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ASSOCIATED INDUSTRIES OF MISSOURI ET AL. v. LOHMAN, DIRECTOR OF REVENUE OF MISSOURI, ET AL.

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OCTOBER TERM, 1993

Syllabus

ASSOCIATED INDUSTRIES OF MISSOURI ET AL. v. LOHMAN, DIRECTOR OF REVENUE OF MISSOURI, ET AL.

CERTIORARI TO THE SUPREME COURT OF MISSOURI No. 93-397. Argued March 28, 1994-Decided May 23,1994

Missouri's uniform, statewide "additional use tax" on goods purchased outside the State and stored, used, or consumed within the State is purportedly designed to "compensate" for the taxes imposed by local jurisdictions within the State on in-state sales of goods. Local sales tax rates, however, vary widely, and in many jurisdictions the use tax exceeds the sales tax. Petitioners-a trade association representing businesses that must collect the additional use tax and a manufacturer that pays it-brought this action in state court, contending that the tax scheme impermissibly discriminates against interstate commerce in violation of the Commerce Clause. The State Circuit Court granted respondents summary judgment. In affirming, the Supreme Court of Missouri reasoned that, because the tax was designed to even exactions on intrastate and interstate trade, the tax scheme should be analyzed under the "compensatory tax" doctrine. The court concluded that, given the high average rate of local jurisdictions' sales taxes, the overall effect of the use tax scheme across the State was to place a lighter aggregate tax burden on interstate commerce than on intrastate commerce, even though in some localities the use tax might exceed the sales tax. The court determined that, in such circumstances, there was no discrimination against interstate commerce on a statewide basis and held that the use tax scheme did not violate the Commerce Clause.

Held: Missouri's use tax scheme impermissibly discriminates against interstate commerce in those localities where the use tax exceeds the sales tax. Pp. 646-657.

(a) Although the compensatory tax doctrine saves from constitutional infirmity a facially discriminatory tax that imposes on interstate commerce the equivalent of an "identifiable and substantially similar tax on intrastate commerce," Oregon Waste Systems, Inc. v. Department of Environmental Quality of Ore., ante, at 103, Missouri's use tax scheme runs afoul of the basic requirement that, for a tax system to be "compensatory," the burdens imposed on interstate and intrastate commerce must be equal, see, e. g., Henneford v. Silas Mason Co., 300 U. S. 577, 584-587. Whether the use tax is equal to (or lower than) the local sales tax is a matter of fortuity in Missouri, depending entirely on the localitycralaw


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in which the Missouri purchaser happens to reside. In jurisdictions where the use tax exceeds the sales tax, the discrepancy imposes a discriminatory burden on interstate commerce. The State Supreme Court's statewide averaging approach is contrary to this Court's decisions, which have, for example, implicitly rejected any theory that would require aggregating the burdens on commerce across an entire State to determine the constitutionality of an exaction imposed on interstate trade by a particular political subdivision. See Fort Gratiot Sanitary Landfill, Inc. v. Michigan Dept. of Natural Resources, 504 U. S. 353, 363. General American Tank Car Corp. v. Day, 270 U. S. 367, 373, distinguished. Requiring equal treatment of intrastate and interstate commerce not only across the State as a whole, but also within each political subdivision of the State, does not effectively eliminate the State's ability to delegate taxing authority to local jurisdictions. It merely prohibits the State from granting its subdivisions a power to discriminate that the State lacked in the first instance. Pp. 646-654.

(b) The Court rejects petitioners' contention that the use tax should be struck down in its entirety. Petitioners argue that the tax should be treated as facially invalid in every jurisdiction because there is no countervailing statewide sales tax and no legislation ensuring that local sales taxes will always equal or exceed the use tax. But it is the actual discrimination that results from the Missouri tax system in some localities, not the potential for discrimination in every locality, that transgresses constitutional commands. See, e. g., Gregg Dyeing Co. v. Query, 286 U. S. 472, 481. Pp. 654-656.

(c) The effect that any pre deprivation procedures provided under state law for contesting the use tax might have on the appropriate remedy in this case, as well as determination of the methods best adapted to implementing a remedy here, are matters best left for consideration on remand. Pp. 656-657.

857 S. W. 2d 182, reversed and remanded.

THOMAS, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and STEVENS, O'CONNOR, SCALIA, KENNEDY, SOUTER, and GINSBURG, JJ., joined. BLACKMUN, J., concurred in the judgment.

Thomas C. Walsh argued the cause for petitioners. With him on the briefs were Juan D. Keller, Michael G. Biggers, and Brenda L. Talent.

Don M. Downing, Deputy Attorney General of Missouri, argued the cause for respondents. With him on the brief for respondent Lohman were Jeremiah W (Jay) Nixon, At-cralaw


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