Pacific Tel. & Tel. Co. v. Tax Commission,
297 U.S. 403 (1936)

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U.S. Supreme Court

Pacific Tel. & Tel. Co. v. Tax Commission, 297 U.S. 403 (1936)

Pacific Telephone & Telegraph Co. v.

Tax Commission of Washington

No. 544

Argued January 13, 1936

Decided March 2, 1936*

297 U.S. 403


1. Where intrastate and interstate commerce are served by the same instrumentalities of a foreign common carrier corporation, a state tax on the privilege of doing the local business measured on the gross income from that business will not be held invalid as imposing indirectly an undue burden on the interstate business in the absence of proof that it actually had such effect. P. 297 U. S. 412.

2. No reason appears for holding such a tax upon the local business void where, despite its burden, the local business is conducted at a profit, or where, though conducted at an apparent loss, the corporation wishes to continue the local business because of benefits present or prospective. P. 297 U. S. 414.

3. The occupation tax involved in this case is held to be inherently unobjectionable. It is not upon an instrumentality of interstate commerce, nor is it a disguised attempt to discriminate against that commerce; payment is not made a condition to continuance of business; the amount is moderate, and not increased because of the interstate business; the tax is not inseparable, although the two branches of the business are so. P. 297 U. S. 414.

4. No decision of this Court supports the proposition that an occupation tax upon local business, otherwise valid, must in such cases be held void merely because the local and interstate branches are for some reason inseparable. P. 297 U. S. 415.

5. The mere fact that an occupation tax on the intrastate business of a railroad increases an operating deficit in that branch of the business while, according to the carrier's allocations, the interstate business is profitable does not show that the tax is an undue burden on the interstate business. P. 297 U. S. 418.

6. The occupation tax, like other taxes and expenses, lessens the benefit derived by interstate commerce from the joint operation with it of the intrastate business of the carrier; but it is not an undue burden on interstate commerce where, as in this case, the

Page 297 U. S. 404

advantage to the carrier, and to interstate commerce, of continuing the intrastate business is greatly in excess of the tax. P. 297 U. S. 419.

183 Wash. 697, 33, 698, 48 P.2d 931, 938, affirmed.

Appeals in three cases from judgments sustaining the validity of state taxes assessed against three foreign corporations, each engaged in both intrastate and interstate business, on the privilege of doing the intrastate business. In No. 544, the Telephone Company sued to enjoin collection. The other two cases were actions by the State to collect the taxes from the two railway companies.

Page 297 U. S. 410

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