Northwestern States Portland Cement Company v. Minnesota/Concurrence Harlan
Mr. Justice HARLAN, concurring.
In joining the opinion of the Court, I deem it appropriate to make some further comments as to the issues in these cases because of the strongly held contrary views manifested in the dissenting opinions of Mr. Justice FRANKFURTER and Mr. Justice WHITTAKER. I preface what follows by saying that in my view the past decisions of this Court clearly point to, if indeed they do not compel, the sustaining of these two state taxing measures.
Since United States Glue Co. v. Town of Oak Creek, 247 U.S. 321, 38 S.Ct. 499, 62 L.Ed. 1135, decided in 1918, this Court has uniformly held that a State, in applying a net income tax of general impact to a corporation doing business within its borders, may reach income derived from interstate commerce to the extent that such income is fairly related to corporate activities within the State. See, e.g., Shaffer v. Carter, 252 U.S. 37, 57, 40 S.Ct. 221, 227, 64 L.Ed. 445; Atlantic Coast Line R. Co. v. Daughton, 262 U.S. 413, 416, 43 S.Ct. 620, 621, 67 L.Ed. 1051. See also Underwood Typewriter Co. v. Chamberlain, 254 U.S. 113, 119-120, 41 S.Ct. 45, 46, 65 L.Ed. 165; Bass, Ratcliff & Gretton, Ltd. v. State Tax Commission, 266 U.S. 271, 45 S.Ct. 82, 69 L.Ed. 282; Norfolk & W.R. Co. v. State of North Carolina, 297 U.S. 682, 56 S.Ct. 625, 80 L.Ed. 977.
As I read the cases the existence of some income from intrastate business on the part of the taxed corporation, while sometimes adverted to, has never been considered essential to the valid taxation of such 'interstate' income. The cases upholding taxes of this kind cannot, in my opinion, properly be said to rest on the theory that the income earned from the carrying on of interstate commerce was not in fact being taxed, but rather was being utilized simply to measure the income derived from some separate, but unidentified, intrastate commerce, which income was in truth the subject of the tax. That this is so seems to me apparent from United States Glue itself. There the Court explicitly recognized that the question before it was whether net income from exclusively interstate commerce could be taxed by a State on an apportioned basis together with other income of a corporation. The careful distinction, drawn more than once in the course of the opinion, between gross receipts from interstate commerce, assumed to be immune from state taxation, and net income therefrom, 247 U.S. at pages 324, 326, 327, 328, 329, 38 S.Ct. at pages 500, 501, would be altogether meaningless if the case is to be explained on the basis suggested by my dissenting brethren, for if all that was in fact being taxed was income from intrastate commerce there is no reason why gross receipts as well as net income could not have been reached by the State. 
Surely any possible doubt on this score is removed by West Publishing Co. v. McColgan, 328 U.S. 823, 66 S.Ct. 1378, 90 L.Ed. 1603, where this Court unanimously affirmed, without oral argument, a decision of the California Supreme Court upholding the validity of a statute taxing 'income from any activities carried on in this State, regardless of whether carried on in intrastate, interstate or foreign commerce' as applied to reach a portion of the net income of a Minnesota corporation not qualified to do intrastate business in California and assumed by the California court to the deriving income in California entirely 'from activities in furtherance of a purely interstate business * * *.' 27 Cal.2d 705, 712, 166 P.2d 861, 865.
It is suggested that the Court's summary affirmance in the West case went on the ground that the taxpayer there was found by the state court to have been engaged in intrastate commerce in California, and that it was only the income earned from such commerce that had in truth been taxed by the State. In my view, this explanation of West is unacceptable. Apart from the fact that the California Supreme Court did not proceed on any such basis (see especially the quotation from the state court's opinion set forth at page 364 of 79 S.Ct.), the only facts elucidated in support of this view of the West cast are that employees of the taxpayer solicited business in California, that they were authorized to receive payments on orders taken by them, to collect delinquent accounts, and to adjust complaints, and that they were given space in California lawyers' offices in return for the use of the taxpayer's books there stored, which locations were also advertised as the taxpayer's local offices. It is said that these are 'the usual criteria which this Court has consistently held to constitute the doing of intrastate commerce' and that 'California determined and taxed only the amount of that intrastate commerce.' With deference, this seems to me to be both novel doctrine and unreal analysis; novel doctrine because this Court has never held that activities of this kind, performed solely in aid of interstate sales, are intrastate commerce; unreal analysis, because it is surely stretching things too far to say that California was seeking to measure and tax office renting and complaint adjusting rather than part of the income from concededly interstate sales transactions.
I think that West squarely governs the two cases now before us. 
It is said that the taxes presently at issue were 'laid on income from (interstate commerce) because of its source.' If this were so I should of course vote to strike down their application here as unconstitutionally discriminatory against interstate commerce. But this seems to me plainly not such a case. As the opinion of the Court demonstrates, the Minnesota and Georgia taxes are each part of a general scheme of state income taxation, reaching all individual, corporate, and other net income. The taxing statutes are not sought to be applied to portions of the net income of Northwestern and Stockham because of the source of that income-interstate commerce-but rather despite that source. The thrust of these statutes is not hostile discrimination against interstate commerce, but rather a seeking of some compensation for facilities and benefits afforded by the taxing States to income-producing activities therein, whether those activities be altogether local or in furtherance of interstate commerce. The past decisions of this Court establish that such compensation may be had by the States consistent with the Commerce Clause.
I think it no more a 'regulation of,' 'burden on,' or 'interference with' interstate commerce to permit a State within whose borders a foreign corporation engages solely in activities in aid of that commerce to tax the net income derived therefrom on a properly apportioned basis than to permit the same State to impose a nondiscriminatory net income tax of general application on a corporation engaging in both interstate and intrastate commerce therein and to take into account income from both categories. Cf. Peck & Co. v. Lowe, 247 U.S. 165, 38 S.Ct. 432, 62 L.Ed. 1049. In each case the amount of the tax will increase as the profitability of the interstate business done increases. This Court has consistently upheld state net income taxes of general application so applied as to reach that portion of the profits of interstate business enterprises fairly allocable to activities within the State's borders. We do no more today.
Mr. Justice FRANKFURTER, dissenting.
^1 As early as 1919 such a discriminating commentator as the late Thomas Reed Powell had this to say, in commenting on the decisions of this Court in Peck & Co. v. Lowe, 247 U.S. 165, 38 S.Ct. 432, 62 L.Ed. 1049, and United States Glue Co. v. Town of Oak Creek, supra: 'We may take it for granted, then, that the legal character of the recipient and the nature of the business in which the recipient is engaged are immaterial elements in considering the constitutionality of a state-wide, all-inclusive general tax on net income from business done within the state. The recipient may be an individual, a partnership, a domestic or a foreign corporation. The business may be exclusively interstate.' Indirect Encroachment on Federal Authority by the Taxing Powers of the States. VII, 32 Harv.L.Rev. 634, 639. That nothing in United States Glue turned on the fact that the taxpayer there happened to be a domestic corporation is shown by the line of cases following it where the taxpayers were foreign corporations doing an interstate business. See cases cited on page 366 of 79 S.Ct.
^2 Apart from the considerations discussed in the text of this opinion, it is noteworthy that the Court in West, in relying on Memphis Natural Gas Co. v. Beeler, 315 U.S. 649, cited directly to page 656 of the Beeler opinion, 62 S.Ct. 857, 862, 86 L.Ed. 1090, where it was said: 'In any case even if taxpayer's business were wholly interstate commerce (italics supplied), a nondiscriminatory tax by Tennessee upon the net income of a foreign corporation having a commercial domicile there (citation), or upon net income derived from within the state (citations), is not prohibited by the commerce clause on which the taxpayer alone relies (citing among other cases United States Glue Co. v. Town of Oak Creek, supra). There is no contention or showing here that the tax assessed is not upon net earnings justly attributable to Tennessee (citations).'