This case presents the question whether the Commerce Clause of
the Federal Constitution is violated by two Pennsylvania statutes
which impose lump-sum annual taxes on the operation of trucks on
Pennsylvania's highways. One challenged statute requires that an
identification marker be affixed to every truck over a specified
weight, and imposes an annual flat fee ($25 from 1980 through March
1983) for such marker. The statute exempts trucks registered in
Pennsylvania by providing that the marker fee shall be deemed a
part of the vehicle registration fee (which was increased when the
$25 marker fee was enacted). The marker fee was reduced to $5 (the
administrative cost of issuing the marker) in 1982, when
Pennsylvania enacted the second challenged statute, which, in
general, imposes an annual axle tax on all trucks over a specified
weight using Pennsylvania highways, and is assessed at the rate of
$36 per vehicle axle. The same statute that enacted the axle tax
also reduced the registration fees for pertinent vehicle weight
classes by the amount of the axle tax usually applicable to
vehicles in such classes. Appellant organizations, which represent
interstate motor carriers whose vehicles are registered outside of
Pennsylvania and who paid the $25 marker fee while it was in effect
and are subject to the axle tax, brought separate actions in the
Commonwealth Court of Pennsylvania challenging the
constitutionality of the $25 marker fee and of the axle tax on the
ground,
inter alia, that both taxes discriminated against
interstate commerce, since the entire economic burden of each tax
fell on out-of-state vehicles because the 1980 statute "deemed" the
marker fee for Pennsylvania vehicles to be a part of the
registration fee, and the 1982 legislation granted Pennsylvania
vehicles a reduction in registration fees that offset the newly
imposed axle tax. The court accepted appellants' argument and held
that the challenged taxes were unconstitutional. The Pennsylvania
Supreme Court considered the cases together, and reversed.
Held:
1. The challenged taxes are unconstitutional, because the
methods by which they are assessed discriminate against interstate
commerce in a way that contradicts the Commerce Clause's central
purpose of guaranteeing
Page 483 U. S. 267
a free trade area among States. The Clause prohibits a State, as
here, from imposing a tax that places a much heavier burden on
out-of-state businesses that compete in an interstate market than
it imposes on its own residents who also engage in interstate
commerce. The challenged taxes do not pass the "internal
consistency" test, under which a state tax must be of a kind that,
if applied by every jurisdiction, there would be no impermissible
interference with free trade. The challenged taxes' inevitable
effect is to threaten the free movement of commerce by placing a
financial barrier around Pennsylvania. Pp.
483 U. S.
280-287.
2. The challenged taxes cannot be upheld on the ground that they
reflect a reasonable charge for the privilege of using
Pennsylvania's roads when considered alongside the high price that
Pennsylvania-based trucks pay in registration fees. There is no
merit to the contention that the axle tax does not discriminate
against interstate commerce because domestic trucks, through
payment of the registration fees, pay a higher price to use
Pennsylvania's highways than those registered in other States. Pp.
483 U. S.
287-289.
3. Nor can the challenged taxes be upheld on the ground that
they are no different from flat user fees recently upheld in other
cases.
Evansville-Vanderburgh Airport Authority District v.
Delta Airlines, Inc., 405 U. S. 707, and
Commonwealth Edison Co. v. Montana, 453 U.
S. 609, distinguished. Pp.
483 U. S.
289-292.
4. Earlier cases that support a State's authority to impose flat
use taxes can no longer suffice to uphold flat taxes with the
blatantly discriminatory consequences associated with
Pennsylvania's marker fee and axle tax. More recent decisions have
rejected the approach to the Commerce Clause taken in the earlier
cases that focused primarily on the character of the privilege,
rather than the practical consequences of the tax. A flat tax may
not be upheld merely because the particular formula by which its
charges are reckoned extends the same nominal privilege to
interstate commerce that it extends to in-state activities.
Although out-of-state carriers obtain a privilege to use
Pennsylvania's highways that is nominally equivalent to that which
local carriers receive, imposition of the challenged taxes for a
privilege that is several times more valuable to a local business
than to its out-of-state competitors is unquestionably
discriminatory, and thus offends the Commerce Clause. While flat
taxes may be valid when administrative difficulties make collection
of more finely calibrated user charges impracticable, such
justification is unavailable with regard to Pennsylvania's
unapportioned marker fee and axle tax. Pp.
483 U. S.
292-297.
510 Pa. 430,
509
A.2d 838, reversed and remanded.
Page 483 U. S. 268
STEVENS, J., delivered the opinion of the Court, in which
BRENNAN, WHITE, MARSHALL, and BLACKMUN, JJ., joined. O'CONNOR, J.,
filed a dissenting opinion, in which REHNQUIST, C.J., and POWELL,
J., joined,
post p.
483 U. S. 298.
SCALIA, J., filed a dissenting opinion, in which REHNQUIST, C.J.,
joined,
post p.
483 U. S.
303.
JUSTICE STEVENS delivered the opinion of the Court.
Again we are "asked to decide whether state taxes as applied to
an interstate motor carrier run afoul of the commerce clause, Art.
I, § 8, of the Federal Constitution."
Aero
Mayflower Transit Co. v. Board of Railroad Comm'rs,
332 U.S.
Page 483 U. S. 269
495,
332 U. S. 496
(1947). That statement of the question presented might equally well
have introduced the Court's opinion in either
Spector Motor
Service, Inc. v. O'Connor, 340 U. S. 602
(1951), or
Complete Auto Transit, Inc. v. Brady,
430 U. S. 274
(1977), which overruled
Spector. In this case, we review
the Supreme Court of Pennsylvania's judgment upholding the
constitutionality of two Pennsylvania statutes which impose
lump-sum annual taxes on the operation of trucks and truck
tractors. Our task is by no means easy; the uneven course of
decisions in this field reflects the difficulties of reconciling
unrestricted access to the national market with each State's
authority to collect its fair share of revenues from interstate
commercial activity.
Appellants claim that these Pennsylvania statutes violate the
principle that no State may discriminate against interstate
commerce by enacting a tax which provides a competitive advantage
to local business. [
Footnote 1]
The Pennsylvania Supreme Court upheld the taxes, interpreting them
as facially neutral and in accord with a line of our decisions in
the pre-
Spector era approving flat taxes imposed on
interstate truckers for the privilege of using a State's highway
system. Before turning to the judgment of the State Supreme Court,
we first describe the challenged taxes in some detail in the
context of the State's revenue-gathering system, and explain why we
find persuasive appellants' claims of discrimination. Despite
appellees' defense of the revenue provisions as valid compensatory,
user-fee, or flat taxes, the judgment of the State Supreme Court
must be reversed.
Page 483 U. S. 270
I
The Commonwealth of Pennsylvania spends large sums of money to
improve and maintain its highways and bridges. [
Footnote 2] Passenger and cargo vehicles travel
billions of miles on these highways every year. [
Footnote 3] Operators of large trucks and
tractor trailers engaged in interstate commerce make particularly
heavy use of the State's highways. Their vehicles, which may be
classified by the number of their axles or by their gross weight --
ranging from less than 5,000 pounds for the smallest class to
79,001-80,000 pounds for the 25th class -- not only transport cargo
between Pennsylvania and out-of-state locations, but also use
Pennsylvania's highways extensively as corridors connecting the
States of the Northeast, the Southeast, and the Midwest. [
Footnote 4] Because of their weight and
size, trucks using the State's roads require the State to make
higher road-related expenditures than would use of the roads by
smaller vehicles alone. App. 30. The State's hilly terrain and
frequently severe weather conditions enhance the
Page 483 U. S. 271
costs of highway maintenance. 510 Pa. 430, 433,
509
A.2d 838, 840 (1986).
These expenditures are financed, in substantial part, by three
types of levies on users of Pennsylvania's highways: vehicle
registration fees, fuel consumption taxes, and lump-sum annual fees
which we will describe as "flat taxes." Although the two taxes at
issue in this litigation are both flat taxes -- a $25 "marker fee"
assessed from August 18, 1980, through March 31, 1983, and an "axle
tax" imposed thereafter -- registration fees and fuel taxes are
principal sources of revenue for road-related purposes, and
therefore the mechanics of their collection provide necessary
background for our analysis of the economic significance and
constitutional validity of the challenged flat taxes.
Registration Fees
Owners of motor vehicles that are based in Pennsylvania must
register them with the Department of Transportation and pay an
annual registration fee. The weight of a truck or truck tractor
[
Footnote 5] determines the
amount of the annual fee. Prior to 1980, there were 20 weight
classifications, and the corresponding fees ranged from $39 to $606
per vehicle. App. 260. In 1980, the registration fees were
increased and five new weight classes for heavier vehicles were
added to the statutory schedule; from 1980 to 1982, the maximum
registration fee was $1,125, for a vehicle weighing 79,001 to
80,000 pounds.
Ibid. In 1982, the registration fees for
vehicles weighing more than 26,000 pounds (classes 9-25) were
reduced by multiples of $36 ranging up to a $180 reduction;
thereafter, the maximum fee was $945.
Ibid.
Pennsylvania, many other States, and Provinces of Canada
participate in an apportioned registration scheme called the
"International Registration Plan" (IRP). Participants in this plan
share the registration fees for vehicles based in
Page 483 U. S. 272
their States with other IRP States in which the vehicles travel.
The percentage of each vehicle's total registration fee that is
allocated to each IRP State other than the State in which the
vehicle is based is determined by dividing the total number of
miles the vehicle traveled within the IRP State during the
preceding year by its total mileage. The total fee payable to each
State is the product of each State's total fee for full
registration of each vehicle and that State's percentage share of
the vehicle's mileage. Thus, if 30% of the mileage of a
Pennsylvania-based vehicle was accrued in other States,
Pennsylvania's share of the registration fee would be 70% of the
full amount specified in its statutory schedule. On the other hand,
if a vehicle based in another IRP State logged 40% of its mileage
in Pennsylvania, its owner would be required to pay that portion of
the Pennsylvania fee schedule to Pennsylvania. [
Footnote 6] Pennsylvania collects no registration
fees from motor carriers based in non-IRP States and, conversely,
Pennsylvania-based vehicles pay no registration fees to non-IRP
States. [
Footnote 7]
Page 483 U. S. 273
In sum, the amount of each truck's registration fee is
determined by the weight of the vehicle and, if the truck travels
in other IRP States, in part by its in-state mileage. No vehicle is
required to pay more than one full registration fee.
Fuel Consumption Taxes
Pennsylvania collects a fuel consumption tax in two ways. It
imposes a per-gallon fuel tax on fuel purchased within the State.
The State also requires trucks that travel less than 90% of their
miles in Pennsylvania to pay a tax based on their miles traveled in
Pennsylvania, reduced by the amount of the tax actually paid
through fuel purchased at Pennsylvania pumps.
See Pa.
Stat.Ann., Tit. 72, §§ 2611d, 2614.4, and 2617.1-2617.26 (Purdon
1964 and Supp.1987). The amount of these taxes does not depend on
the vehicle's State of registration.
The Flat Taxes
Pennsylvania requires an identification marker issued by the
Department of Revenue to be affixed to every motor carrier vehicle.
A motor carrier vehicle is a "truck, truck tractor or combination
having a gross weight or registered gross weight in excess of
17,000 pounds." 75 Pa.Cons.Stat. § 102 (1984). Until 1980, the fee
for the issuance of this marker was $2. In that year, the fee was
increased to $25, but vehicles registered in Pennsylvania were
exempted from the fee. The statute effected this exemption by
providing that, for each vehicle registered in Pennsylvania, the
"marker fee shall
Page 483 U. S. 274
be deemed a part of and included in the vehicle registration
fee." § 2102(b).
The parties have stipulated that the administrative costs
associated with the issuance of the identification markers total
approximately $5 per vehicle. App. 22. In 1982, when it enacted the
axle tax, Pennsylvania reduced the annual marker fee from $25 to $5
per vehicle. § 2102(b). Since 1982, then, the marker fee is
sufficient only to meet the specific cost of issuing the marker,
but the effect of the $25 marker fee from 1980 to 1982 was to
impose a flat tax on vehicles registered in other States. This tax
was, at least nominally, not imposed on Pennsylvania-registered
vehicles. It should be noted, however, that the same statute that
increased the marker fee in 1980 to $25 for out-of-state vehicles
weighing more than 17,000 pounds also increased Pennsylvania's
registration fees for such vehicles by amounts substantially larger
than $25.
In 1982, Pennsylvania enacted its axle tax and, as noted,
reduced the marker fee to $5 per vehicle. The axle tax applies to
all trucks, truck tractors, and combinations weighing more than
26,000 pounds, whether registered in Pennsylvania or elsewhere; it
requires an annual payment of $36 per vehicle axle. 75
Pa.Cons.Stat. § 9902 (1984). For example, the tax is $72 for a
two-axle vehicle and $180 for a five-axle vehicle. If a truck
travels less than 2,000 miles in Pennsylvania, however, it is
entitled to a rebate: the axle tax paid multiplied by the ratio of
the amount by which the vehicle's in-state mileage was short of
2,000 miles to 2,000 determines the rebate amount. § 9905.
Moreover, the axle tax is excused when a trucker pays $25 for a
trip permit for a period not exceeding five days. § 2102(d).
The same statute that enacted the axle tax in 1982 also reduced
the registration fees for all weight classes of vehicles of more
than 26,000 pounds. In classes 9-12, which generally include
two-axle vehicles required to pay a $72 axle tax, the reduction
amounted to $72; in classes 13-17, which usually
Page 483 U. S. 275
include three-axle vehicles subject to a $108 axle tax, it
amounted to $108; in classes 18, 19, and 20, usually four-axle
vehicles subject to a $144 axle tax, it amounted to $144, and in
the five heaviest classes -- vehicle weights exceeding the
permissible weight for four-axle vehicles -- it amounted to $180.
[
Footnote 8] In brief, the
amounts of the reductions in all classes were a multiple of the $36
per axle which is used as the measure for the axle tax. App.
260.
II
Appellants represent a class of interstate motor carriers whose
vehicles are registered outside of Pennsylvania and who paid the
$25 marker fee while it was in effect and who have thereafter been
subject to the axle tax. They brought separate actions in the
Commonwealth Court of Pennsylvania challenging the
constitutionality of the $25 marker fee and of the axle tax. In
each case, appellants made two separate arguments based on the
Commerce Clause of the Federal Constitution.
First, they argued that the entire economic burden of each tax
fell on out-of-state vehicles, because the 1980 statute "deemed"
the marker fee for Pennsylvania vehicles to be a part of the
registration fee, and the 1982 legislation granted Pennsylvania
vehicles a reduction in registration fees that
Page 483 U. S. 276
neatly offset the newly imposed axle tax. Second, they argued
that, even if owners of vehicles registered in Pennsylvania,
through payment of registration fees, shared the burden of the two
flat taxes with owners of vehicles based elsewhere, the taxes were
nevertheless discriminatory because both taxes imposed a much
heavier charge per mile of highway usage by out-of-state vehicles.
On the average, the Pennsylvania-based vehicles subject to the flat
taxes travel about five times as many miles on Pennsylvania roads
as do the out-of-state vehicles; correspondingly, the cost per mile
of each of the flat taxes is approximately five times as high for
out-of-state vehicles as for local vehicles. [
Footnote 9] Although out-of-state and instate
vehicles subject to the axle tax traveled approximately the same
number of miles on Pennsylvania's highways, less than one-sixth of
the State's total axle tax revenues were generated by
Pennsylvania-based vehicles in fiscal years 1982-1983 and
1983-1984. [
Footnote 10]
In both the marker fee case and the axle tax case, the
Commonwealth Court accepted appellants' first argument, and did not
consider the second. In the first case, the court reasoned:
Page 483 U. S. 277
"A state tax on interstate commerce does not offend the Commerce
Clause . . . if that tax [1] is applied to an activity with a
substantial nexus with the taxing state, [2] is fairly apportioned,
[3] does not discriminate against interstate commerce, and [4] is
fairly related to the services provided by the state.
Complete Auto Transit, Inc. v.
Brady, 430 U. S. 274[,
430 U. S.
279] (1977). . . . Section 2102(b) facially fails the
third prong of the
Complete Auto standard which prohibits
discrimination against interstate commerce. Notwithstanding
legislative legerdemain in the insertion of the obfuscating term
'deemed,' Pennsylvania-registered vehicles were exempted from, and
foreign-registered vehicles were subject to, the marker decal fee.
'The commerce clause forbids discrimination, whether forthright or
ingenious.'
Best & Co. v. Maxwell, 311 U. S.
454,
311 U. S. 455 (1940)
(footnote omitted)."
American Trucking Assns., Inc. v. Bloom, 77 Pa.Commw.
575, 581, 466 A.2d 755, 757 (1983). The Commonwealth Court ordered
a refund of marker fee payments made after April 1, 1982.
Id. at 581-582, 466 A.2d at 758. Sitting en banc, the
Commonwealth Court overruled defendants' exceptions to the trial
judge's order.
American Trucking Assns., Inc. v. Bloom, 87
Pa.Commw. 345, 487 A.2d 468 (1985). The en banc court inferred from
the legislature's nonenactment of increased registration fees to
keep pace with the marker levy imposed on vehicles based outside of
Pennsylvania "a legislative intent to exempt
Pennsylvania-registered motor carriers from payment of the $25.00
marker fee."
Id. at 350, 487 A.2d at 471.
Appellants in the case challenging the axle tax represent a
class of all interstate motor carriers who own vehicles registered
outside of Pennsylvania who are or will be subject to the tax, and
a subclass consisting of such interstate motor carriers who are
registered in any of the States or the Provinces of Canada that are
not members of the IRP. Appellants contended that the axle tax,
together with the simultaneous
Page 483 U. S. 278
reduction in registration fees substantially offsetting the axle
tax for Pennsylvania-registered vehicles, is facially
discriminatory, and in practice imposes the axle tax only on
interstate motor carriers registered outside of Pennsylvania.
Appellants also argued that the axle tax is an invalid flat tax
wholly unrelated to the benefits received by interstate motor
carriers. Sitting en banc, the Commonwealth Court declared that the
axle tax violated the Commerce Clause and ordered a refund of axle
tax payments made by affected class members after April 1, 1983. 87
Pa.Commw. 379, 487 A.2d 465 (1985). The court found that operators
of foreign-registered vehicles bore the "full brunt of the tax,"
and concluded that the axle tax therefore "constitutes economic
protectionism, and is facially invalid."
Id. at 383, 487
A.2d at 467.
The Supreme Court of Pennsylvania considered the two cases
together, and reversed. 510 Pa. 430,
509 A.2d
838 (1986). [
Footnote
11] The Court began its analysis by noting that the prohibition
against discrimination was included in the four-part test stated in
Complete Auto Transit, Inc. v. Brady, 430 U.
S. 274 (1977), and that it was essential to focus on the
"effect or economic consequences of the state tax upon interstate
commerce." 510 Pa. at 449, 509 A.2d at 848.
Pursuing this inquiry, the State Supreme Court rejected the
trial court's conclusion that the full burden of both taxes was
imposed on foreign-registered vehicles. With respect to the marker
fee, the Court considered irrelevant the legislative history
supporting a contrary inference, because the plain language of the
statute "deemed" a portion of the registration
Page 483 U. S. 279
fee to constitute payment of the marker fee for Pennsylvania
vehicles. The Court thus found no discrimination in the operation
of the marker fee, because the statute
"imposed a $25.00 marker fee on all motor carriers in the class
represented by appellees and deemed a like amount of the
simultaneous increase in Pennsylvania registration fees as the
marker fee for Pennsylvania registered vehicles."
Id. at 453, 509 A.2d at 850. Moreover, even if the
statute had not explicitly provided that Pennsylvania-registered
vehicles are regarded as having paid a marker fee, the simultaneous
increase in the registration fee when the $25 marker fee was
enacted made it "apparent that the marker fee does not work any
discrimination against interstate commerce in practical operation.
"
Ibid. .
The court thus viewed the marker fee as a flat tax applied
equally on all vehicles using the State's highways. The court
offered two reasons why this flat tax was not discriminatory
despite its imposition of a greater cost per mile on
non-Pennsylvania registered vehicles. First, relying on our
opinions in
Evansville-Vanderburgh Airport Authority District
v. Delta Airlines, Inc., 405 U. S. 707
(1972), and
Commonwealth Edison Co. v. Montana,
453 U. S. 609
(1981), the Court reasoned that a State may impose a tax for the
privilege of using its highways "so long as the flat fee charged is
not manifestly disproportionate to the services rendered." 510 Pa.
at 457, 509 A.2d at 852. Second, the Court found that interstate
motor carriers could not protest that the burden of the flat fee
fell too heavily upon them, for they "are free to use the
Commonwealth's highways as often and for whatever distances they
wish."
Ibid.
In the axle tax case, the Court found that the tax was collected
from Pennsylvania and non-Pennsylvania-registered vehicles alike,
and thus presented no question of discrimination "[o]n its face and
in actual operation."
Id. at 459, 509 A.2d at 853. The
Court acknowledged that a difficulty arose when it considered the
tax together with the statutory
Page 483 U. S. 280
reduction in 1982 of registration fees paid by
Pennsylvania-based vehicles subject to the axle tax, but concluded
that, even though the reduction in registration fees offset the
axle taxes for Pennsylvania-based vehicles, this reduction had to
be viewed against the earlier increase in 1980 of registration
fees. According to the State Supreme Court, the net effect of the
restructuring of the tax system over the 2-year period was
"to enact a compensatory tax to neutralize or partially offset
an economic advantage previously enjoyed by interstate commerce to
the disadvantage of local commerce that was caused by operation of
that state's taxing scheme."
Id. at 462, 509 A.2d at 855. Taking all provisions of
the State's highway user fee system into account, the court
reasoned that members of appellants' class bore less of the tax
burden than Pennsylvania-registered motor vehicles.
Id. at
460-463, 509 A.2d at 854-855. The Court concluded that,
"in easing the burden on Pennsylvania registered vehicles, the
Commonwealth has neither disadvantaged interstate commerce nor
favored local commerce, and the axle tax does not, therefore,
discriminate against interstate commerce."
Id. at 462, 509 A.2d at 855.
III
Although we have described our own decisions in this area as a
"quagmire" of judicial responses to specific state tax measures,
Northwestern States Portland Cement Co. v. Minnesota,
358 U. S. 450,
358 U. S.
457-458 (1959), we have steadfastly adhered to the
central tenet that the Commerce Clause "by its own force created an
area of trade free from interference by the States."
Boston
Stock Exchange v. State Tax Comm'n, 429 U.
S. 318,
429 U. S. 328
(1977).
See also Armco Inc. v. Hardesty, 467 U.
S. 638,
467 U. S. 642
(1984). One primary consequence of this constitutional restriction
on state taxing powers, frequently asserted in litigation, is that
"a State may not tax a transaction or incident more heavily when it
crosses state lines than when it occurs entirely within the State."
Ibid.; see also 466 U. S. v.
Tully, 466
Page 483 U. S. 281
U.S. 388,
466 U. S. 403
(1984). In its guarantee of a free trade area among States,
however, the Commerce Clause has a deeper meaning that may be
implicated even though state provisions, such as the ones reviewed
here, do not allocate tax burdens between insiders and outsiders in
a manner that is facially discriminatory. [
Footnote 12]
The parties broadly state the constitutional question in this
appeal as whether Pennsylvania's flat taxes result in a blanket
discrimination against interstate commerce. The operator of a
Pennsylvania-based vehicle that engages in interstate commerce,
however, has no apparent quarrel with the challenged flat taxes; he
is "deemed" to pay the $25 marker fee through his registration fee,
and the axle taxes he paid beginning in 1982 were generally offset
by the statutory reduction
Page 483 U. S. 282
in vehicle registration fees. But some operators of vehicles
based in other States or Provinces have neither consolation, for
they have paid registration fees to their own jurisdictions and
still face Pennsylvania's axle taxes. The precise issue is
therefore more subtle: do the methods by which the flat taxes are
assessed discriminate against some participants in interstate
commerce in a way that contradicts the central purpose of the
Commerce Clause? We find dispositive those of our precedents which
make it clear that the Commerce Clause prohibits a State from
imposing a heavier tax burden on out-of-state businesses that
compete in an interstate market than it imposes on its own
residents who also engage in commerce among States. [
Footnote 13]
The way in which a tax levied on participants in interstate
commerce is measured and assessed bears directly on whether it
implicates central Commerce Clause values. The method of assessing
the marker and axle taxes in this case on Pennsylvania-based
vehicles and on other vehicles establishes that the State is not
treating the two types of vehicles with an even hand. There are
important and obvious differences of a constitutional magnitude
between the State's registration fees and fuel taxes, on the one
hand, and its flat taxes, on the other.
The State's vehicle registration fee has its counterpart in
every other State and the District of Columbia.
See 2 CCH
State Tax Guide �� 50-200 - 50-940 (2d ed.1986). It is a tax that
readily satisfies the test of "internal consistency" that
Page 483 U. S. 283
we have applied in other contexts. [
Footnote 14] Under this test, even though the
registration fee is assessed, as indeed it has been, by every
jurisdiction, it causes no impermissible interference with free
trade, because every State respects the registration of every other
State. Payment of one registration fee enables a carrier to operate
a vehicle either locally or in the interstate market. Having paid
one registration fee, a vehicle may pass among the States as freely
as it may roam the State in which it is based; the Commerce Clause
is not offended when state boundaries are economically
irrelevant.
Yet even if more than one jurisdiction applies a charge to
participants in interstate commerce, the Commerce Clause may be
satisfied if the revenue measures maintain state boundaries as a
neutral factor in economic decisionmaking. Pennsylvania's fuel
consumption taxes, for example, do not hinder the maintenance of a
free trade area among States. The fuel consumption taxes are
directly apportioned to the mileage traveled in Pennsylvania; they
are therefore simply payments for traveling a certain distance that
happens to be within Pennsylvania. When a vehicle uses other
States' roads, it may be subject to their fuel taxes, but the free
trade area is unimpaired; if one sovereign controlled the entire
free trade area, it would have the equivalent authority to impose a
charges for the use of all of its roads. [
Footnote 15]
Page 483 U. S. 284
The unapportioned flat taxes, however, penalize some travel
within the free trade area. Whether the full brunt, or only a major
portion, of their burden is imposed on the out-of-state carriers,
their inevitable effect is to threaten the free movement of
commerce by placing a financial barrier around the State of
Pennsylvania. To pass the "internal consistency" test, a state tax
must be of a kind that, "if applied by every jurisdiction, there
would be no impermissible interference with free trade."
Armco
Inc. v. Hardesty, 467 U.S. at
467 U. S. 644.
If each State imposed flat taxes for the privilege of making
commercial entrances into its territory, there is no conceivable
doubt that commerce among the States would be deterred. [
Footnote 16]
Page 483 U. S. 285
Although the actual imposition of flat taxes by other
jurisdictions is not necessary to sustain the Commerce Clause
challenge to Pennsylvania's flat taxes under the "internal
consistency" test, the adoption of these flat taxes by other
jurisdictions even before the Pennsylvania suits were resolved
surely suggests that acquiescence in these flat taxes would
occasion manifold threats to the national free trade area. Since
1980, when Pennsylvania authorized the $25 marker fee, six other
States have also adopted flat taxes [
Footnote 17] and seven States have adopted retaliatory
levies that are assessed on motor carrier vehicles that are based
in Pennsylvania or another flat-tax State. [
Footnote 18] Such taxes [
Footnote 19] can obviously divide and disrupt
the market for interstate transportation services. [
Footnote 20]
Page 483 U. S. 286
In practical effect, since they impose a cost per mile on
appellants' trucks that is approximately five times as heavy as the
cost per mile borne by local trucks, the taxes are plainly
discriminatory. [
Footnote
21] Under our consistent course of decisions in recent years, a
state tax that favors in-state business over out-of-state business
for no other reason than the location of its business is prohibited
by the Commerce Clause.
Tyler Pipe Industries, Inc. v.
Washington Dept. of Revenue, ante p.
483 U. S. 232;
Bacchus Imports, Ltd. v. Dias, 468 U.
S. 263 (1984);
Armco Inc. v. Hardesty,
467 U. S. 638
(1984);
Westinghouse Electric Corp. v. Tully, 466 U.
S. 388 (1984);
Maryland v. Louisiana,
451 U. S. 725
(1981);
Boston Stock Exchange v. State Tax Comm'n,
429 U. S. 318
(177). Nor is the axle tax saved because some out-of-state carriers
which accrue high mileage in Pennsylvania pay the axle tax at a
lower per-mile rate than some Pennsylvania-based carriers; it makes
no difference that the axle tax, on its face, does not exact a
lower per-mile charge from Pennsylvania-based carriers than from
out-of-state carriers. Like the exemption from wholesaling tax for
goods manufactured in Washington that we struck down in
Tyler
Pipe Industries, Inc., the axle tax has a forbidden impact on
interstate commerce because it exerts an inexorable hydraulic
pressure on interstate businesses to ply their trade within the
State that enacted the measure, rather
Page 483 U. S. 287
than "among the several States." U.S.Const., Art. I, § 8, cl.
3.
IV
Notwithstanding our recent precedents invalidating various state
taxation measures that failed the "internal consistency" test,
Pennsylvania advances three arguments in defense of its flat taxes.
They are said to reflect a reasonable charge for the privilege of
using its roads when considered alongside the high price that
Pennsylvania-based trucks pay in registration fees. Appellees also
argue that the flat taxes are no different from the flat user fees
this Court has recently upheld. Finally, talismanically invoking
decisions in which we upheld flat taxes for the privilege of doing
business within a State, appellees contend that a mere disparity in
per-mile costs between interstate and intrastate truckers provides
no basis upon which to strike down a tax. We are persuaded,
however, that none of the cases relied upon by appellees controls
our disposition.
The "Rational Restructuring" Defense
Appellees expressly acknowledge that the axle tax cannot be
defended as a compensatory tax that equalizes previously unequal
tax burdens by offsetting "a specific tax imposed only on
intrastate commerce for a substantially equivalent event." Brief
for Appellees 18.
See Tyler Pipe Industries, Inc. v. Washington
Dept. of Revenue, ante at
483 U. S.
242-244;
Armco Inc. v. Hardesty, 467 U.S. at
467 U. S.
642-643;
Henneford v. Silas Mason Co.,
300 U. S. 577,
300 U. S. 584
(1937). Instead, they argue that the axle tax does not discriminate
against interstate commerce because "it is but a small part of
Pennsylvania's multi-tiered scheme of taxes and fees designed to
finance an extensive highway system." Brief for Appellees 17.
Appellees contend that domestic trucks pay a higher price to use
Pennsylvania's highways than those registered in other States, and
specifically, that the totality of the tax and fee changes since
1980 has resulted in higher relative taxes
Page 483 U. S. 288
on trucks registered in Pennsylvania. The registration fee
reductions in 1982 only partially offset these increases. We find
this argument unavailing.
Appellees' reasoning is based on the erroneous premise that
relief for Pennsylvania-based trucks is constitutionally
permissible because they are subject to a higher financial burden
for their use of Pennsylvania's roads than trucks based in other
States must pay for use of the same roads. This premise is flawed
for three reasons. Pennsylvania-based trucks are allowed to travel
throughout the United States without paying more than one
registration fee; the registration fees they pay are not solely for
the use of Pennsylvania's highways. In addition, while it is true
that registration fees are lower in some States, they are also
higher in some other States.
See, e.g., App. 178. Most
importantly, even if the relative amounts of the States'
registration fees confer a competitive advantage on trucks based in
other States, the Commerce Clause does not permit compensatory
measures for the disparities that result from each State's choice
of tax levels. To the extent that a competitive disadvantage is
conferred on Pennsylvania carriers by the relative amounts of the
States' registration fees, the remedy lies in a change in their
level, the enlargement of participation in the IRP, [
Footnote 22] or the collection of revenues
through valid taxes. The axle tax cannot be vindicated as a
"rational restructuring of burdens" simply because it arguably
benefits a class of
Page 483 U. S. 289
truckers that pays more to use the State's highways than does
another class of highway users. As one commentator has
observed,
"[i]mplementation of a rule of law that a tax is
nondiscriminatory because other taxes of at least the same
magnitude are imposed by the taxing State on other taxpayers
engaging in different transactions would plunge the Court into the
morass of weighing comparative tax burdens."
J. Hellerstein, 1 State Taxation: Corporate Income and Franchise
Taxes � 4.12[5], p. 150 (1983). The flat taxes must stand or fall
on their own.
The User-Fee Defense
Taken on their own, the marker fee and axle tax are wholly
unlike the user fees we upheld in
Evansville-Vanderburgh
Airport Authority District v. Delta Airlines, Inc.,
405 U. S. 707
(1972), a case relied upon by the Pennsylvania Supreme Court.
Evansville-Varlderburgh involved the question whether a
municipal airport authority could collect a flat service fee of $1
for each passenger boarding a commercial aircraft operating from
the airport. [
Footnote 23]
After reviewing our decisions concerning highway tolls, as well as
the cases holding that a State may impose a flat fee for the
privilege of using its roads without regard to the actual use by
particular vehicles, so long as the fee is not excessive, we
stated:
"At least so long as the toll is based on some fair
approximation of use or privilege for use, as was that before us in
Capitol Greyhound [Lines v. Brice, 339 U. S.
542 (1950)], and is neither discriminatory against
interstate commerce nor excessive in comparison with the
governmental benefit conferred, it will pass constitutional muster,
even though some other formula might reflect more
Page 483 U. S. 290
exactly the relative use of the state facilities by individual
users."
Id. at
405 U. S.
716-717.
We then explained why the $1 fee satisfied the two essential
conditions that it be neither discriminatory nor excessive:
"The Indiana and New Hampshire charges meet those standards.
First, neither fee discriminates against interstate commerce and
travel. While the vast majority of passengers who board flights at
the airports involved are traveling interstate, both interstate and
intrastate flights are subject to the same charges. Furthermore,
there is no showing of any inherent difference between these two
classes of flights, such that the application of the same fee to
both would amount to discrimination against one or the other.
See Nippert v. Richmond, 327 U. S. 416 (1946)."
"Second, these charges reflect a fair, if imperfect,
approximation of the use of facilities for whose benefit they are
imposed."
Id. at
405 U. S. 717.
Pennsylvania's flat taxes satisfy neither of these conditions: they
discriminate against out-of-state vehicles by subjecting them to a
much higher charge per mile traveled in the State, and they do not
even purport to approximate fairly the cost or value of the use of
Pennsylvania's roads.
The Pennsylvania Supreme Court also relied on
Commonwealth
Edison Co. v. Montana, 453 U. S. 609
(1981). The State of Montana imposed a severance tax on coal at the
same rate whether the final destination of the coal was local or
interstate. We rejected the taxpayer's discrimination claim, which
was premised on the fact that 90% of Montana coal was shipped to
other States under contracts that shifted the tax burden
principally to utility companies outside of Montana, and that
therefore imposed the bulk of the tax burden on out-of-state
consumers of Montana coal. We held that
"there is no real discrimination in this case; the tax burden is
borne according to the amount of coal consumed and not according
to
Page 483 U. S. 291
any distinction between in-state and out-of-state
consumers."
Id. at
453 U. S. 619.
Because the tax was a percentage of the value of the contract, and
because only Montana could impose the tax, every holder of an
equivalently valued contract paid the same tax; whether the
shipment crossed a state border was irrelevant to the magnitude of
the tax burden imposed by Montana. The flat taxes in this case are
distinguishable in two ways. First, the amount of Pennsylvania's
marker and axle taxes owed by a trucker does not vary directly with
miles traveled or with some other proxy for value obtained from the
State.
"[W]hen the measure of a tax bears no relationship to the
taxpayers' presence or activities in a State, a court may properly
conclude under the fourth prong of the
Complete Auto
Transit test that the State is imposing an undue burden on
interstate commerce."
Id. at
453 U. S. 629.
As Justice Frankfurter argued in his dissent in
Capitol
Greyhound Lines v. Brice, 339 U. S. 542,
339 U. S. 557
(1950):
"So long as a State bases its tax on a relevant measure of
actual road use, obviously both interstate and intrastate carriers
pay according to the facilities in fact provided by the State. But
a tax levied for the privilege of using roads, and not their actual
use, may, in the normal course of operations and not as a fanciful
hypothesis, involve an undue burden on interstate carriers. While
the privilege extended by a State is unlimited in form, and thus
theoretically the same for all vehicles, whether interstate or
intrastate, the intrastate vehicle can and will exercise the
privilege whenever it is in operation, while the interstate vehicle
must necessarily forego the privilege some of the time simply
because of its interstate character,
i.e., because it
operates in other States as well. In the general average of
instances, the privilege is not as valuable to the interstate as to
the intrastate carrier."
Second, unlike the Montana coal tax, highway use taxes can be
imposed by other States.
Page 483 U. S. 292
"And, because it operates in other States, there is danger --
and not a fanciful danger -- that the interstate carrier will be
subject to the privilege taxes of several States, even though his
entire use of the highways is not significantly greater than that
of intrastate operators who are subject to only one privilege
tax."
Ibid. (footnote omitted). Justice Frankfurter thus
illuminated the reason that a State's imposition of an
unapportioned flat tax, unlike the neutral user fee in
Evansville-Vanderburgh and the neutral severance tax in
Commonwealth Edison Co., discriminates against interstate
commerce.
The Flat-Tax Defense
Third, the cases in support of the State's authority to impose
flat use taxes, while lending support to appellees' argument, can
no longer suffice to uphold flat taxes with the blatantly
discriminatory consequences associated with the marker fee and axle
tax.
In
Clark v. Poor, 274 U. S. 554
(1927), the Court held that users of a State's highways,
"although engaged exclusively in interstate commerce, may be
required to contribute to their cost and upkeep. . . . There is no
suggestion that the tax discriminates against interstate
commerce."
Id. at
274 U. S. 557.
A few years later, in
Aero Mayflower Transit Co. v. Georgia
Public Service Comm'n, 295 U. S. 285
(1935), the Court sustained an annual license fee of $25 imposed on
both out-of-state and domestic vehicles, concluding that the case
was so similar to
Clark v. Poor, supra, "as to apply a
closure to debate." 295 U.S. at
295 U. S. 289.
Unlike the
Clark case, however, the Court considered and
rejected an argument that it was unfair to impose the same charge
upon an interstate carrier as upon a local carrier that used the
roads more. The Court reasoned that the fee covered the same
privilege for both carriers.
Page 483 U. S. 293
"The appellant urges the objection that its use of roads in
Georgia is less than that by other carriers engaged in local
business, yet they pay the same charge. The fee is not for the
mileage covered by a vehicle. There would be administrative
difficulties in collecting on that basis. The fee is for the
privilege of a use as extensive as the carrier wills that it shall
be. There is nothing unreasonable or oppressive in a burden so
imposed.
Cf. Clark v. Poor, supra; 290 U. S.
Coney, [
290 U.S.
169 (1933)]. One who receives a privilege without limit is not
wronged by his own refusal to enjoy it as freely as he may."
295 U.S. at
295 U. S.
289.
In a second case brought by the same interstate carrier, the
Court again relied on the principle of
Clark v. Poor to
support the proposition that
"a state, consistently with the commerce clause, may lay upon
motor vehicles engaged exclusively in interstate commerce, or upon
those who own and so operate them, a fair and reasonable
nondiscriminatory tax as compensation for the use of its
highways."
Aero Mayflower Transit Co. v. Board of Railroad
Comm'rs, 332 U.S. at
332 U. S. 503.
Aero Mayflower held that two flat taxes imposed by Montana
on each commercial vehicle operated on its highways did not
discriminate against interstate commerce;
"[b]oth levies apply exclusively to operations wholly within the
state or the proceeds of such operations, although those operations
are interstate in character."
Id. at
332 U. S. 502.
The Court was careful to identify the consideration for the taxes
as the privilege of using the State's highways, [
Footnote 24] and to point out that the
appellant had erred by failing to distinguish between a tax on that
privilege and a tax on the privilege of engaging in interstate
commerce:
Page 483 U. S. 294
"Appellant therefore confuses a tax 'assessed for a proper
purpose and . . . not objectionable in amount,'
Clark v. Poor,
supra, at
274 U. S. 557, that is, a
tax affirmatively laid for the privilege of using the state's
highways, with a tax not imposed on that privilege but upon some
other such as the privilege of doing the interstate business.
Though necessarily related, in view of the nature of interstate
motor traffic, the two privileges are not identical, and it is
useless to confuse them. . . ."
Id. at
332 U. S. 504.
Later in the opinion, the Court again emphasized the fact that the
gross revenue fee was exacted in consideration for the privilege of
using the State's highways, not for the privilege of doing
interstate business.
Id. at
332 U. S.
506.
The distinction between a tax on the privilege of using a
State's highways and a tax on the privilege of engaging in
interstate commerce was also dispositive in
Spector Motor
Service, Inc. v. O'Connor, 340 U. S. 602
(1951), decided just four years later. Again addressing a tax on an
interstate motor carrier, the Court this time invalidated it,
distinguishing
Aero Mayflower Transit Co. v. Board of Railroad
Comm'rs because the
Spector tax was "not levied as
compensation for the use of highways," 340 U.S. at
340 U. S. 607,
and was not a tax on sales or use.
"It is a 'tax or excise' placed unequivocally upon the
corporation's franchise for the privilege of carrying on
exclusively interstate transportation in the State."
We explained:
"Even though the financial burden on interstate commerce might
be the same, the question whether a state may validly make
interstate commerce pay its way depends first of all upon the
constitutional channel through which it attempts to do so.
Freeman v. Hewit, 329 U. S. 249 [1946];
McLeod
v. Dilworth Co., 322 U. S. 327 [1944]."
Id. at
340 U. S.
608.
In our more recent decisions, we have rejected this somewhat
metaphysical approach to the Commerce Clause that focused
Page 483 U. S. 295
primarily on the character of the privilege, rather than the
practical consequences of the tax. [
Footnote 25] In 1977, while we recognized that we had
invalidated privilege taxes on instate activity deemed to be part
of interstate commerce, we also noted that we had "moved toward a
standard of permissibility of state taxation based upon its actual
effect, rather than its legal terminology."
Complete Auto
Transit, Inc. v. Brady, 430 U.S. at
430 U. S.
281.
"These decisions have 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."
Id. at
430 U. S. 279.
In
Complete Auto Transit, Inc., we not only observed that
the
Spector rule against a tax on the privilege of
interstate commerce "has no relationship to economic realities,"
430 U.S. at
430 U. S. 279,
and expressly overruled the
Spector case itself, 430 U.S.
at
430 U. S. 289,
but also concluded that "the philosophy underlying the rule [that
interstate commerce is immune from state taxation has] been
rejected."
Id. at
430 U. S. 288. In ruling that the theoretical
underpinnings of this rule had been eroded, we necessarily called
into question the future vitality of earlier cases that had upheld
facially neutral flat taxes against challenges premised on the rule
of immunity for interstate commerce. Unsuccessful challenges had
then been turned away on the theory that the State was not taxing
the conduct of interstate commerce, but instead was taxing a
unitary, formally defined privilege that was sometimes part of
intrastate commerce and sometimes part of interstate commerce.
Now
Page 483 U. S. 296
that it has been firmly established that interstate commerce, as
such, has no immunity from state taxation, it is no longer
appropriate to uphold a flat tax merely because the particular
formula by which its charges are reckoned extends the same nominal
privilege to interstate commerce that it extends to in-state
activities. Such formalism "merely obscures the question whether
the tax produces a forbidden effect."
Ibid.
Thus, the precedents upholding flat taxes can no longer support
the broad proposition, advanced by appellees, that every flat tax
for the privilege of using a State's highways must be upheld, even
if it has a clearly discriminatory effect on commerce by reason of
that commerce's interstate character. Although out-of-state
carriers obtain a privilege to use Pennsylvania's highways that is
nominally equivalent to that which local carriers receive,
imposition of the flat taxes for a privilege that is several times
more valuable to a local business than to its out-of-state
competitors is unquestionably discriminatory, and thus offends the
Commerce Clause. The great constitutional purpose of the Fathers
cannot be defeated by using an apparently neutral "guise of
taxation which produces the excluding or discriminatory effect."
Nippert v. Richmond, 327 U. S. 416,
327 U. S. 426
(1946). Those precedents are still valid, however, in their
recognition that the Commerce Clause does not require the States to
avoid flat taxes when they are the only practicable means of
collecting revenues from users and the use of a more finely
gradated user fee schedule would pose genuine administrative
burdens. [
Footnote 26]
Page 483 U. S. 297
The administrative machinery of revenue collection for highways
is now obviously capable of taking into account at least the gross
variations in cost per unit of highway usage between
Pennsylvania-based and out-of-state carriers that are presented by
these facts. Pennsylvania, as noted, uses mileage figures to
apportion motor carriers' registration fees among IRP
jurisdictions, to collect fuel taxes from trucks that travel less
than 90% of their miles in Pennsylvania, and to calculate axle tax
rebates. Pennsylvania also apportions the corporate income tax it
imposes on interstate carriers by the carrier's total miles
traveled in the State. Pa.Stat.Ann., Tit. 72, § 7401(3)2(b) (Purdon
Supp.1987). [
Footnote 27]
While flat taxes may be perfectly valid when administrative
difficulties make collection of more finely calibrated user charges
impracticable, we conclude that this justification is unavailable
in the case of Pennsylvania's unapportioned marker fee and axle
tax.
V
Appellees request that, in the event of an adverse decision, the
Court remand the case to the Pennsylvania Supreme Court to consider
whether our ruling should be applied retroactively and to decide
other remedial issues. We agree that, having
Page 483 U. S. 298
decided the constitutional issue presented to us, we should
remand for further proceedings in the marker fee, axle tax, and
marker fee refund suits.
See Tyler Pipe Industries, Inc. v.
Washington Dept. of Revenue, ante at
483 U. S.
251-253.
The judgment of the Pennsylvania Supreme Court is reversed, and
the case is remanded for further proceedings not inconsistent with
this opinion.
It is so ordered.
[
Footnote 1]
"No State, consistent with the Commerce Clause, may 'impose a
tax which discriminates against interstate commerce . . . by
providing a direct commercial advantage to commercial business.'
[
Northwestern States Portland Cement Co. v. Minnesota,
358 U. S.
450,
358 U. S. 458 (1959)]. . . .
Permitting the individual States to enact laws that favor local
enterprises at the expense of out-of-state businesses 'would invite
a multiplication of preferential trade areas destructive' of the
free trade which the Clause protects.
Dean Milk Co. v.
Madison, 340 U. S. 349,
340 U. S.
356 (1951)."
Boston Stock Exchange v. State Tax Comm'n, 429 U.
S. 318,
429 U. S. 329
(1977).
[
Footnote 2]
For example, during the period from April 1, 1981, through
November 30, 1982, the expenditures from Pennsylvania's Motor
License Fund that directly benefited motor carriers operating in
Pennsylvania were at least $1,551,088,000. App. 30.
[
Footnote 3]
"During calendar year 1979, the most recent period for which
detailed figures are currently available, vehicle miles travelled
in Pennsylvania were approximately as follows:"
Total Vehicle Miles Traveled, 1979
Total Passenger Vehicles 58,600,811,505
Auto 57,291,004,547
Motor Cycle 911,913,897
School Bus 124,376,972
Commercial Bus 273,516,089
Total Cargo Vehicles 12,844,167,335
2 Axle/4 tire 6,381,130,943
All other Single Trucks 2,806,356,994
Combination Trucks 3,656,679,398
Id. at 31-32.
[
Footnote 4]
For example, the States of New York, New Jersey, Delaware,
Maryland, West Virginia, and Ohio share borders with
Pennsylvania.
[
Footnote 5]
A truck tractor does not itself carry cargo, but is equipped to
haul cargo trailers.
[
Footnote 6]
The parties stipulated to this example:
"[A]ssuming a motor carrier vehicle based in Pennsylvania, state
A or state B traveled 50% of its miles in the Commonwealth, 40% in
state A, and 10% in state B, and assuming the full registration
fees for those states were $400, $300, and $200 respectively, the
registration fees paid by that vehicle would be as follows (if
states A and B are IRP-member jurisdictions. . .):"
To Pennsylvania: 50% x $400 = $200
To state A: 40% x $300 = $120
To state B: 10[%] x $200 = $ 20
----
Total registration fee: $340
App. 38-39.
[
Footnote 7]
Thus, if the example used in n.
6 supra, is modified by assuming that State A is
not an IRP State, 90% of Pennsylvania's $400 fee, or $360, would be
payable to Pennsylvania; in that event, the total registration
would be $380, of which $20 would be payable to State B.
Pennsylvania also has nonapportioned reciprocity agreements with
non-IRP States. A Pennsylvania-based carrier that pays a
registration fee to Pennsylvania obtains the privilege of operating
the vehicle over the highways of "all other states with which
Pennsylvania has registration reciprocity respecting that vehicle
registration."
Id. at 42. Likewise, carriers that pay
registration fees to States with which Pennsylvania has reciprocity
agreements receive the privilege of operating their vehicles on the
roads of their home state and "the roads of all other states,
including Pennsylvania, with which the home state has registration
reciprocity."
Ibid.
[
Footnote 8]
The explanation for the substantial congruence between the
amount of the reductions in registration fee and the amount of axle
tax imposed lies in the statutory requirement that a truck with a
given number of axles may not exceed a specified weight. As Chief
Justice Nix explained in his dissent, the registration fee
"reductions correspond to the number of axles most commonly used
and minimally required by law in each weight class. . . . Except in
a few instances, the [registration fee] reductions created by the
Act were intended to, and did exactly, offset the impact of the
Axle Tax upon motor carrier vehicles registered in
Pennsylvania."
510 Pa. 430, 467, n. 1,
509
A.2d 838, 858, n. 1 (1986). The Commonwealth Court had also
found that the reductions in registration fees "generally offset
the tax owed based on the number of axles ordinarily required of
vehicles within each affected weight class."
American Trucking
Assns., Inc. v. Bloom, 87 Pa.Commw. 379, 382, 487 A.2d 465,
467 (1985).
[
Footnote 9]
In 1981, the cost of the marker fee was more than 1/2 cent per
mile for all foreign-based motor carrier vehicles and about l/10
cent per mile for all Pennsylvania-based motor carrier vehicles.
App. 104.
[
Footnote 10]
In an affidavit supporting appellee's motion for summary
judgment, the Secretary of the Department of Revenue stated:
bt:
"Axle tax revenues for fiscal year 1982-83 and fiscal year
1983-84 are as follows:"
Trucks Trucks
registered registered
in other Temporary
Pennsylvania than Pa. Permits Fines Total
----------------------------------------------------------
$ 8,684,008 $45,292,372 $1,147,855 -- $55,124,235
$12,314,308 $62,088,820 $4,547,849 $1,448,872 $80,399,849
"The Department of Revenue is in the process of paying axle tax
rebates for the April 1, 1983, to March 31, 1984, period, and
estimates that rebates will total about $6,000,000."
et:
App. 207.
[
Footnote 11]
A third case, involving a refund claim for the two years that
the $25 marker fee was in effect, presented the same legal issue as
the other two. The Commonwealth Court held that it did not have
jurisdiction over the case, because appellants had not initially
sought refunds from the Board of Finance and Revenue. 87 Pa.Commw.
418, 489 A.2d 269 (1985). The Pennsylvania Supreme Court considered
this third case along with the other two. In view of its rejection
in the first case of the constitutional challenges to the marker
fee, the court affirmed without reviewing the Commonwealth Court's
ruling on the exhaustion issue.
[
Footnote 12]
Our more recent cases repeat a theme that recurred in an early
series of decisions invalidating facially neutral taxes on
nonresident solicitors, or "drummers," seeking to engage in
business within the taxing jurisdiction. In
Nippert v.
Richmond, 327 U. S. 416
(1946), we explained:
"As has been so often stated but nevertheless seems to require
constant repetition, not all burdens upon commerce, but only undue
or discriminatory ones, are forbidden. For, though 'interstate
business must pay its way,' a State, consistently with the commerce
clause, cannot put a barrier around its borders to bar out trade
from other States, and thus bring to naught the great
constitutional purpose of the fathers in giving to Congress the
power 'To regulate Commerce with foreign Nations, and among the
several States. . . [.]' Nor may the prohibition be accomplished in
the guise of taxation which produces the excluding or
discriminatory effect."
Id. at
327 U. S.
425-426.
"Provincial interests and local political power are at their
maximum weight in bringing about acceptance of this type of
legislation. With the forces behind it, this is the very kind of
barrier the commerce clause was put in the fundamental law to guard
against. It may be, as the Court said in the
Berwind-White
case, that the State is free to allow its municipal subdivisions to
erect such barriers against each other, to some extent, as to the
commerce over which the State has exclusive control. It cannot so
outlaw or burden the commerce of the United States."
"The drummer is a figure representative of a by-gone day. But
his modern prototype persists under more euphonious appellations.
So endure the basic reasons which brought about his protection from
the kind of local favoritism the facts of this case typify."
Id. at
327 U. S.
434-435.
[
Footnote 13]
"This free trade purpose [of the Commerce Clause] is not
confined to the freedom to trade with only one State; it is a
freedom to trade with any State, to engage in commerce across all
state boundaries."
"There has been no prior occasion expressly to address the
question whether a State may tax in a manner that discriminates
between two types of interstate transactions in order to favor
local commercial interests over out-of-state businesses, but the
clear import of our Commerce Clause cases is that such
discrimination is constitutionally impermissible."
Boston Stock Exchange v. State Tax Comm'n, 429 U.S. at
429 U. S.
335.
[
Footnote 14]
See Tyler Pipe Industries, Inc. v. Washington Dept. of
Revenue, ante at
483 U. S. 247;
Armco Inc. v. Hardesty, 467 U. S. 638,
467 U. S.
644-645 (1984);
Container Corp. of America v.
Franchise Tax Board, 463 U. S. 159,
463 U. S. 163
(1983).
[
Footnote 15]
It might be objected that, if other States impose lower fuel
taxes or forgo them entirely, then Pennsylvania's tax is
inconsistent with a free trade area because it furnishes a
disincentive to travel throughout that State. But the disincentive
affects local and out-of-state vehicles in precisely the same way,
and thus does not implicate the Commerce Clause. When a tax does
establish a difference in treatment, however, the
"immunities implicit in the Commerce Clause and the potential
taxing power of a State can hardly be made to depend, in the world
of practical affairs, on the shifting incidence of the varying tax
laws of the various States at a particular moment."
Freeman v. Hewit, 329 U. S. 249,
329 U. S. 256
(1946). The adverse economic impact in dollars and cents upon a
participant in interstate commerce for crossing a state boundary
and thus becoming subject to another State's taxing jurisdiction is
neither necessary to establish a Commerce Clause violation,
see
Armco Inc. v. Hardesty, 467 U.S. at
467 U. S. 644,
nor sufficient,
see Complete Auto Transit, Inc. v. Brady,
430 U. S. 274,
430 U. S. 289
(1977) (taxes on interstate business are not invalid
per
se).
[
Footnote 16]
A line of cases invalidating unapportioned flat taxes that
provided general revenue also illustrates the principle that the
very nature of the market that interstate operators serve prevents
them from making full use of the privilege of doing business for
which they have paid the State. Thus, we found that a tax on
drummers in the city of Memphis for the privilege of doing business
there on behalf of out-of-state firms discriminated against
out-of-state manufacturers. We reasoned that their local
competitors,
"having regular licensed houses of business [in Memphis], have
no occasion for such agents, and, if they had, they are not subject
to any tax therefor. They are taxed for their licensed houses, it
is true; but so, it is presumable, are the merchants and
manufacturers of other states in the places where they reside; and
the tax on drummers operates greatly to their disadvantage in
comparison with the merchants and manufacturers of Memphis."
Robbins v. Shelby County Taxing District, 120 U.
S. 489,
120 U. S. 498
(1887).
See also Best & Co. v. Maxwell, 311 U.
S. 454,
311 U. S.
456-457 (1940) (annual flat tax on those who were not
regular retail merchants in the State invalid because its actual
effect "is to discriminate in favor of intrastate businesses,
whatever may be the ostensible reach of the language");
Nippert
v. Richmond, 327 U. S. 416
(1946). As one commentator observed almost half a century ago:
"True, each fee is imposed upon the use of different states'
highways, but the cumulative effect does not result from the
mileage or distance traveled, but from the interstate character of
the journey. The same mileage in one state would result in only one
tax."
Lockhart, State Tax Barriers to Interstate Trade, 53 Harv.L.Rev.
1253, 1269 (1940).
[
Footnote 17]
The States are Arkansas, Ark.Stat.Ann. §§ 75-817.2, 75-817.3
(a)(3), (4), and (5) (Supp.1985); Indiana, Ind.Code Ann. § 6-6-8-6
(Burns Supp.1986); Kentucky, Ky.Rev.Stat. § 138.660(4)-(7)
(Supp.1986); Maryland, Md.Transp.Code Ann. § 13-423(a) (1984); New
Jersey, N.J.Stat.Ann. § 54.39 A-10 (West 1986); and Vermont,
Vt.Stat.Ann., Tit. 23, §§ 415, 3007, 3010 (1978 and
Supp.1986-1987).
[
Footnote 18]
The States are Florida, Fla.Stat. § 207.004(5)(d) (1986);
Georgia, Ga.Code Ann. § 40-2-111 (1985); Maine, Me.Rev.Stat.Ann.,
Tit. 29, § 2243 (Supp.1986-1987); Nebraska, Neb.Rev.Stat. §
60-305.03 (1984); New Jersey, N.J.Stat.Ann. § 39:3-6 (West 1973);
Oklahoma, Okla.Stat., Tit. 47, § 1120 (Supp.1986); and Vermont,
Vt.Stat.Ann., Tit. 23, § 417 (Supp.1986-1987).
[
Footnote 19]
The parties stipulated that, if all the States in which
appellant Old Dominion Freight Lines, Inc. operated were to impose
a $25 marker fee, the cost of qualifying its vehicles in every
State in which it operates its vehicles would amount to a figure
that is many times larger than the company's net pretax income in
fiscal year 1981. App. 27-28.
[
Footnote 20]
Flat-rate license taxes,
"if adopted by many cities and states, bear much more heavily in
the aggregate on a firm that sells in many places than on a firm
otherwise identical (and in particular, with the same total
quantity of sales) that sells in only one place."
Regan, The Supreme Court and State Protectionism: Making Sense
of the Dormant Commerce Clause, 84 Mich.L.Rev. 1091, 1188
(1986).
[
Footnote 21]
"It is true also that a State may impose, even on motor vehicles
engaged exclusively in interstate commerce, a reasonable charge as
their fair contribution to the cost of constructing and maintaining
the public highways. . . . But no part of the license fee here in
question may be assumed to have been prescribed for that purpose. A
flat tax, substantial in amount and the same for busses plying the
streets continuously in local service and for busses making, as do
many interstate busses, only a single trip daily, could hardly have
been designed as a measure of the cost or value of the use of the
highways."
Sprout v. South Bend, 277 U. S. 163,
277 U. S. 170
(1928).
[
Footnote 22]
The flat taxes would appear to create a disincentive to
participation in the IRP, because the statute is unclear as to
whether trucks based in IRP States are required to pay not only
their share of Pennsylvania's registration fees, but the $25 marker
fee and the axle tax as well.
See 75 Pa.Cons.Stat. §§
2102(b), (d)(1) (1984) ("The fee for issuance of an identification
marker prior to and including March 31, 1983 shall be $25 and
thereafter the fee shall be $5. . . . The Secretary of Revenue may
by regulation exempt from the requirement to display the
identification marker motor carrier vehicles which in his opinion
are clearly identifiable such that effective enforcement of this
chapter will not suffer thereby"); § 9902 ("all motor carriers
shall pay an annual tax in the amount of $36 per axle").
[
Footnote 23]
In response, Congress prohibited any "tax, fee, head charge, or
other charge" on air travel. 49 U.S.C.App. § 1513(a). If Congress
should disagree with this decision, it would, of course, have the
power to authorize flat taxes of this kind.
See Prudential
Insurance Co. v. Benjamin, 328 U. S. 408,
328 U. S. 434
(1946).
[
Footnote 24]
"The present taxes, on their face, are exacted 'in consideration
of the use of the highways of this state,' that is, they are laid
for the privilege of using those highways."
332 U.S. at
332 U. S.
503.
[
Footnote 25]
Compare, e.g., Interstate Transit, Inc. v. Lindsey,
283 U. S. 183
(1931) (invalidating state tax on exclusively interstate motor
carriers' carrying capacity as a tax on privilege of engaging in
interstate commerce),
with Hicklin v. Coney, 290 U.
S. 169 (1933) (upholding state tax on carrying capacity
of interstate carriers which earmarked proceeds for highway
maintenance as highway use tax).
[
Footnote 26]
In
Aero Mayflower Transit Co. v. Board of Railroad
Comm'rs, 332 U. S. 495
(1947), after disposing of the appellant's main claims, the Court,
in a footnote, summarily rejected appellant's alternative claim
that the minimum fee of $15 on gross receipts was unreasonable
because it imposed a tax roughly 10 times greater than would be
required if the percentage standard set forth in the statute (0.5%
of gross operating revenues) were used. We observed that the
"Federal Constitution does not require the state to elaborate a
system of motor vehicle taxation which will reflect with exact
precision every gradation in use. In return for the $15 fee,
appellant can do business grossing $3,000 per vehicle annually for
operations on Montana roads. Appellant was not wronged by its
failure to make the full use of the highways permitted."
Id. at
332 U. S. 506,
n.19. Our disposition was thus based on the costs the State would
encounter in collecting taxes for vehicles that earned less than
$3,000 annually in Montana. We also emphasized the administrative
impossibility of precise apportionment according to road use in
Capitol Greyhound Lines v. Brice, 339 U.
S. 542,
339 U. S. 546
(1950). In that case, we upheld a 2% tax on the fair market value
of motor vehicles for the use of state highways as a rough
approximation of use because of the administrative burden of
applying a tax formula that would vary "with every factor affecting
appropriate compensation for road use."
[
Footnote 27]
See also Brief for State of North Carolina
et
al. as
Amici Curiae 21 (each of these States, which
recoup highway costs through registration fees apportioned to
mileage under the IRP and through motor fuel purchase and use taxes
directly related to miles traveled within the State, experiences no
administrative difficulties).
JUSTICE O'CONNOR, with whom THE CHIEF JUSTICE and JUSTICE POWELL
join, dissenting.
In finding Pennsylvania's "flat" highway use taxes
unconstitutional under the Commerce Clause, the Court today
directly overrules the holdings of at least three cases:
Capitol Greyhound Lines v. Brice, 339 U.
S. 542 (1950);
Aero Mayflower Transit Corp. v. Board
of Railroad Comm'rs, 332 U. S. 495
(1947); and
Aero Mayflower Transit Co. v. Georgia Public
Service Comm'n, 295 U. S. 285
(1935). These cases were apparently cited with approval as recently
as
Massachusetts v. United States, 435 U.
S. 444,
435 U. S.
463-464 (1978), and
Evansville-Vanderburgh Airport
Authority District v. Delta Airlines, Inc., 405 U.
S. 707,
405 U. S.
715-717 (1972). In
Massachusetts, the opinion
states:
"[W]e turn to consider the Commonwealth's argument that § 4491
should not be treated as a user fee, because the amount of the tax
is a flat annual fee, and hence is not directly related to the
degree of use of the airways. This argument has been confronted and
rejected in analogous contexts.
Capitol Greyhound Lines v.
Brice, 339 U. S. 542 (1950) is
illustrative. . . . Noting that the tax 'should be judged by its
result, not its formula, and must stand unless proven to be
unreasonable in amount for the privilege granted,'
id. at
339 U. S. 545, the Court
rejected the carrier's argument:"
" Complete fairness would require that a state tax formula vary
with every factor affecting appropriate compensation
Page 483 U. S. 299
for road use. These factors, like those relevant in considering
the constitutionality of other state taxes, are so countless that
we must be content with 'rough approximation, rather than
precision.' . . . Each additional factor adds to administrative
burdens of enforcement, which fall alike on taxpayers and
government. We have recognized that such burdens may be sufficient
to justify states in ignoring even such a key factor as mileage,
although the result may be a tax which, on its face, appears to
bear with unequal weight upon different carriers. . . . Upon this
type of reasoning rests our general rule that taxes like that of
Maryland here are valid unless the amount is shown to be in excess
of fair compensation for the privilege of using state roads."
"
Id. at
339 U. S. 546-547.
(Citations and footnotes omitted).
See also Aero Mayflower
Transit Co. v. Board of Railroad Comm'rs, 332 U. S.
495 (1947). . . ."
Massachusetts v. United States, supra, at
435 U. S.
463-464.
I am aware of the substantially contemporaneous criticism of the
Aero Mayflower line of decisions.
See, e.g., Capitol
Greyhound Lines v. Brice, supra, at
339 U. S.
548-560 (Frankfurter, J., dissenting); Brown, The Open
Economy: Justice Frankfurter and the Position of the Judiciary, 67
Yale L.J. 219, 232 (1957); Lockhart, State Tax Barriers to
Interstate Trade, 53 Harv.L.Rev. 1253, 1267-1270 (1940). Flat
highway use taxes may potentially pose a serious practical burden
for interstate commerce.
See ante at
483 U. S.
284-287. Certainly, as a matter of first impression, the
constitutionality of flat highway use taxes could have been
resolved differently. Nonetheless, this particular issue has been
settled now for over 50 years, and Congress has not seen fit to
preempt these taxes by exercising its commerce power, though, of
course, it has had recent occasion to consider and reconsider the
problems of the trucking industry.
See Motor Carrier Act
of 1980, 94 Stat. 793
et seq., as amended, 49 U.S.C. §
10101
et seq.; see generally Thoms, Rollin' On . . . To a
Free Market: Motor
Page 483 U. S. 300
Carrier Regulation 1935-1980, 13 Trans.L.J. 43 (1983). If and
when the practical problems that the Court envisions occur,
Congress may correct them. Indeed, as the Brief for State of
Vermont as
Amicus Curiae 3-8 sets out in some detail,
Congress, the Executive, and the States have, in fact, recently and
actively considered the issue.
See H.R. 4518, 98th Cong.,
1st Sess. (1983); Surface Transportation Issues: Hearings before
the Subcommittee on Surface Transportation of the House Committee
on Public Works and Transportation, 98th Cong., 2d Sess. (1984)
(hereinafter 1984 Hearings); Oversight of the Motor Carrier Act of
1980: Hearings before the Subcommittee on Surface Transportation of
the House Committee on Public Works and Transportation, 98th Cong.,
1st Sess. (1983). Federal action has been deferred while the
National Governors' Association attempts to develop uniform
national standards for taxation of interstate motor carriers. 1984
Hearings 1201-1213;
see National Governors' Association
Center for Policy Research, An Experiment in Federalism: Can the
States Improve the Interstate Motor Carrier Taxation System?,
Capital Ideas (Feb. 1, 1986).
In the meantime, the reliance interest sought to be protected by
the doctrine of
stare decisis has grown up around the
settled rule. For example, Pennsylvania has collected some $300
million in axle taxes to be spent on highway improvements that, of
course, largely benefit the interstate trucking industry. Brief for
Appellees 7. In my view, Pennsylvania, in structuring its program
for financing highway construction and repair, had every reason to
rely upon the settled understanding that flat highway taxes
reasonably related to the extent of the benefit conferred do not
violate the Commerce Clause. Similarly, Arkansas, appearing as
amicus curiae here, opened its highways to the heaviest
trucks only upon the understanding that it might collect sufficient
revenue from those trucks by means of flat taxes to compensate for
the damage they do to its roads.
See American
Page 483 U. S. 301
Trucking Assns., Inc. v. Gray, 288 Ark. 488, 503-504,
707 S.W.2d
759, 766-767 (1986),
cert. pending, No. 86-358. If
this flat tax is also unconstitutional, then Arkansas is left with
the damage, but without the taxes. Brief for State of Arkansas as
Amicus Curiae 6 (estimating incremental damage by heavy
trucks at $53 million annually). In light of these reliance
interests, in my view, if a new rule is to be declared, Congress
should do it.
Capitol Greyhound Lines v. Brice, 339 U.S.
at
339 U. S.
547.
The Court's suggestion,
ante at
483 U. S.
294-296, that the
Aero Mayflower line of cases
is somehow intimately bound up with the rule of
Spector Motor
Service, Inc. v. O'Connor, 340 U. S. 602
(1951), and therefore was overruled
sub silentio along
with
Spector in
Complete Auto Transit, Inc. v.
Brady, 430 U. S. 274
(1977), is easily refuted. The fact of the matter is that
Spector and
Complete Auto Transit involved a
state tax on the privilege of doing business, an entirely different
form of state taxation, that
Spector found that form of
taxation unconstitutional, and therefore had to distinguish the
Aero Mayflower line of decisions,
see Spector Motor
Service, Inc. v. O'Connor, supra, at
340 U. S. 607,
and n. 4, and that this Court explicitly relied on the
Aero
Mayflower line after
Complete Auto Transit in
Massachusetts v. United States, 435 U.S. at
435 U. S.
463-464. Similarly, the Court's reliance upon
Nippert v. Richmond, 327 U. S. 416
(1946), is inappropriate. Again a somewhat different form of
taxation was involved in
Nippert, and the case predates
both
Aero Mayflower Transit Co. v. Board of Railroad
Comm'rs, 332 U. S. 495
(1947), and
Capitol Greyhound Lines v. Brice, supra.
Appellants argue that circumstances have so substantially
changed since the days of
Aero Mayflower and its progeny
that the cases, even if they had some basis when they were decided,
have no basis now. They point to the growth of the interstate
trucking industry and the increased reliance on mileage apportioned
taxes in our time, and argue that presently the extent of the
burden on interstate commerce
Page 483 U. S. 302
is greater, and the administrative inconvenience associated with
apportioned taxes less. These arguments are not without some force.
Significantly changed circumstances can make an older rule,
defensible when formulated, inappropriate, and we have reconsidered
cases in the dormant Commerce Clause area before.
See, e.g.,
Commonwealth Edison Co. v. Montana, 453 U.
S. 609,
453 U. S.
614-617 (1981), disapproving statements in
Heisler
v. Thomas Colliery Co., 260 U. S. 245
(1922);
Hughes v. Oklahoma, 441 U.
S. 322,
441 U. S.
326-336 (1979), overruling
Geer v. Connecticut,
161 U. S. 519
(1896);
Complete Auto Transit, Inc., supra, at
430 U. S.
278-289,
overruling Spector Motor Service, Inc.,
supra. But the changes that appellants point to are of degree,
not kind. Interstate trucking and mileage-based taxes were
certainly not oddities when
Capitol Greyhound Lines v. Brice,
supra, was decided in 1950.
See, e.g., Interstate Busses
Corp. v. Blodgett, 276 U. S. 245
(1928) (upholding mileage-based tax and noting existence of fuel
tax). Indeed, the substantial contemporaneous criticism of the
Aero Mayflower line of cases makes clear that the
potential burden on interstate commerce that flat taxes posed, and
the existence of feasible alternatives, were fully understood at
the time these cases were decided. In short, I do not believe that
the evolutionary changes we have seen in the trucking industry are
substantial enough to defeat the strong
stare decisis
concerns, and the resulting reliance interests of the States,
present here.
Neither does
Armco Inc. v. Hardesty, 467 U.
S. 638 (1984), dictate a different result. The West
Virginia taxation scheme in that case, on its face, discriminated
against out-of-state manufacturers:
"if the property was manufactured in the State, no tax on the
sale is imposed. If the property was manufactured out of the State
and imported for sale, a tax of 0.27% is imposed on the sale
price."
Id. at
467 U. S. 642.
Since this facially discriminatory tax could not be justified under
the compensatory tax doctrine,
id. at
467 U. S.
642-643, it was held unconstitutional.
See Maryland
v. Louisiana, 451
Page 483 U. S. 303
U.S. 725,
451 U. S.
758-760 (1981). There is nothing in
Armco to
suggest that the
Aero Mayflower line of cases was being
implicitly disapproved, or even that these cases were considered at
all relevant to the case before the Court. Nor do I read
Armco as establishing a grandiose version of the "internal
consistency test" as the constitutional measure of all state taxes
under the Commerce Clause.
See ante at
483 U. S.
282-284;
cf. Tyler Pipe Industries, Inc. v.
Washington Dept. of Revenue, ante at
483 U. S.
254-259 (SCALIA, J., dissenting). In my view, the fact
that the tax in
Armco was facially discriminatory
sufficiently supports holding that tax invalid under the Commerce
Clause. At most,
Armco may be read for the proposition
that a tax that is facially discriminatory is unconstitutional if
it is not "internally consistent." In no way does it stand for the
proposition that
nondiscriminatory state taxes must also
generally be "internally consistent" to pass constitutional muster.
Creating an "internal consistency" rule of general application is
an entirely novel enterprise that the Court undertakes for the
first time in this case. Yet the Court gives no reason why such a
rule is necessary or desirable, nor does it discuss the views of
the lower courts or commentators. Indeed, the limited scholarly
work on general application of the internal consistency test is
largely negative.
See, e.g., Judson & Duffy, An
Opportunity Missed:
Armco, Inc. v. Hardesty, A Retreat
From Economic Reality in Analysis of State Taxes, 87 W.Va.L.Rev.
723, 739-740 (1985); Lathrop,
Armco -- A Narrow and
Puzzling Test for Discriminatory State Taxes Under the Commerce
Clause, 63 Taxes 551, 557 (1985). I am simply unwilling to follow
the Court down this path without some greater understanding of the
need, and authority, for doing so. I respectfully dissent.
JUSTICE SCALIA, with whom THE CHIEF JUSTICE joins,
dissenting.
I agree with the Court that the "internal consistency" test it
adopts requires invalidation of the Pennsylvania axle tax and
marker fee -- as it would any unapportioned flat tax involving
Page 483 U. S. 304
multistate activities. For the reasons given in my dissent in
Tyler Pipe Industries, Inc. v. Washington Dept. of Revenue,
ante p.
483 U. S. 254,
I do not believe that test can be derived from the Constitution or
is compelled by our past decisions. The same tax is imposed on
in-state as on out-of-state trucks; that is all I would require.
See Capitol Greyhound Lines v. Brice, 339 U.
S. 542 (1950);
Aero Mayflower Transit Co. v. Board
of Railroad Comm'rs, 332 U. S. 495
(1947);
Aero Mayflower Transit Co. v. Georgia Public Service
Comm'n, 295 U. S. 285
(1935).
The Court's disposition relieves it of the need to address
appellants' narrower contention that the axle tax is facially
discriminatory because the same law that introduced it reduced
registration fees for Pennsylvania-based trucks by, for all
practical purposes, precisely the amount of the axle taxes. I would
reject that challenge as well. The axle tax is imposed uniformly on
both in-state and out-of-state vehicles, and is therefore not
facially discriminatory. The registration fee is imposed only on
in-state trucks, and its reduction likewise does not facially
discriminate against interstate commerce. Since both the axle tax
and the reduction in registration fees are independently
nondiscriminatory, I would sustain them.
Appellants rely on
Maryland v. Louisiana, 451 U.
S. 725 (1981), in which we invalidated Louisiana's use
tax on offshore gas because the State credited payments of that tax
against other taxes imposed on local commerce, such as the
severance tax on in-state production, and exempted gas used for
certain in-state activities from the tax.
Id. at
451 U. S.
732-733,
451 U. S. 756.
That case is readily distinguishable. Pennsylvania provides no
exemption from its axle tax for in-state truckers, and does not
permit axle tax payments to be used as credits against the
registration fee. The axle tax
alone -- unlike the gas tax
in
Maryland v. Louisiana -- is on its face
nondiscriminatory.
Page 483 U. S. 305
It may well be that the lowering of the exclusively intrastate
registration fee has the same net effect as would a tax credit for
the axle tax. But so would have the establishment of the
registration fee and the axle tax at their current levels in the
first place. To determine the facially discriminatory character of
a tax not on the basis of the tax alone, but on the basis of the
structure of a State's tax code, is to extend our case law into a
new field, and one in which principled distinctions become
impossible. What if, for example, the registration fees for
Pennsylvania-based barges, rather than trucks, had been reduced in
an amount that precisely compensated for the additional revenues to
be derived from the increased axle fees? Or what if Pennsylvania
had enacted the axle tax without reducing registration fees, and
then, one year, later made a corresponding reduction in truck
registration fees? This case, of course, is more difficult than
those examples, because the tax reduction and axle tax both apply
to the same mode of transport and were enacted simultaneously.
However, to inquire whether a tax reduction is close enough in time
or in mode to another tax so that "in effect" the latter should be
treated as facially discriminatory is to ask a question that has no
answer.
Legislative action adjusting taxes on interstate and intrastate
activities spans a spectrum, ranging from the obviously
discriminatory to the manipulative to the ambiguous to the wholly
innocent. Courts can avoid arbitrariness in their review only by
policing the entire spectrum (which is impossible), by policing
none of it, or by adopting rules which subject to scrutiny certain
well-defined classes of actions thought likely to come at or near
the discriminatory end of the spectrum. We have traditionally
followed the last course, confining our disapproval to forms of tax
that seem clearly designed to discriminate,
* and accepting
the fact that some amount
Page 483 U. S. 306
of discrimination may slip through our net. A credit against
intrastate taxes falls readily within the highly suspect category;
a reduction of intrastate taxes to take account of increased
revenue from a nondiscriminatory axle tax does not.
I acknowledge that the distinction between a credit and a
straight reduction is a purely formal one, but it seems to me less
absurd than what we will be driven to if we abandon it. The axle
tax and registration fee reduction in this case appeared in the
same bill. Extend the rule to treat that as "in effect" a tax
credit, and the next case will involve two different bills enacted
the same day, or a week apart, or at the beginning and end of the
same session. A line must be drawn somewhere, and (in the absence
of direction from any authoritative text) I would draw it here.
* There is one area where we seem to have based our decisions
less on the form of the tax than on the character of the activity
taxed: the "drumming" cases, where we have invalidated, without
elaborate inquiry, facially neutral taxes on soliciting activities.
See, e.g., Nippert v. Richmond, 327 U.
S. 416 (1946). "Everybody knows" that these laws have
but a single purpose, to protect local merchants from out-of-town
(and hence out-of-state) competition. The temptation was great to
presume that whole class of taxes, regardless of their
nondiscriminatory form, guilty until proved innocent. I do not
think those cases are an attractive model on which to base a more
general Commerce Clause jurisprudence.