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U.S. Supreme Court

Department of Revenue v. Stevedoring Assn., 435 U.S. 734 (1978)

Department of Revenue of Washington v.

Association of Washington Stevedoring Companies

No. 76-1706

Argued January 16-17, 1978

Decided April 26, 1978

435 U.S. 734


1. The State of Washington's business and occupation tax does not violate the Commerce Clause by taxing the interstate commerce activity of stevedoring within the State. Complete Auto Transit, Inc. v. Brady, 430 U. S. 274, followed; Puget Sound Stevedoring Co. v. State Tax Comm'n, 302 U. S. 90, and Joseph v. Carter & Weekes Stevedoring Co., 330 U. S. 422, overruled. Pp. 435 U. S. 743-751.

(a) A State, under appropriate conditions, may tax directly the privilege of conducting interstate business. Complete Auto Transit, Inc. v. Brady, supra. P. 435 U. S. 745.

(b) When a general business tax levies only on the value of services performed within the State, the tax is properly apportioned, and multiple burdens on interstate commerce cannot occur. Pp. 435 U. S. 746-747.

(c) All state tax burdens do not impermissibly impede interstate commerce, and the Commerce Clause balance tips against the state tax only when it unfairly burdens commerce by exacting from the interstate activity more than its just share of the cost of state government. Pp. 435 U. S. 747-748.

(d) State taxes are valid under the Commerce Clause where they are applied to activity having a substantial nexus with the State, are fairly apportioned, do not discriminate against interstate commerce, and are fairly related to the services provided by the State; and here, the Washington tax in question meets this standard, since the stevedoring operations are entirely conducted within the State, the tax is levied solely on the value of the loading and unloading occurring in the State, the tax rate is applied to stevedoring as well as generally to businesses rendering services, and there is nothing in the record to show that the tax is not fairly related to services and protection provided by the State. Pp. 435 U. S. 750-751.

2. Nor is the Washington business and occupation tax, as applied to stevedoring so as to reach services provided wholly within the State to imports, exports, and other goods, among the "Imposts or Duties"

Page 435 U. S. 735

prohibited by the Import-Export Clause. Michelin Tire Corp. v. Wages, 423 U. S. 276. Pp. 435 U. S. 751-761.

(a) The application of the tax to stevedoring threatens none of the Import-Export Clause's policies of precluding state disruption of United States foreign policy, protecting federal revenues, and avoiding friction and trade barriers among the States. The tax, as so applied, does not restrain the Federal Government's ability to conduct foreign policy. Its effect on federal import revenue is merely to compensate the State for services and protection extended to the stevedoring business. The policy against interstate friction and rivalry is vindicated, as is the Commerce Clause's similar policy, if the tax falls upon a taxpayer with reasonable nexus to the State, is properly apportioned, does not discriminate, and relates reasonably to services provided by the State. Pp. 435 U. S. 751-755.

(b) While, as distinguished from Michelin Tire Corp. v. Wages, supra, where the goods taxed were no longer in transit, the activity taxed here occurs while imports and exports are in transit, nevertheless the tax does not fall on the goods themselves, but reaches only the business of loading and unloading ships, i.e., the business of transporting cargo, within the State, and hence the tax is not a prohibited "Impost or Duty" when it violates none of the policies of the Import-Export Clause. Pp. 435 U. S. 755-757.

(c) While here the stevedores load and unload imports and exports, whereas, in Michelin Tire Corp. v. Wages, supra, the state tax in question touched only imports, nevertheless the Michelin approach of analyzing the nature of the tax to determine whether it is a prohibited "Impost or Duty" should apply to taxation involving exports as well as imports. Any tax relating to exports can be tested for its conformity to the Import-Export Clause's policies of precluding state disruption of United States foreign policy and avoiding friction and trade barriers among the States, although the tax does not serve the Clause's policy of protecting federal revenues in view of the fact that the Constitution forbids federal taxation of exports. Pp. 435 U. S. 757-758.

(d) The Import-Export Clause does not effect an absolute ban on all state taxation of imports and exports, but only on "Imposts or Duties." Pp. 435 U. S. 759-760.

(e) To say that the Washington tax violates the Import-Export Clause because it taxes the imports themselves while they remain a part of commerce would be to resurrect the now rejected "original package" analysis, whereby goods enjoyed immunity from state taxation as long as they retained their status as imports by remaining in their import packages. P. 435 U. S. 760.

Page 435 U. S. 736

(f) The Washington tax is not invalid under the Import-Export. Clause as constituting the imposition of a transit fee upon inland customers, since, as is the case in Commerce Clause jurisprudence, interstate friction will not chafe when commerce pays for the state services it enjoys. Fair taxation will he assured by the prohibition on discrimination and the requirements of apportionment, nexus, and reasonable relationship between tax and benefits. Pp. 435 U. S. 760-761.

88 Wash.2d 315, 559 P.2d 997, reversed and remanded.

BLACKMUN, J., delivered the opinion of the Court, in which BURGER, C.J.,and STEWART, WHITE, MARSHALL, REHNQUIST, and STEVENS, JJ., joined, and in all but Part III-B of which POWELL, J., joined. POWELL, J., filed an opinion concurring in part and concurring in the result, post, p. 435 U. S. 761. BRENNAN, J., took no part in the consideration or decision of the case.

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