483 U. S. 266
June 23, 1987
To pay for the cost of highway maintenance, Pennsylvania imposed a flat tax of $36 per axle on all trucks that used Pennsylvania roads, whether registered in or out of state (there was also a $5 tax for vehicle identification). Trucks registered in-state paid registration taxes which were correspondingly reduced to offset these flat taxes. Out-of-state truckers pointed out that they used Pennsylvania roads far less than in-state truckers, and therefore paid a much higher cost per mile through this tax scheme. They sued, claiming a Commerce Clause violation.
The Court ruled 5-4 that the flat taxes did violate the Commerce Clause. Justice Stevens, writing for the majority, found the cost per mile disparity highly significant, and detrimental to interstate commerce. The majority said state taxes must conform to an “internal consistency” test, meaning that taxes are invalid if commerce would be negatively affected should all 50 states impose the same tax. Simply put, the tax was too much of a barrier to interstate trade. Stevens was forced to admit that several old cases approved of facially neutral taxes for use of state roads. These were unceremoniously overruled on the plea that the earlier Justices insufficiency valued form over substance. As in the other tax case decided the same day, the question of remedy was remanded.
O’Connor’s dissent was joined by Rehnquist and Powell. She didn’t like the casual obliteration of a long line of precedent, and pointed out that Congress had never seen fit to challenge those precedents in spite of political pressure to do so. She showed that the “internal consistency” test was a misreading of prior cases, and made the general observation that the Court had rendered it far too difficult to states to raise revenues for highway maintenance. Scalia’s dissent, joined by Rehnquist, likewise affirmed that the “internal consistency” test was an invention, and also refuted the potential contention that the axle and vehicle identification taxes were in fact facially discriminatory.
I’m genuinely surprised by how merciless the Court is toward state taxes. I would have expected far more deference, especially from the more liberal Justices. Certainly, you’ll never see them strike down a national tax on such feeble grounds.