, however, think that Central Greyhound provides the wrong analogy for answering the sales tax apportionment question here. To be sure, the two cases involve the identical services, and apportionment by mileage per State is equally feasible in each. But the two diverge crucially in the identity of the taxpayers and the consequent opportunities that are understood to exist for multiple taxation of the same taxpayer. Central Greyhound did not rest simply on the mathematical and administrative feasibility of a mileage apportionment, but on the Court‘s express understanding that the seller-taxpayer was exposed to taxation by New Jersey and Pennsylvania on portions of the same receipts that New York was taxing in their entirety. The Court thus understood the gross receipts tax to be simply a variety of tax on income, which was required to be apportioned to reflect the location of the various interstate activities by which it was earned. This understanding is presumably the reason that the Central Greyhound Court said nothing about the arguably local character of the levy on the sales transaction.5 Instead, the Court heeded Berwind-White‘s warning about “[p]rivilege taxes requiring a percentage of the gross receipts from interstate transportation,” which “if sustained, could be imposed wherever the interstate activity occurs. . . .” 309 U. S., at 45-46, n. 2.
Here, in contrast, the tax falls on the buyer of the services, who is no more subject to double taxation on the sale of these services than the buyer of goods would be. The taxable event comprises agreement, payment, and delivery of some of the services in the taxing State; no other State can claim to be the site of the same combination. The economic activity represented by the receipt of the ticket for “consumption” in the form of commencement and partial provision of the
In sum, the sales taxation here is not open to the double taxation analysis on which Central Greyhound turned, and that decision does not control. Before we classify the Oklahoma tax with standard taxes on sales of goods, and with the taxes on less complicated sales of services, however, two questions may helpfully be considered.
3
Although the sale with partial delivery cannot be duplicated as a taxable event in any other State, and multiple taxation under an identical tax is thus precluded, is there a possibility of successive taxation so closely related to the trаnsaction as to indicate potential unfairness of Oklahoma‘s tax on the full amount of sale? And if the answer to that question is no, is the very possibility of apportioning by mileage a sufficient reason to conclude that the tax exceeds the fair share of the State of sale?
a
The taxpayer argues that anything but a Central Greyhound mileage apportionment by State will expose it to the
If, for example, in the face of Oklahoma‘s sales tax, Texas were to levy a sustainable, apportioned gross receipts tax on the Texas portion of travel from Oklahoma City to Dallas, interstate travel would not be exposed to multiple taxation in any sense different from coal for which the producer may be taxed first at point of severance by Montana and the customer may later be taxed upon its purchase in New York. The multiple taxation placed upon interstate commerce by such a confluence of taxes is not a structural evil that flows from either tax individually, but it is rather the “accidental incident of interstate commerce being subject to two different taxing jurisdictions.” Lockhart 75; See Moorman Mfg. Co., 437 U. S., at 277.6
Although we have not held that a State imposing an apportioned gross receipts tax that grants a credit for sales taxes paid in state must also extend such a credit to sales taxes paid out of state, see, e. g., Halliburton, supra, at 77 (Brennan, J., concurring); Silas Mason, supra, at 587; see also Williams v. Vermont, 472 U. S. 14, 21-22 (1985), we have noted that equality of treatment of interstate and intrastate activity has been the common theme among the paired (or “compensating“) tax schemes that have passed constitutional muster, see, e. g., Boston Stock Exchange, supra, at 331-332. We have indeed never upheld a tax in the face of a substantiated charge that it provided credits for the taxpayer‘s payment of in-state taxes but failed to extend such credit to payment of equivalent out-of-state taxes. To the contrary, in upholding tax schemes providing credits for taxes paid in state and occasioned by the same transaction, we have often pointed to the concomitant credit provisions for taxes paid out of state as supporting our conclusion that a particular tax passed muster because it treated out-of-state and in-state taxpayers alike. See, e. g., Itel Containers Int‘l Corp. v. Huddleston, 507 U. S. 60, 74 (1993); D. H. Holmes Co. v. McNamara, 486 U. S. 24, 31 (1988) (“The . . . taxing scheme is fairly apportioned, for it provides a credit against its use tax for sales taxes that have been paid in other States“); General Trading Co. v. State Tax Comm‘n of Iowa, 322 U. S. 335 (1944); Silas Mason, supra, at 584. A general requirement of equal treatment is thus amply clear from our precedent. We express no opinion on the need for equal treatment when a credit is allowed for payment of in- or out-of-state taxes by a third party. See Darnell v. Indiana, 226 U. S. 390 (1912).
True, it is not Oklahoma that has offered to provide a credit for related taxes paid elsewhere, but in taxing sales Oklahoma may rely upon use-taxing States to do so. This is merely a practical consequence of the structure of use taxes as generally based upon the primacy of taxes on sales, in that use of goods is taxed only to the extent that their prior sale has escaped taxation. Indeed the District of Columbia and 44 of the 45 States that impose sales and use taxes permit such a credit or exemption for similar taxes paid to other States. See 2 Hellerstein & Hellerstein ¶ 18.08, p. 18-48; 1 All States Tax Guide ¶ 256 (1994). As one state court summarized the provisions in force:
“These credit provisions create a national system under which the first state of purchase or use imposes the tax. Thereafter, no other state taxes the transaction unless there has been no prior tax imposed . . . or if the tax rate of the prior taxing state is less, in which case the subsequent taxing state imposes a tax measured only by the differential rate.” KSS Transportation Corp. v. Baldwin, 9 N. J. Tax 273, 285 (1987).
b
Finally, Jefferson points to the fact that in this case, unlike the telephone communication tax at issue in Goldberg, Oklahoma could feasibly apportion its sales tax on the basis of mileage as we required New York‘s gross receipts tax to do in Central Greyhound. Although Goldberg indeed noted that “[a]n apportionment formula based on mileage or some other geographic division of individual telephone calls would produce insurmountable administrative and technological barriers,” 488 U. S., at 264-265, and although we agree that no comparable barriers exist here, we nonetheless reject the idea that a particular apportionment formula must be used simply because it would be possible to use it. We have never required that any particular apportionment formula or method be used, and when a State has chosen one, an objecting taxpayer has the burden to demonstrate by ““clear and cogent evidence,” that “the income attributed to the State is in fact out of all appropriate proportions to the business transacted... in that State, or has led to a grossly distorted result.“” Container Corp., 463 U. S., at 170, quoting Moorman Mfg. Co., 437 U. S., at 274 (internal quotation marks omitted; citations omitted). That is too much for Jefferson
We now turn to the remaining two portions of Complete Auto‘s test, which require that the tax must “not discriminate against interstate commerce,” and must be “fairly related to the services provided by the State.” 430 U. S., at 279. Oklahoma‘s tax meets these demands.
A State may not “impose a tax which discriminates against interstate commerce... by providing a direct commercial advantage to local business.” Northwestern States Portland Cement Co. v. Minnesota, 358 U. S. 450, 458 (1959); see also American Trucking Assns., Inc. v. Scheiner, 483 U. S. 266, 269 (1987). Thus, States are barred from discriminating against foreign enterprises competing with local businesses, see, e. g., id., at 286, and from discriminating against commercial activity occurring outside the taxing State, see, e. g., Boston Stock Exchange v. State Tax Comm‘n, 429 U. S. 318 (1977). No argument has been made that Oklahoma dis-
The argument proffered by Jefferson and amicus Greyhound Lines is largely a rewriting of the apportionment challenge rejected above, and our response needs no reiteration here. See Brief for Respondent 40; Brief for Greyhound Lines, Inc., as Amicus Curiae 20-27. Jefferson takes the additional position, however, that Oklahoma discriminates against out-of-state travel by taxing a ticket “at the full 4% rate” regardless of whether the ticket relates to “a route entirely within Oklahoma” or to travel “only 10 percent within Oklahoma.” Brief for Respondent 40. In making the same point, amicus Greyhound invokes our decision in Scheiner, which struck down Pennsylvania‘s flat tax on all trucks traveling in and through the State as “plainly discriminatory.” 483 U. S., at 286. But that case is not on point.
In Scheiner, we held that a flat tax on trucks for the privilege of using Pennsylvania‘s roads discriminated against interstate travel, by imposing a cost per mile upon out-of-state trucks far exceeding the cost per mile borne by local trucks that generally traveled more miles on Pennsylvania roads. Ibid. The tax here differs from the one in Scheiner, however, by being imposed not upon the use of the State‘s roads, but upon “the freedom of purchase.” McLeod v. J. E. Dilworth Co., 322 U. S. 327, 330 (1944). However complementary the goals of sales and use taxes may be, the taxable event for one is the sale of the service, not the buyer‘s enjoyment or the privilege of using Oklahoma‘s roads. Since Oklahoma facilitates purchases of the services equally for intrastate and interstate travelers, all buyers pay tax at the same rate on the value of their purchases. See D. H. Holmes, 486 U. S., at 32; cf. Scheiner, supra, at 291 (“[T]he amount of Pennsylvania‘s ... taxes owed by a trucker does not vary directly ... with some ... proxy for value obtained from the State“). Thus, even if dividing Oklahoma sales taxes by
D
Finally, the Commerce Clause demands a fair relation between a tax and the benefits conferred upon the taxpayer by the State. See Goldberg, 488 U. S., at 266-267; D. H. Holmes, supra, at 32-34; Commonwealth Edison, supra, at 621-629. The taxpayer argues that the tax fails this final prong because the buyer‘s only benefits from the taxing State occur during the portion of the journey that takes place in Oklahoma. The taxpayer misunderstands the import of this last requirement.
The fair relation prong of Complete Auto requires no detailed accounting of the services provided to the taxpayer on account of the activity being taxed, nor, indeed, is a State limited to offsetting the public costs created by the taxed activity. If the event is taxable, the proceeds from the tax may ordinarily be used for purposes unrelated to the taxable event. Interstate commerce may thus be made to pay its fair share of state expenses and ““contribute to the cost of providing all govеrnmental services, including those serv-
IV
Oklahoma‘s tax on the sale of transportation services does not contravene the Commerce Clause. The judgment of the Court of Appeals is reversed, accordingly, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
JUSTICE SCALIA, with whom JUSTICE THOMAS joins, concurring in the judgment.
I agree with the Court‘s conclusion that Oklahoma‘s sales tax does not facially discriminate against interstate commerce. See ante, at 198-199. That seеms to me the most we can demand to certify compliance with the “negative Commerce Clause“-which is “negative” not only because it negates state regulation of commerce, but also because it does not appear in the Constitution. See Amerada Hess Corp. v. Director, Div. of Taxation, N. J. Dept. of Treasury, 490 U. S. 66, 80 (1989) (SCALIA, J., concurring in judgment); Tyler Pipe Industries, Inc. v. Washington State Dept. of Revenue, 483 U. S. 232, 254, 259-265 (1987) (SCALIA, J., concurring in part and dissenting in part).
I would not apply the remainder of the eminently unhelpful, so-called “four-part test” of Complete Auto Transit, Inc. v. Brady, 430 U. S. 274, 279 (1977). Under the real Commerce Clause (“The Congress shall have Power... To regulate Commerce ... among the several States,”
JUSTICE BREYER, with whom JUSTICE O‘CONNOR joins, dissenting.
Despite the Court‘s lucid and thorough discussion of the relevant law, I am unable to join its conclusion fоr one simple reason. Like the judges of the Court of Appeals, I believe the tax at issue here and the tax that this Court held unconstitutional in Central Greyhound Lines, Inc. v. Mealey, 334 U. S. 653 (1948), are, for all relevant purposes, identical. Both cases involve taxes imposed upon interstate bus transportation. In neither case did the State apportion the tax to avoid taxing that portion of the interstate activity performed in other States. And, I find no other distinguishing features. Hence, I would hold that the tax before us violates the Constitution for the reasons this Court set forth in Central Greyhound.
Justice Frankfurter wrote for the Central Greyhound Court that “it is interstate commerce which the State is seeking to reach,” id., at 661; that the “real question [is] whether what the State is exacting is a constitutionally fair demand ... for that aspect of the interstate commerce to which the State bears a special relation,” ibid.; and that by “its very nature an unapportioned gross receipts tax makes interstate transportation bear more than ‘a fair share of the cost of the local government whose protection it enjoys,‘” id., at 663 (quoting Freeman v. Hewit, 329 U. S. 249, 253 (1946)). The Court noted:
“If New Jersey and Pennsylvania could claim their right to make appropriately apportioned claims against that substantial part of the business of appellant to which they afford protection, we do not see how on principle and in precedent such a claim could be denied. This being so, to allow New York to impose a tax on the gross receipts for the entire mileage-on the 57.47% within New York as well as the 42.53% without-would subject interstate commerce to the unfair burden of being taxed as to portions of its revenue by States which give pro-
tection to those portions, as well as to a State which does not.” 334 U. S., at 662.
The Court essentially held that the tax laсked what it would later describe as “external consistency.” Container Corp. of America v. Franchise Tax Bd., 463 U. S. 159, 169 (1983). That is to say, the New York law violated the Commerce Clause because it tried to tax significantly more than “that portion of the revenues from the interstate activity which reasonably reflects the in-state component of the activity being taxed.” Goldberg v. Sweet, 488 U. S. 252, 262 (1989).
The tax before us bears an uncanny resemblance to the New York tax. The Oklahoma statute (as applied to “[t]ransportation ... by common carriers“) imposes an “excise tax” of 4% on “the gross receipts or gross proceeds of each sale” made in Oklahoma.
Not in the language of the two statutes, which differs only slightly. Oklahoma calls its statute an “excise tax” and “levie[s]” the tax “upon all sales” of transportation. New York called its tax an “[e]mergency tax on ... services” and levied the tax on ““gross income,“” defined to include “receipts ... of any sale.“” This linguistic difference, however, is not significant. As the majority properly recognizes, purely formal differences in terminology should not make a constitutional difference. Ante, at 183. In both instances, the State im-
The majority sees a number of reasons why the result here should be different from that in Central Greyhound, but I do not think any is persuasive. First, the majority points out that the New York law required a seller, the bus company, to pay the tax, whereas the Oklahoma law sаys that the “tax... shall be paid by the consumer or user to the vendor.”
Second, the majority believes that this case presents a significantly smaller likelihood than did Central Greyhound that the out-of-state portions of a bus trip will be taxed both “by States which give protection to those portions, as well as [by]... а State which does not.” Central Greyhound, 334 U. S., at 662. There is at least a hint in the Court‘s opinion that this is so because the “taxable event” to which the Okla-
In any event, the majority itself does not seem to believe that Oklahoma is taxing something other than bus transportation; it seems to acknowledge the risk of multiple taxation. The Court creates an ingenious set of constitutionally based taxing rules in footnote 6-designed to show that any other State that imposes, say, a gross receipts tax on its share of bus ticket sales would likely have to grant a credit for the Oklahoma sales tax (unless it forced its own citizens to pay both a sales tax and a gross receipts tax). But, one might have said the same in Central Greyhound. Instead of enforcing its apportionment requirement, the Court could have simply said that once one State, like New York, imposes a gross receipts tax on “receipts received ... by reason of any sale made” in that State, any other State, trying to tax the gross receipts of its share of bus ticket sales, might have
Finally, the majority finds support in Goldberg v. Sweet, 488 U. S. 252 (1989), a case in which this Court permitted Illinois to tax interstate telephone calls that originated, or terminated, in that State. However, the Goldberg Court was careful to distinguish “cases [dealing] with the movement of large physical objects over identifiable routes, where it was practicable to keep track of the distance actually traveled within the taxing State,” id., at 264, and listed Central Greyhound as one of those cases, 488 U. S., at 264. Telephone service, the Goldberg Court said, differed from movement of the kind at issue in Central Greyhound, in that, at least arguably, the service itself is consumed wholly within one State, or possibly two-those in which the call is charged to a service address or paid by an addressee. 488 U. S., at 263. Regardless of whether telephones and buses are morе alike than different, the Goldberg Court did not purport to modify Central Greyhound, nor does the majority. In any event, the Goldberg Court said, the tax at issue credited taxpayers for similar taxes assessed by other States. 488 U. S., at 264.
Ultimately, I may differ with the majority simply because I assess differently the comparative force of two competing analogies. The majority finds determinative this Court‘s case law concerning sales taxes applied to the sale of goods,