The Illinois use tax was applied to appellant's aviation fuel
stored in the State and loaded aboard its aircraft there and
consumed in interstate flights, the tax authorities having revised
their previous "burn off" interpretation of a statutory exemption
for temporary storage. Under the "burn off" interpretation, only
fuel consumed in flight over Illinois was used to measure the tax
imposed for storage before loading, but under the reinterpretation,
all fuel loaded was deemed to measure the tax on the "use" of
storage or withdrawal from storage. The Illinois Supreme Court
upheld the statute against appellant's contention that the tax, as
reinterpreted, impermissibly burdened interstate commerce.
Held:
1. The statute as authoritatively construed by the State's
highest court to tax storage, and not consumption, does not place
an unconstitutional burden on interstate commerce.
Edelman v.
Boeing Air Transport, Inc., 289 U. S. 249;
Nashville, Chattanooga & St. Louis R. Co. v. Wallace,
288 U. S. 249.
Cases allowing the taxation of storage of fuel before loading have
not outlived their usefulness. Pp.
410 U. S.
626-630.
2. The "burn off" rule is not unconstitutional, being
distinguishable from a tax imposed on consumption such as was
invalidated in
Helson v. Kentucky, 279 U.
S. 245. Since some of the Illinois Supreme Court
majority were under the mistaken impression that
Helson
precluded use of the "burn off" interpretation, the case is
remanded to enable that court to construe the temporary storage
provision under state law free from any constraint that such
interpretation would not be constitutionally permissible. Pp.
410 U. S.
630-632
49 Ill. 2d
45,
273 N.E.2d
585,
vacated and remanded.
BLACKMUN, J., delivered the opinion of the Court, in which
BURGER, C.J., and BRENNAN, MARSHALL, POWELL, and REHNQUIST, JJ.,
joined. DOUGLAS, J., filed a dissenting opinion, in which STEWART
and WHITE, JJ., joined,
post, p.
410 U. S. 632.
WHITE, J., filed a dissenting opinion,
post, p.
410 U. S.
639.
Page 410 U. S. 624
MR. JUSTICE BLACKMUN delivered the opinion of the Court.
United Air Lines, Inc., challenged the constitutionality of the
Illinois general revenue use tax as applied to aviation fuel stored
in Illinois and then loaded aboard aircraft there and consumed in
interstate flights. The Supreme Court of Illinois upheld the state
tax as currently applied, concluding that it did not impose an
unconstitutional burden on interstate commerce.
49 Ill. 2d
45,
273 N.E.2d
585 (1971). We noted probable jurisdiction. 405 U.S. 986
(1972). We now affirm that holding, but we vacate the judgment and
remand the case for consideration of an issue under state law.
Since 1953, United has purchased aviation fuel from a supplier
for delivery from the supplier's Indiana facilities. This fuel is
utilized by United in its extensive operations out of O'Hare and
Midway airports in the Chicago area of Illinois. Although the
method of delivery varies for different types of fuel and for the
two airports, [
Footnote 1] all
fuel
Page 410 U. S. 625
is delivered by common carrier and is held for periods ranging
from two to 12 days in ground storage facilities maintained in
Illinois by United. [
Footnote
2] Fuel for both interstate and intrastate operations is
delivered in the same manner. [
Footnote 3] United voluntarily has paid the tax on fuel
consumed in purely intrastate operations. Only the tax as applied
to fuel used in interstate flights is in issue.
In 1955, Illinois enacted a general tax on the "privilege of
using" tangible personal property in the State. Ill.Rev.Stat., c.
120, § 439.3 (1971). "Use" was defined to include the "exercise . .
. of any right or power over tangible personal property incident to
the ownership of that property." § 439.2. Some exceptions from this
inclusive definition were made. One of these exceptions, which the
statute recites, § 439.3, is "[t]o prevent actual or likely
multi-state taxation," is the temporary storage provision. This
denies application of the tax to property brought from another
State and stored temporarily in Illinois before use solely outside
the State. [
Footnote 4]
Page 410 U. S. 626
Since this general use tax, apart from its exceptions, reached
all tangible personal property, it applied, by its terms, to fuel
stored for use in vehicles. From 1955 to 1963, the Illinois
Department of Revenue allowed interstate common carriers to benefit
from the temporary storage provision to the extent that fuel,
although loaded aboard in Illinois, was not consumed by the vehicle
in that State. The amount of aviation fuel used over Illinois could
be calculated because scheduled airline routes are precise and the
rate of consumption by each type of aircraft is known. This "burn
off" interpretation was changed in 1963, however, when the
Department announced by bulletin that it was reinterpreting the
temporary storage provision to mean that
"temporary storage ends, and a taxable use occurs, when the fuel
is taken out of storage facilities and is placed into the tank of
the airplane, railroad engine or truck."
Thus, as the Illinois court described it, "all fuel loaded on
United's planes at the two airports was deemed to measure the tax."
49 Ill. 2d at 49, 273 N.E.2d at 587.
United's suit attacked the new interpretation on both state and
federal grounds. All justices of the Supreme Court of Illinois
agreed that the new interpretation did not run afoul of the Federal
Constitution, but the justices disagreed over the applicability and
validity of the "burn off" alternative discussed in the several
opinions. 49 Ill. 2d at 553, 56, 57-59, 273 N.E.2d at 587-589,
591-592.
I
Two decisions of this Court were relied upon by the Illinois
court in reaching its conclusion that the present application of
the state tax was not offensive to the Federal Constitution. The
cases are
Edelman v. Boeing Air Transport, 289 U.
S. 249 (1933), and
Nashville, Chattanooga & St.
Louis R. Co. v. Wallace, 288 U. S. 249
(1933). We agree that these cases support the
Page 410 U. S. 627
application of the Illinois tax to all fuel stored in Illinois
and loaded aboard United's aircraft for in-flight consumption.
In
Edelman, this Court upheld a state gasoline use tax,
even when imposed on gasoline imported from outside the State,
stored in tanks at an airport, and loaded aboard planes departing
on interstate flights. The decision in
Edelman followed
the holding in
Nashville that oil purchased by a railroad
outside Tennessee but stored in Tennessee solely for the purpose of
providing motive power for the railroad's interstate and intrastate
operations could be subjected constitutionally to a Tennessee
privilege tax. In
Nashville, as in this case, none of the
fuel stored was held as inventory for sale, and the tax was not one
for the use of special services furnished by the State to the
taxpayer railroad.
In
Edelman, the Court accepted the State's
determination that the taxable event was withdrawal from storage,
rather than consumption. 289 U.S. at
289 U. S. 251.
The airline in
Edelman contended,
id. at
289 U. S. 252,
that the state tax was invalid under
Helson v. Kentucky,
279 U. S. 245
(1929). In
Helson, the Court held that a Kentucky tax on
the use of gasoline within the State fell too directly on
interstate commerce when it was imposed on fuel loaded in Illinois
but consumed in the course of an interstate ferry's trip through
Kentucky. In
Edelman, the Court distinguished
Helson because storage, rather than consumption, was the
taxable event.
See Southern Pacific Co. v. Gallagher,
306 U. S. 167
(1939).
The Supreme Court of Illinois characterized the taxable "use"
under the Illinois statute as either storage or withdrawal from
storage. United argued in the state court that the temporary
storage provision constituted a legislative waiver of the right to
tax storage prior to loading. The Illinois court rejected this
contention, noting that United stored fuel at the airport for
general use.
Page 410 U. S. 628
On these facts, the Supreme Court of Illinois concluded that the
Illinois use tax applied to storage by United before loading and
that this application was constitutional:
"Under the circumstances, the 'storage' becomes something more
than a 'temporary storage' for safekeeping prior to its use solely
outside of Illinois. Such storage, under the plain words of the
statute, does not qualify under the temporary storage exemption,
and, as the authorities already discussed reveal,
either the
storage itself or the withdrawal therefrom are uses which may be
taxed without offending the commerce clause of the Federal
constitution."
49 Ill. 2d at 55-56, 273 N.E.2d at 590 (emphasis added). The
Illinois dissenters, too, treated the taxable event as storage or
withdrawal. 49 Ill. 2d at 57, 273 N.E.2d at 591. [
Footnote 5]
Page 410 U. S. 629
This Court usually has deferred to the interpretation placed on
a state tax statute by the highest court of the State.
Scripto,
Inc. v. Carson, 362 U. S. 207,
362 U. S. 210
(1960);
General Trading Co. v. State Tax Comm'n,
322 U. S. 335,
322 U. S. 337
(1944).
See Evco v. Jones, 409 U. S.
91 (1972). As in
Edelman, we see no reason to
ignore, or to disagree with, the state court's determination that
the taxable event is storage, rather than consumption.
We hold that
Edelman and
Nashville support the
conclusion of the Supreme Court of Illinois that this tax, as
applied to all fuel withdrawn from storage for consumption in an
interstate vehicle, does not place an unconstitutional burden on
interstate commerce. Further, we decline to hold that
Edelman has outlived its usefulness. [
Footnote 6] We must concede that, for a long time,
this area of state tax law has been cloudy and complicated,
primarily because the varied nature of interstate activities makes
line drawing difficult. This Court has established some precedents,
however, and
Edelman and
Nashville remain useful
guidelines.
The line drawn between an impermissible tax on mere consumption
of fuel, as in
Helson, and a permissible tax on storage of
fuel before loading, as in
Edelman and
Nashville,
continues to serve rational purposes. Retaining the line at this
point minimizes the danger of double taxation, and yet provides a
source of revenue having a
Page 410 U. S. 630
relation to the event taxed. Double taxation is minimized,
because the fuel cannot be taxed by States through which it is
transported, under
Michigan-Wisconsin Pipe Line Co. v.
Calvert, 347 U. S. 157
(1954), nor by the State in which it is merely consumed, under
Helson. A fair result is achieved because a State in which
pre-loading storage facilities are maintained is likely to provide
substantial services to those facilities, including police
protection and the maintenance of public access roads. [
Footnote 7]
Since no persuasive reason has been advanced for changing the
established rule, we reaffirm
Edelman and
Nashville as precedents.
II
United contended in state court that the Illinois temporary
storage exemption should be interpreted, as a matter of state law,
to encompass the "burn off" rule which, as noted above, had
received administrative sanction for eight years. 49 Ill. 2d at 49,
273 N.E.2d at 587. Two justices of the Illinois court deemed
themselves bound under
Helson to regard the "burn off"
rule as invalid under the Federal Constitution. 49 Ill. 2d at 50,
273 N.E.2d at 587. This basis for construing a state statute
creates a federal question.
Red Cross Line v. Atlantic Fruit
Co., 264 U. S. 109,
264 U. S. 120
(1924). The possibility that the state court might have reached the
same conclusion if it had decided the question purely as a matter
of state law does not create an adequate and independent state
ground that relieves this Court of the
Page 410 U. S. 631
necessity of considering the federal question.
Beecher v.
Alabama, 389 U. S. 35,
389 U. S. 37 n.
3 (1967);
see C. Wright, Federal Courts § 107, p. 488 (2d
ed.1970). Since the other justices of the Illinois court divided
three to two on the state law issue, the votes of the two who felt
bound by
Helson could be determinative of the state issue.
Under these circumstances, we proceed to consider the validity of
the "burn off" rule in the light of
Helson, as United has
urged us to do.
See Perkins v. Benguet Mining Co.,
342 U. S. 437,
342 U. S.
441-443 (1952).
The facts in
Helson are different from the facts here.
In
Helson, the operators of the interstate ferry boat
purchased and took delivery of fuel in Illinois. The office, the
place of business, and the situs of all the taxpayer's property
were in Illinois. The boat crossed the Ohio River into Kentucky on
regular runs, and Kentucky sought to impose a tax on the use of
gasoline consumed in Kentucky. The Court invalidated the tax
"computed and imposed upon the use of the gasoline thus consumed."
279 U.S. at
279 U. S.
248.
In the present case, Illinois is the State of storage of
United's fuel before loading. If Illinois imposed a tax on the
basis of that storage but measured the tax only by the fuel
consumed over Illinois, a lower tax would result. The dangers of
multiple taxation and possible tax windfalls, already suggested as
justifying the
Helson decision, would not be present if
the tax were imposed on storage prior to loading but were measured
by consumption. Multiple taxation and tax windfalls are avoided
because only one State -- the State of storage before loading --
has a local event upon which a tax is imposed. Under
Helson, States over which the planes fly will be unable to
impose a tax on mere consumption. [
Footnote 8]
Page 410 U. S. 632
The use of a method of tax measurement that is intimately
related to interstate commerce is not automatically
unconstitutional. Tolls on the use of facilities that aid
interstate commerce have been upheld even when measured by
passengers or by mileage traveled on the highways of a State.
Evansville-Vanderburgh Airport Authority District v. Delta
Airlines, 405 U. S. 707
(1972);
Interstate Busses Corp. v. Blodgett, 276 U.
S. 245 (1928). Upon the facts before us, [
Footnote 9] we see no constitutional barrier
to the use of the "burn off" rule by Illinois to measure the tax
imposed for storage before loading.
Since we now determine that the federal compulsion felt by two
justices of the Illinois court is not warranted, we remand the case
to avoid the risk of "an affirmance of a decision which might have
been decided differently if the court below had felt free, under
our decisions, to do so."
Perkins v. Benguet Mining Co.,
342 U.S. at
342 U. S. 443.
We, of course, express no opinion on the construction of the
temporary storage provision under state law.
The judgment of the Supreme Court of Illinois is vacated, and
the case is remanded to that court for further proceedings
It is so ordered.
[
Footnote 1]
Turbine (jet) fuel for use at O'Hare is shipped by common
carrier pipeline from the supplier's Indiana terminals to a 15
million gallon storage facility at Des Plaines, Illinois. App.
168-169. Normally, three deliveries are made each month to this
facility. App. 129. Smaller quantities of fuel are transferred by
pipeline to facilities maintained by United at O'Hare.
Turbine fuel for use at Midway and aviation gasoline for both
airports is transported from Indiana by common carrier tank truck
to airport storage facilities. App. 159.
[
Footnote 2]
The parties have stipulated that the period of storage ranges
from two to 12 days. App. 38. The Des Plaines storage facilities
are not owned by United; it and another airline jointly lease the
facilities. United shares in the cost of repairs, the risk of loss,
and the employment of a managing agent. App. 132, 168.
[
Footnote 3]
App. 173-174. United uses fuel from the storage facilities for
its intrastate training flights and for the intrastate leg of
flights that stop at both Chicago and Moline, Illinois.
49 Ill. 2d
45, 47-48,
273 N.E.2d
585, 586. United also engages in interstate charter flights.
App. 37 n. 6.
[
Footnote 4]
The temporary storage provision excepts
"(d) the temporary storage, in this State, of tangible personal
property which is acquired outside this State and which, subsequent
to being brought into this State and stored here temporarily, is
used solely outside this State or physically attached to or
incorporated into other tangible personal property that is used
solely outside this State."
§ 439.3.
[
Footnote 5]
The Illinois court's interpretation of the temporary storage
provision makes it clear that loading into the tanks of the
airplane is a relevant event, but is not the taxable event. The
court indicated that the temporary storage exemption suspended the
effect of otherwise taxable events:
"To put it another way, the legislature has stated that the
temporary storage and the withdrawal therefrom are not taxable uses
if the property in question is to be used solely outside the State.
It is clear that, if United was to withdraw its fuel from storage
at Des Plaines and the airports and transport it outside the State
for use elsewhere, as, for example, at an airport in nearby
Wisconsin, the exemption would apply, and neither the storage, nor
the withdrawal, nor the transportation of the fuel outside the
State would be uses subject to the tax."
49 Ill. 2d at 55, 273 N.E.2d at 590. Under this view, all the
fuel is "used" and subject to Illinois tax when it is temporarily
stored or withdrawn from storage. The taxable event is nullified,
however, if the fuel is transported from the State for consumption
elsewhere.
Although this use of a subsequent event to define the effect of
a prior event may appear somewhat unusual, the result may be said
to be compelled, since fuel in transit may not be constitutionally
taxed.
See Michigan-Wisconsin Pipe Line Co. v. Calvert,
347 U. S. 157
(1954). A similar exemption for gasoline "exported or sold for
exportation from the State" was present in the Wyoming statute
challenged in
Edelman v. Boeing Air Transport,
289 U. S. 249,
289 U. S. 250
(1933).
[
Footnote 6]
Amici have urged reconsideration of
Edelman, arguing
that it represents "a high-water mark in the Court's search in the
early thirties for formulas that would assist states in finding
additional sources of revenue." Brief for American Airlines
et
al. 13.
[
Footnote 7]
Although this is a general state tax, rather than a toll on
commerce, this Court has recognized that interstate commerce can be
"required to pay a nondiscriminatory share of the tax burden."
Braniff Airways v. Nebraska State Board of Equalization,
347 U. S. 590,
347 U. S. 598
(1954). In
Helson v. Kentucky, 279 U.
S. 245 (1929), in contrast, the ferry boat was asked to
bear more than its "nondiscriminatory share" when it was taxed only
for passing through Kentucky waters.
[
Footnote 8]
Those justices of the Illinois court who relied on
Helson did not consider, apparently, any interpretation of
Helson that would prevent multistate taxation. They
suggested that an adoption of the "burn off" rule would allow
taxation by every State over which United's planes fly. 49 Ill. 2d
at 51, 273 N.E.2d at 588.
[
Footnote 9]
United successfully calculated and paid the state tax under the
"burn off" interpretation for eight years. App. 41. No suggestion
has been made that the recordkeeping procedures were an intolerable
burden on commerce, or that special equipment must be installed to
measure fuel consumption.
MR. JUSTICE DOUGLAS, with whom MR. JUSTICE STEWART and MR.
JUSTICE WHITE concur, dissenting.
The Court today makes a break with the history of the Commerce
Clause that has been largely responsible for creating in this
Nation a great common market. One
Page 410 U. S. 633
protective device this Court has used to keep the national
channels of commerce open against hostile state legislation has
been the constitutional ban on state taxation levied on interstate
activities. In 1873, in
Case of State Freight
Tax, 15 Wall. 232, we held unconstitutional a state
tax "so far as it applies to articles . . . taken up in the State
and carried out of it. . . ."
Id. at
82 U. S. 282. While
there are ways in which interstate commerce can be required to pay
its way, we have not until today abandoned the basic principle that
a State may not tax interstate activities. That is what is done
here, for the Illinois tax is levied on filling the fuel tanks of
airplanes taking off for interstate or foreign journeys. If
Illinois can tax that segment of the interstate activity, there is
no reason why she may not tax the takeoff itself. The filling of
fuel tanks to make an interstate or foreign journey is as
indispensable a part and parcel of the interstate or foreign
journey as using the runways for that purpose.
The Supreme Court of Illinois sustained the Illinois Use Tax
[
Footnote 2/1] on all aviation fuel
loaded aboard United's interstate and foreign flights departing
from Chicago. United purchases fuel outside Illinois and stores it
in Illinois temporarily for its interstate and foreign operations.
The use tax exempts from the tax property purchased outside
Illinois, temporarily stored in the State, and used solely outside
the State. [
Footnote 2/2]
Until 1963, the temporary storage exception was construed by the
Illinois Department of Revenue so as to subject to the use tax only
that fuel loaded on departing flights that was actually burned over
Illinois. In 1963, the Department changed its prior ruling and
announced:
"[T]emporary storage ends and a taxable use occurs when the fuel
is taken out of storage facilities
Page 410 U. S. 634
and is placed into the tank of the airplane, railroad engine or
truck. At this point, the fuel is converted into its ultimate use,
and, therefore, a taxable use occurs in Illinois."
The Supreme Court of Illinois upheld that construction and
application of the use tax against the claim that it violates the
Commerce Clause, saying that United's storage becomes something
more than temporary storage for safekeeping "prior to its use
solely outside of Illinois."
49 Ill. 2d
45, 55,
273 N.E.2d
585, 590.
The taxable event is the act of loading the fuel aboard United's
aircraft in Illinois preparatory to their interstate or foreign
journey. The majority states that the Supreme Court of Illinois
concluded that either the storage of the gasoline itself or the
withdrawal therefrom is a use which may be taxed without offending
the Federal Constitution. But that statement of the Supreme Court
of Illinois was made in its discussion of the exemption from the
use tax, which, as relevant here, provides:
"[T]he temporary storage, in this State, of tangible personal
property which is acquired outside this State and which, subsequent
to being brought into this State and stored here temporarily, is
used solely outside this State."
Ill.Rev.Stat., c. 120, § 439.3 (1971). That means that the
temporary storage exemption would extend not merely to storage on
the ground, but also to its loading aboard the transportation
vehicles, such as trucks or railroad cars, and to its
transportation from the State. It is thus obvious that, unless the
means of removing the property from the State is included in the
scope of the temporary storage, it would be a nullity, as appellant
maintains. Since, in this case, there is no tax if fuel is
withdrawn from storage and taken from the State by other means, it
is clear that neither the storage nor the removal from storage is
what makes the fuel taxable. The majority properly notes that, as a
matter of state
Page 410 U. S. 635
law and the Illinois court's interpretation thereof, it is the
"consumption" wholly without the State that makes the exception
operable. Conversely, I read the Illinois opinion to mean that, as
a matter of state law, it is at least partial consumption within
the State that brings the tax on all the fuel into play. That is so
even if only a small portion of the fuel is consumed within the
State, while the remainder is consumed out of State during an
interstate or foreign flight. The inescapable conclusion from the
state court's interpretation of this state law is that the act of
loading the fuel into the fuel tanks of the interstate aircraft
solely for use as the motive power is the taxable event.
If that event were used to tax fuel used on an intrastate
flight, no problem under the Commerce Clause would arise. But
loading is part of the interstate activity when planes prepare for
an interstate journey, just as loading is a part of the shipment of
goods by rail or water interstate (
Puget Sound Stevedoring Co.
v. Tax Comm'n, 302 U. S. 90,
302 U. S. 92-94;
Joseph v. Carter & Weekes Stevedoring Co.,
330 U. S. 422,
330 U. S. 427,
330 U. S.
433-434) and just as local pickups of parcels and local
delivery of parcels in interstate movement are not permissible
grounds "for a state license, privilege or occupation tax."
Railway Express Agency v. Virginia, 347 U.
S. 359,
347 U. S.
368.
In
Richfield Oil Corp. v. State Board, 329 U. S.
69, we held invalid a state sales tax levied on the
delivery of fuel oil into a ship for overseas carriage. We said
"[t]he incident which gave rise to the accrual of the tax was a
step in the export process."
Id. at
329 U. S. 84. A
like result was reached in
Michigan-Wisconsin Pipe Line Co. v.
Calvert, 347 U. S. 157,
where a State sought to impose a severance tax on the transfer of
gas from a refinery pipeline to an interstate pipeline. We noted
that the "taxable incidence" was the taking of gas from a local
plant "for the purpose of immediate interstate transmission."
Page 410 U. S. 636
Id. at
347 U. S. 161.
We therefore held it unconstitutional, since it was a tax "on the
exit of the gas from the State."
Id. at
347 U. S.
167.
The present tax is analogous to the tax on the privilege of
carrying on an exclusively interstate business which we struck down
in
Spector Motor Service v. O'Connor, 340 U.
S. 602,
340 U. S. 608.
A tax upon an integral part of interstate commerce is a tax that no
State, by reason of the Commerce Clause, is empowered to impose,
unless authorized by Congress.
Id. at
340 U. S.
608.
The fuel in United's planes propels the interstate flights;
because it is the source of the motive power, it is essential to
the interstate journey. It is, therefore, indisputably a part and
parcel of the interstate movement.
McCarroll v. Dixie Greyhound
Lines, 309 U. S. 176,
involved an Arkansas statute which prohibited any truck or
automobile from entering the State with more than 20 gallons of
gasoline in its tank unless an excise tax were paid on the
gasoline. The Court held the tax unconstitutional because it
imposed a tax on "gasoline to be immediately transported over the
roads of Arkansas
for consumption beyond."
Id. at
309 U. S. 180
(emphasis added). Similarly, Illinois imposes its tax on all of the
fuel loaded into airplane tanks, whether or not that fuel is
consumed out of State. In
Helson v. Kentucky, 279 U.
S. 245, on which the Illinois Supreme Court relied in
disapproving the earlier construction of the statute, a ferry boat
operated between Illinois and Kentucky, having its office in
Illinois and buying all its fuel there. Kentucky sought to tax that
portion of the fuel used in Kentucky. This Court invalidated the
tax, saying it was "exacted as the price of the privilege of using
an instrumentality of interstate commerce."
Id. at
279 U. S. 252.
If that tax is invalid, it follows
a fortiori that
Illinois may not tax the movement of airplanes from Illinois to
California, from Illinois to Europe, or from Illinois to any other
out-of-state point.
Page 410 U. S. 637
It is now well settled that interstate commerce can be required
to pay its way,
Illinois Central R. Co. v. Minnesota,
309 U. S. 157;
Western Live Stock v. Bureau of Revenue, 303 U.
S. 250;
Greyhound Lines v. Mealey, 334 U.
S. 653;
Northwestern Cement Co. v. Minnesota,
358 U. S. 450, a
result commonly reached by formulae which allocate to the taxing
State business derived from operations within the State.
Railway Express Agency v. Virginia, 358 U.
S. 434. Yet, when pieces or segments of an interstate
business are taxed, our cases reveal discrimination in approving or
disapproving taxes that may be imposed. A State may not exact a
license tax for the privilege of carrying on interstate commerce.
McGoldrick v. Berwind-White Co., 309 U. S.
33,
309 U. S. 56-58;
Murdock v. Pennsylvania, 319 U. S. 105,
319 U. S.
112-113. As stated in
Berwind-White, taxes
"which are aimed at or discriminate against [interstate]
commerce or impose a levy for the privilege of doing it, or tax
interstate transportation or communication or their gross earnings,
or levy an exaction on merchandise in the course of its interstate
journey"
are within the ban, since they may "so readily be made the
instrument of impeding or destroying interstate commerce." 309 U.S.
at
309 U. S.
48.
Sales within the State, however, are taxable, though the goods
have reached the market by interstate channels.
Magnano Co. v.
Hamilton, 292 U. S. 40,
292 U. S. 43;
McGoldrick v. Berwind-White Co., supra, at
309 U. S. 58.
The sales tax in
Berwind-White was on the "transfer of
title or possession, or both,"
id. at
309 U. S. 43.
And we sustained the tax because of "a local activity" which we
described as "delivery of goods within the state upon their
purchase for consumption,"
id. at
309 U. S. 58. As
a consequence, an out-of-state buyer who purchases goods in New
York City and takes them with him pays the tax, while if he has
them shipped to him, he pays no sales tax.
Although "delivery of goods" within the State may be taxed,
"solicitation" within the State for out-of-state
Page 410 U. S. 638
confirmation and shipment into the State may not be.
Nippert
v. Richmond, 327 U. S. 416,
327 U. S. 422;
West Point Grocery Co. v. Opelika, 354 U.
S. 390. In
Dunbar-Stanley Studio v. Alabama,
393 U. S. 537, a
tax was sustained on out-of-state photographers, since their
activities were not soliciting orders for an out-of-state house,
but taking photographs within the State.
The use tax came into being to complement the sales tax,
i.e., to fill in gaps where the States could not
constitutionally tax interstate arrivals or departures.
See
Henneford v. Silas Mason Co., 300 U.
S. 577,
300 U. S. 581.
Thus, goods may be taxed at the end of their interstate journey,
where the tax does not discriminate against interstate commerce.
Id. at
300 U. S.
582-583;
Felt & Tarrant Co. v. Gallagher,
306 U. S. 62 (use
tax on storage, use, or other consumption);
Southern Pacific
Co. v. Gallagher, 306 U. S. 167
(storage and use). Use taxes imposed on storage or withdrawal from
storage have consistently been sustained.
Eastern Air Transport
v. Tax Comm'n, 285 U. S. 147;
Gregg Dyeing Co. v. Query, 286 U.
S. 472;
Nashville, Chattanooga & St. Louis R.
Co. v. Wallace, 288 U. S. 249;
McGoldrick v. Berwind-White Co., supra, at
409 U. S.
49.
Nice distinctions are often necessary because, although all
taxes on interstate carriers "in an ultimate sense, come out of
interstate commerce" (
Freeman v. Hewit, 329 U.
S. 249,
329 U. S.
256), the constitutional ban relates only to
"a direct imposition on that very freedom of commercial flow
which, for more than a hundred and fifty years, has been the ward
of the Commerce Clause."
Id. at
329 U. S.
256.
For Illinois to tax the storage of fuel within its borders is,
of course, constitutionally permissible, even though, in time, the
fuel may be used in interstate or foreign commerce. In
Edelman
v. Boeing Air Transport, 289 U. S. 249,
289 U. S. 251,
the use tax was "not levied upon the consumption of gasoline in
furnishing motive power for respondent's
Page 410 U. S. 639
interstate planes." The tax was "applied to the stored gasoline
as it is withdrawn from the storage tanks at the airport and placed
in the planes."
Ibid. "It is at
the time of withdrawal
alone that
use' is measured for the purposes of the tax."
Id. at 289 U. S. 252.
(Italics added.) At that time, the gasoline was not irrevocably
committed to interstate commerce, for it might be diverted to
planes on intrastate journeys.
By contrast, the taxable event on which Illinois levies her tax
is not storage for future use, or withdrawal from storage, but only
loading in the tanks of planes preparing for interstate or foreign
journeys. It is, therefore, inescapably a tax on the actual motive
power for an interstate or foreign journey. Taxing the fuel loaded
in a plane destined for an interstate or foreign journey is, in
other words, taxing the privilege of using a facility in commerce,
because the motive power [
Footnote
2/3] represented by the fuel has become part and parcel of the
facility. The decision today marks a break with our constitutional
tradition, which, absent an Act of Congress, has led this Court
consistently to hold that the free flow of interstate commerce is a
ward of the Commerce Clause. Without that free flow of commerce, we
would not have the great common market we enjoy today.
I would reverse the judgment of the Supreme Court of
Illinois.
[
Footnote 2/1]
Ill.Rev.Stat., c. 120, § 439.1
et seq.
[
Footnote 2/2]
Id. § 439.3.
[
Footnote 2/3]
Edelman was distinguished in
Southern Pacific Co.
v. Gallagher, 306 U. S. 167, as
involving a tax "upon events prior to the commerce,"
id.
at
306 U. S. 176,
the Court going on to say: "The principle illustrated by the
Helson case forbids a tax upon commerce or consumption in
commerce."
Ibid.
MR. JUSTICE WHITE, dissenting.
The Illinois statute in question, Ill.Rev.Stat., c. 120, § 439.3
(1971), taxes the use of tangible personal property in Illinois,
and "use" is defined as being the "exercise . . .
Page 410 U. S. 640
of any right or power over tangible personal property incident
to the ownership of that property. . . ."
Id., § 439.2.
The Illinois Supreme Court held that, as applied in this case, the
statute taxed either the storage or the withdrawal therefrom of
aviation fuel. But the statute itself goes on to exempt from tax
property temporarily stored in the State, withdrawn from storage,
loaded on transportation facilities and transported for use solely
outside the State.
Id., § 439.3(d). For the tax to apply,
the property must not only be stored and subsequently withdrawn,
but must also be further used or consumed in the State. It is this
actual use or consumption in the State after storage and withdrawal
that triggers the tax. Thus, it was enough here to invoke the tax
that the fuel was temporarily stored, withdrawn, loaded on
interstate aircraft, and then partially used within the State. But
Helson v. Kentucky, 279 U. S. 245
(1929), forbids taxing the use of gasoline consumed within the
State on an interstate trip. And as for that portion of the fuel
withdrawn from storage, loaded on an aircraft and consumed in
another State, the exemption in the statute would seemingly cover
it; but if the exemption itself is not to apply,
Helson, a
fortiori, bars the tax. Moreover, under the Due Process Clause
of the Fourteenth Amendment, Illinois has no jurisdiction to tax
the use of property occurring in another State.
Norfolk &
W. R. Co. v. Missouri State Tax Comm'n, 390 U.
S. 317,
390 U. S.
324-325 (1968), and cases there cited.