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U.S. Supreme Court

Illinois Central Ry. Co. v. Minnesota, 309 U.S. 157 (1940)

Illinois Central Railway Co. v. Minnesota

No. 222

Argued January 8, 1940

Decided January 29, 1940

309 U.S. 157


1. Minnesota imposed on railroads a property tax measured by gross earnings from operations within the State. In the absence of adequate records, earnings from interchange of freight cars were apportioned to Minnesota according to a formula. The reporting road was charged with that proportion of the balance owing from each user of its cars which the user's Minnesota revenue freight car mileage was of the user's system car mileage, and was permitted to deduct that proportion of the balance owing to other roads for use of their cars which its Minnesota freight car mileage was of its system car mileage. The net credits were ascertained annually, and the tax imposed thereon. As applied to a railroad whose Minnesota mileage was small compared to its system mileage, and whose deductions were small compared with roads having extensive mileages within the State, held that the tax formula was consistent with equal protection and due process under the Fourteenth Amendment and with the Commerce Clause of the Constitution. Pp. 309 U. S. 161, 309 U. S. 164.

2. The ratio of Minnesota revenue freight car mileage to system car mileage is consistent with the statutory scheme of ascertaining what payments represent use in Minnesota. P. 309 U. S. 161.

3. That the apportionment may not result in mathematical exactitude is not a constitutional defect. P. 309 U. S. 161.

Page 309 U. S. 158

4. Objections of the complainant railroad to the validity of the tax, that, by the formula, it is permitted to deduct only a small fraction of its debit balances compared with other roads having extensive mileage in the State, and that though it has only 30 miles of track in the State, it must pay a tax, while others with hundreds of miles may pay none, examined and rejected. Pp. 309 U. S. 162-163.

5. The fact that the railroads not owning or operating lines within the State are not taxed on their income from the use of their cars within the State by other railroads does not produce unconstitutional discrimination against roads which have subjected themselves to the state's jurisdiction and enjoy the privilege of engaging in business there. P. 309 U. S. 163.

6. Double taxation, short of confiscation or proceedings unconstitutional on other grounds, is not forbidden by the Fourteenth Amendment. P. 309 U. S. 164.

7. The tax has a fair relation to property employed within the State, although the property be used in interstate commerce. P. 309 U. S. 164.

8. A recomputation by the taxes payable under a statute which was in force throughout the whole period in question is not such retroactivity as deprives of due process of law. P. 309 U. S. 164.

9. Whether the credits here taxed are includible as "gross earnings" within the meaning of the state statute is a question of local law in respect of which this Court defers to the state court's interpretation. P. 309 U. S. 165.

205 Minn. 621, 286 N.W. 359, affirmed.

Appeal from the affirmance of a Judgment against the railroad company in a suit brought by the State to recover additional taxes.

Page 309 U. S. 159

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