South Central Bell Telephone Company, et al. v. Alabama et al. (526 U.S. 160)
U.S. Supreme Court · decided March 23, 1999 · Supreme Court Database (Spaeth)
- Citation
- 526 U.S. 160 · 119 S. Ct. 1180
- Decided
- March 23, 1999
- Term
- October Term 1998
- Vote
- 9–0
- Majority author
- Justice Breyer
- Issue area
- Economic Activity
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
- Constitutional ruling
- State/territorial law held unconstitutional
Opinion excerpt
Justice Breyer delivered the opinion of the Court. The basic question in this ease is whether tax Alabama assesses on foreign corporations violates the Commerce Clause. We conclude that it does. I Alabama requires each corporation doing State to pay a franchise tax based upon the firm's capital. A domestic firm, organized under the laws of Alabama, must pay tax in an amount equal to 1% of the par value of the firm’s stock. Ala. Const., Art. XII, §229; Ala. Code §40-14-40 (1993); App. to Pet. for Cert. 50a, 52a, 61a (Stipulated Facts). A foreign firm, organized under the laws of a State other than Alabama, must pay tax in an amount equal to 0.3% of the value of “the actual amount of capital employed” in Alabama. Ala. Const., Art. XII, §232; Ala. Code §40-14-41(a) (Supp. 1998). Alabama law grants domestic firms considerable leeway in controlling their own tax base and tax liability, as a firm may set its stock’s par value at a level well below its book or market value. App. to Pet. for Cert. 52a-5Ba (Stipulated Facts). Alabama law does not grant a foreign firm similar leeway to control its tax base, however, as the value of the “actual” capital upon which Alabama calculates the foreign franchise tax includes not only the value of capital stock but also other accounting items (e. g., long-term debt, surplus), the value of whieh depends upon the firm’s financial status. Id., at…
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