Joseph v. Carter & Weekes Stevedoring Company/Dissent Douglas
Mr. Justice DOUGLAS, with whom Mr. Justice RUTLEDGE concurs, dissenting in part.

First. I think the tax is valid insofar as it reaches the gross receipts from loading and unloading vessels engaged in interstate commerce.

Puget Sound Stevedoring Co. v. Tax Commission, 302 U.S. 90, 58 S.Ct. 72, 82 L.Ed. 68, makes clear that respondents' activities in loading and unloading the vessels are interstate commerce. That case followed a long line of decisions  when it held in 1937 that a State could not tax the privilege of engaging in interstate or foreign commerce by exacting a percentage of the gross receipts.

Those cases, like the present one, involved no exaction by the State of a license to engage in interstate commerce on the payment of flat license tax or otherwise. Cf. Leloup v. Port of Mobile, 127 U.S. 640, 8 S.Ct. 1380, 32 L.Ed. 311; Crutcher v. Kentucky, 141 U.S. 47, 11 S.Ct. 851, 35 L.Ed. 649; Bowman v. Continental Oil Co., 256 U.S. 642, 41 S.Ct. 606, 65 L.Ed. 1139; Cooney v. Mountain States Telephone & Telegraph Co., 294 U.S. 384, 55 S.Ct. 477, 79 L.Ed. 934; Murdock v. Pennsylvania, 319 U.S. 105, 114, 63 S.Ct. 870, 875, 891, 87 L.Ed. 1292, 146 A.L.R. 81. Nor did they, any more than the present case, concern legislation which expressed hostility to interstate commerce by discriminating against it. Cf. Best & Co. v. Maxwell, 311 U.S. 454, 61 S.Ct. 334, 85 L.Ed. 275; Nippert v. City of Richmond, 327 U.S. 416, 66 S.Ct. 586, 162 A.L.R. 844. Although all or like business of a local nature was subject to the same tax, the interstate business was granted immunity. The theory, as expressed in Philadelphia & S. M. Southern S.C.o. v. Pennsylvania, 122 U.S. 326, 336, 7 S.Ct. 1118, 1119, 1120, 30 L.Ed. 1200, was that taxation was one form of regulation and a tax on the gross receipts from interstate transportation would be 'a regulation of the commerce, a restriction upon it, a burden upon it. Clearly, this could not be done by the state without interfering with the power of congress.'

The tax in that case was a tax on the gross receipts from fares and freight for the transportation of persons and goods in interstate and foreign commerce. It was unapportioned. As we shall see, the holding in the Philadelphia & S. M. Southern S.C.o. case has not been impaired. But the principle it announced-that a tax on the gross receipts was forbidden because it was a regulation of interstate or foreign commerce-was not given full scope. For soon gross receipts taxes on businesses engaged in interstate commerce (including transportation or communication) were sustained where they were not discriminatory and where they were fairly apportioned to the commerce carried on in the taxing state.  Maine v. Grand Trunk R. Co., 142 U.S. 217, 12 S.Ct. 121, 163, 35 L.Ed. 994. Their validity was established whether they were employed as a measure of the value of a local franchise (Maine v. Grand Trunk R. Co., supra; Wisconsin & M.R. Co. v. Powers, 191 U.S. 379, 24 S.Ct. 107, 48 L.Ed. 229) or were used in lieu of all other property taxes to measure the value of the property in the State. nited States Express Co. v. Minnesota, 223 U.S. 335, 32 S.Ct. 211, 56 L.Ed. 459; Cudahy Packing Co. v. Minnesota, 246 U.S. 450, 38 S.Ct. 373, 62 L.Ed. 827; Illinois Central R. Co. v. Minnesota, 309 U.S. 157, 60 S.Ct. 419, 84 L.Ed. 670.

The distinction between an apportioned gross receipts tax and a tax on all the gross receipts of an interstate business, such as was involved in Philadelphia & S. M. Southern S.C.o. v. Pennsylvania, supra, 122 U.S. at pages 335-336, 7 S.Ct. at pages 1119, 1120, 30 L.Ed. 1200, was explained in Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 256, 58 S.Ct. 546, 549, 82 L.Ed. 823, 115 A.L.R. 944, which was decided in 1938. The Court stated that the latter type of tax could be imposed or added to 'with equal right by every state which the commerce touches, merely because interstate commerce is being done, so that without the protection of the commerce clause it would bear cumulative burdens not imposed on local commerce. * * * The multiplication of state taxes measured by the gross receipts from interstate transactions would spell the destruction of interstate commerce and renew the barriers to interstate trade which it was the object of the commerce clause to remove.' This explanation of the vice of the unapportioned gross receipts tax had been earlier suggested in Case of the State Freight Tax, 15 Wall. 232, 280, 21 L.Ed. 146, and has been accepted by our decisions since the Western Live Stock case. Adams Mfg. Co. v. Storen, 304 U.S. 307, 311, 58 S.Ct. 913, 915, 916, 82 L.Ed. 1365; Gwin, White & Prince, Inc. v. Henneford, 305 U.S. 434, 438-440, 59 S.Ct. 325, at pages 327, 328, 83 L.Ed. 272; McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33, 45-46, 60 S.Ct. 388, at pages 391, 392, 84 L.Ed. 565, 128 A.L.R. 876. In both Adams Mfg. Co. v. Storen, supra, and Gwin, White & Prince Inc. v. Henneford, supra, unapportioned gross receipts taxes as applied to the receipts from interstate sales were held invalid. It was said that the vice of such a tax was that interstate commerce would be subjected 'to the risk of a double tax burden to which intrastate commerce is not exposed * * *.' Adams Mfg. Co. v. Storen, supra, 304 U.S. at page 311, 58 S.Ct. at page 915, 916, 82 L.Ed. 1365. Or as stated in Gwin, White & Prince, Inc. v. Henneford, supra, 305 U.S. at page 439, 59 S.Ct. at page 327, 328, 83 L.Ed. 272:

'Here the tax, measured by the entire volume of the interstate commerce in which appellant participates, is not apportioned to its activities within the state. If Washington is free to exact such a tax, other states to which the commerce extends may, with equal right, lay a tax similarly measured for the privilege of conducting within their respective territorial limits the activities there which contribute to the service. The present tax, though nominally local, thus in its practical operation discriminates against interstate commerce, since it imposes upon it, merely because interstate commerce is being done, the risk of a multiple burden to which local commerce is not exposed.'

As was later stated in Southern Pacific Co. v. Gallagher, 306 U.S. 167, 175, 59 S.Ct. 389, 392, 83 L.Ed. 586, as respects taxes on gross receipts from interstate transactions or interstate transportation, 'The measurement of a tax by gross receipts where it cannot result in a multiplication of the levies is upheld.'

Under that view the Philadelphia & S. M. Southern S.C.o. case would be decided one way and the Puget Sound Stevedoring Co. case the other. As we have noted, the tax in the Philadelphia & S. M. Southern S.C.o. case was a gross receipts tax on fares and freight for the transportation of persons and goods in interstate and foreign commerce. It was unapportioned. And there was the risk of multiple taxation to which local transportation, though also taxed, was not subjected. The same was true of Ratterman v. Western Union Tel. Co., 127 U.S. 411, 8 S.Ct. 1127, 32 L.Ed. 229; Western Union Telegraph Co. v. Alabama, 132 U.S. 472, 10 S.Ct. 161, 33 L.Ed. 409; and Meyer v. Wells Fargo & Co., 223 U.S. 298, 32 S.Ct. 218, 56 L.Ed. 445.

But in the Puget Sound case any risk of multiple taxation was absent. The same is true of the present case. For in each the activity of loading and unloading was confined exclusively to the State that imposed the tax. No other State could tax the same activity.  The tax therefore is in its application nothing more than a gross receipts tax apportioned to reach only income derived from activities within the taxing State. The gross receipts reflect values attributed to the business or property wholly within the taxing state. Under the test of our recent decisions (Western Live Stock v. Bureau of Revenue, supra; Adams Mfg. Co. v. Storen, supra; Gwin, White & Prince, Inc. v. Henneford, supra), the tax would therefore seem to be unobjectionable.

It is true, however, that taxes on gross receipts of transportation companies and other interstate enterprises were held invalid in cases prior to the Puget Sound case, even though all of the activities were confined to the taxing state and could not be taxed by any other state. Galveston, Harrisburg & S.A. Ry. Co. v. Texas, 210 U.S. 217, 28 S.Ct. 638, 52 L.Ed. 1031; New Jersey Bell Tel. Co. v. State Board of Texes and Assessment 280 U.S. 338, 50 S.Ct. 111, 74 L.Ed. 463. Cf. Fargo v. Michigan, 121 U.S. 230, 7 S.Ct. 857, 30 L.Ed. 888. The explanation given in the Galveston case was that a tax on the gross receipts was a regulation of commerce, as the Philadelphia & S. M. Southern S.C.o. case held. It distinguished Maine v. Grand Trunk R. Co., supra, and the other apportionment cases on the ground that they involved taxes on property, the gross receipts being taken as the measure of the value of the property. The Court said (210 U.S. at page 227, 28 S.Ct. at page 640, 52 L.Ed. 1031):

'It appears sufficiently, perhaps from what has been said, that we are to look for a practical rather than a logical or philosophical distinction. The state must be allowed to tax the property, and to tax it at its actual value as a going concern. On the other hand, the state cannot tax the interstate business. The two necessities hardly admit of an absolute logical reconciliation. Yet the distinction is not without sense. When a legislature is trying simply to value property it is less likely to attempt to or effect injurious regulation than when it is aiming directly at the receipts from interstate commerce. A practical line can be drawn by taking the whole scheme of taxation into account. That must be done by this court as best it can. Neither the state courts nor the legislatures, by giving the tax a particular name or by the use of some form of words, can take away our duty to consider its nature and effect. If it bears upon commerce among the states so directly as to amount to a regulation in a relatively immediate way, it will not be saved by name or form.'

The Galveston case, like the Philadelphia & S. M. Southern S.C.o. case, involved a tax applicable to transportation companies alone.  Whatever may be said for the proposition that a gross receipts tax, applicable only to transportation companies, may readily become the instrument for impeding or destroying interstate commerce, that consideration has no relevancy here. For in the present case, as in the Puget Sound case, all businesses are taxed alike. There is equality throughout; and interstate commerce is taxed no heavier than local business. Political restraints, perhaps lacking when a particular type of business is singled out for special taxation, would not be absent here.

Moreover, the difference between a tax on property measured by gross receipts and a tax on the gross receipts does not appear significant in constitutional terms when the issue is one of undue burden on interstate commerce. Either might be an instrument to that end. The apportioned gross receipts tax in Maine v. Grand Trunk R. Co., supra, was in terms 'an annual excise tax for the privilege of exercising' the corporation's franchises in the State. 142 U.S. at page 219, 12 S.Ct. at page 121, 163, 35 L.Ed. 994. The Court stated, 142 U.S. at page 228, 12 S.Ct. at page 122, 163, 35 L.Ed. 994, 'a resort to those receipts was simply to ascertain the value of the business done by the corporation, and thus obtain a guide to a reasonable conclusion as to the amount of the excise tax which should be levied * * *.' As much can be said of the present case and of the Puget Sound case. While the tax is in terms one on the privilege of doing business, resort is made to the gross receipts merely to ascertain the value of the business. No vice of extraterritoriality or multiple taxation is involved. The value taxed is attributable to business within the taxing State and may not be reached by any other State. That value is, of course, augmented by the interstate character of the business. But the same is true in any apportionment case. Galveston, Harrisburg & S.A.R. Co. v. Texas, supra, 210 U.S. at page 225, 28 S.Ct. at page 639, 52 L.Ed. 1031; Cudahy Packing Co. v. Minnesota, supra, 246 U.S. at pages 455-456, 38 S.Ct. at pages 375, 376, 62 L.Ed. 827.

Respondents pay other taxes to New York City, including the usual property taxes. But so long as a tax does not discriminate against interstate commerce and is fairly apportioned to the activities in the taxing state, taxing the business twice is for constitutional purposes no different than doubling a single tax. If the whole scheme of taxation adopted by a particular State were taken into account, it might be that a case of discrimination against interstate commerce could be made out. But there is no suggestion that this is such a case. Nor can we say that the system which has been adopted here bids fair to be more harmful to interstate commerce than a system designed to raise the same amount of revenue by the use of a gross receipts tax in lieu of property taxes.

Moreover, as noted in Gwin, White & Prince, Inc. v. Henneford, supra, 305 U.S. at page 438, 59 S.Ct. at page 327, 83 L.Ed. 272, and in Adams Mfg. Co. v. Storen, supra, 304 U.S. at pages 312-313, 58 S.Ct. at pages 916, 917, 82 L.Ed. 1365, there have been other cases sustaining a gross receipts tax on interstate enterprises where the gross receipts tax fairly measured the value of a local privilege or franchise and all risk of multiple taxation was absent. Ficklen v. Taxing District of Shelby Co., 145 U.S. 1, 12 S.Ct. 810, 36 L.Ed. 601, upheld a state license tax imposed upon the privilege of doing a brokerage business within the State and measured by the gross receipts from sales of merchandise shipped into the State for delivery after sales were made. American Mfg. Co. v. St. Louis, 250 U.S. 459, 39 S.Ct. 522, 63 L.Ed. 1084, upheld a municipal license tax on the gross receipts of a manufacturer who was producing goods for interstate commerce. The tax was sustained as an excise upon the conduct of a manufacturing enterprise. Those taxes, like property taxes or taxes on activities confined solely to the taxing state (New York, Lake Erie & W.R. Co. v. Pennsylvania, 158 U.S. 431, 15 S.Ct. 896, 39 L.Ed. 1043; Utah Power & Light Co. v. Pfost, 286 U.S. 165, 52 S.Ct. 548, 76 L.Ed. 1038; Coverdale v. Arkansas-Louisiana Pipe Line Co., 303 U.S. 604, 58 S.Ct. 736, 82 L.Ed. 1043) have no cumulative effect caused by the interstate character of the business. They are apportioned to the activities taxed, all of which are intrastate. Plainly the loading and unloading involved in the present case are activities as local in character as the brokerage activities in the Ficklen case or the manufacturing business in the American Mfg. Co. case. One has as close and as immediate a relationship to interstate commerce as the other. Cf. United States v. Darby, 312 U.S. 100, 657, 61 S.Ct. 451, 85 L.Ed. 609, 132 A.L.R. 1430. If one gives rise to a taxable event for which the State may exact a portion of the gross receipts, it is difficult to see why the other does not. The practical effect on interstate commerce is the same in each.

In McGoldrick v. Berwind-White Coal Mining Co., supra, 309 U.S. at page 52, 60 S.Ct. at pages 395, 396, 84 L.Ed. 565, 128 A.L.R. 876, we held that a sales tax on the purchase of property at the end of its interstate journey was not to be distinguished from a tax on the property itself. For taxation of the sale was merely taxation of the exercise of one of the constituent elements of the property. Unless formal doctrine is to be restored to this field, the label which the tax bears should not be controlling; and the tax should be sustained unless it evinces hostility to interstate commerce or in practical operation obstructs or impedes it. Either result may obtain whether the tax be called a property tax or a gross receipts tax. As McGoldrick v. Berwind-White Coal Mining Co., supra, 309 U.S. at page 48, 60 S.Ct. at page 393, 84 L.Ed. 565, 128 A.L.R. 876, states:

'Certain types of tax may, if permitted at all, so readily be made the instrument of impeding or destroying interstate commerce as plainly to call for their condemnation as forbidden regulations. Such are the taxes already noted which are aimed at or discriminate against the commerce or impose a levy for the privilege of doing it, or tax interstate transportation or communication or their gross earnings, or levy an exaction on merchandise in the course of its interstate journey. Each imposes a burden which intrastate commerce does not b ar, and merely because interstate commerce is being done places it at a disadvantage in comparison with intrastate business or property in circumstances such that if the asserted power to tax were sustained, the states would be left free to exert it to the detriment of the national commerce.'

Measured by that test, the present tax is not invalid. 'Even interstate business must pay its way * * *.' Postal Telegraph-Cable Co. v. City of Richmond, 249 U.S. 252, 259, 39 S.Ct. 265, 266, 63 L.Ed. 590. A non-discriminatory gross receipts tax, apportioned to local activity in the taxing state, is to be judged by its practical effect. As we stated in Wisconsin v. J. C. Penney Co., 311 U.S. 435, 444, 61 S.Ct. 246, 249, 85 L.Ed. 267, 130 A.L.R. 1229:

'The Constitution is not a formulary. It does not demand of states strict observance of rigid categories nor precision of technical phrasing in their exercise of the most basic power of government, that of taxation. For constitutional purposes the decisive issue turns on the operating incidence of a challenged tax. A state is free to pursue its own fiscal policies, unembarrassed by the Constitution, if by the practical operation of a tax the state has exerted its power in relation to opportunities which it has given, to protection which it has afforded, to benefits which it has conferred by the fact of being an orderly, civilized society.'

All local taxes on interstate businesses affect to some degree the commerce and increase the cost of doing it. Matters of form should not be decisive if the tax threatens no harm to interstate commerce.

Prior to McGoldrick v. Berwind-White Coal Mining Co., supra, it had long been said that 'Interstate commerce cannot be taxed at all, even though the same amount of tax should be laid on domestic commerce, or that which is carried on solely within the state.' Robbins v. Taxing District of Shelby Co., 120 U.S. 489, 497, 7 S.Ct. 592, 596, 30 L.Ed. 694. That was the philosophy of the Philadelphia & S. M. Southern S.C.o. case. And see Fargo v. Michigan, supra, 121 U.S. at pages 246-247, 7 S.Ct. at page 864, 30 L.Ed. 888. But McGoldrick v. Berwind-White Coal Mining Co., supra, did not adhere to that formal doctrine. It followed Wiloil Corporation v. Pennsylvania, 294 U.S. 169, 55 S.Ct. 358, 79 L.Ed. 838, and upheld a 'non-discriminatory tax on the sale to a buyer within the taxing state of a commodity shipped interstate in performance of the sales contract, not upon the ground that the delivery was not a part of interstate commerce * * * but because the tax was not a prohibited regulation of or burden on that commerce.' Illinois Natural Gas Co. v. Central Illinois Public Service Co., 314 U.S. 498, 505, 62 S.Ct. 384, 386, 387, 86 L.Ed. 371. The test adopted was whether the tax on the local activity as a practical matter was being used to place interstate commerce at a competitive disadvantage or obstruct or impede it. That should be the approach here; 'the logic of words should yield to the logic of realities.' Mr. Justice Brandeis dissenting, Di Santo v. Pennsylvania, 273 U.S. 34, 43, 47 S.Ct. 267, 270, 271, 71 L.Ed. 524. The failure of the Court to adhere to the philosophy of our recent cases corroborates the impression which some of us had that Freeman v. Hewit, 329 U.S. 249, 67 S.Ct. 274, marked the end of one cycle under the Commerce Clause and the beginning of another.

Second. I think the tax is unconstitutional insofar as it reaches the gross receipts from loading and unloading vessels engaged in foreign commerce. Such a tax is repugnant to Article I, § 10, Clause 2 of the Constitution which provides that 'No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws * * *.

Loading and unloading are a part of 'the exporting process' which the Import-Export Clause protects from state taxation. See Thames & Mersey Marine Ins. Co. v. United States, 237 U. . 19, 27, 35 S.Ct. 496, 499, 59 L.Ed. 821, Ann.Cas.1915D, 1087. Activity which is a 'step in exportation' has that immunity. Spalding & Bros. v. Edwards, 262 U.S. 66, 68, 43 S.Ct. 485, 486, 67 L.Ed. 865. As the Court says, loading and unloading cargo are 'a 'continuation of the transportation." Indeed, the commencement of exportation would occur no later. See Richfield Oil Corp. v. State Board of Equalization, 329 U.S. 69, 67 S.Ct. 156. And the gross receipts tax is an impost on an export within the meaning of the Clause, since the incident 'which gave rise to the accrual of the tax was a step in the export process.' Richfield Oil Corp. v. State Board of Equalization, supra.

As we pointed out in that case, the Commerce Clause and the Import-Export Clause 'though complementary, serve different ends.' Since the Commerce Clause does not expressly forbid any tax, the Court has been free to balance local and national interests. Taxes designed to make interstate commerce bear a fair share of the cost of local government from which it receives benefits have been upheld; taxes which discriminate against interstate commerce, which impose a levy for the privilege of doing it, or which place an undue burden on it have been invalidated. But the Import-Export Clause is written in terms which admit of no exception but the single one it contains. Accordingly a state tax might survive the tests of validity under the Commerce Clause and fail to survive the Import-Export Clause. For me the present tax is a good example.

Mr. Justice MURPHY joins in this dissent except as to the second part, as to which he is of the opinion that the tax in relation to the gross receipts from loading and unloading vessels engaged in foreign commerce is constitutional. 

Notes