Allied-Signal, Inc. v. Director, Div. of Taxation, 504 U.S. 768, 24 (1992)

Page:   Index   Previous  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  Next

Cite as: 504 U. S. 768 (1992)

O'Connor, J., dissenting

that States tax only business activities they can reasonably claim to have helped support should depend on something more than manipulations of corporate structure. See Mobil Oil Corp. v. Commissioner of Taxes of Vt., 445 U. S. 425, 440 (1980) ("[T]he form of business organization may have nothing to do with the underlying unity or diversity of business enterprise"); Fargo v. Hart, 193 U. S. 490 (1904) (refusing to find unitary business even though single owner); Adams Express Co. v. Ohio State Auditor, 165 U. S. 194, 222 (1897) (same).

New Jersey suggests that we should presume that all the holdings of a single corporation are mutually interdependent because common ownership will stabilize profits from the commonly held businesses, generating flows of value between them that make them part of a unity. While it may be true that many corporations attempt to diversify their holdings to avoid business cycles, we have refused to presume a flow of value into an in-state business from the potential benefits of being part of a larger multistate, multi-business corporation. The reason for this is simple: Diversification may benefit the corporation as an entity without necessarily affecting the business activity in the taxing State and without requiring any support from the taxing State. See Wisconsin v. J. C. Penney Co., 311 U. S. 435, 444 (1940) (State may not tax where it has not "given anything for which it can ask return").

I also agree with the Court that there need not be a unitary relationship between the underlying business of a taxpayer and the companies in which it invests in order for a State to tax investment income. See ante, at 787. "[A]ctive operational control" of the investment income payor by the taxpayer is certainly not required. ASARCO Inc. v. Idaho Tax Comm'n, 458 U. S. 307, 343 (1982) (O'Connor, J., dissenting). Insofar as a requirement that the investment payor and payee be unitary was suggested by our decisions in ASARCO and F. W. Woolworth Co. v. Taxation and Reve-


Page:   Index   Previous  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  Next

Last modified: October 4, 2007