Associated Industries of Mo. v. Lohman, 511 U.S. 641 (1994)

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certiorari to the supreme court of missouri

No. 93-397. Argued March 28, 1994—Decided May 23, 1994

Missouri's uniform, statewide "additional use tax" on goods purchased outside the State and stored, used, or consumed within the State is purportedly designed to "compensate" for the taxes imposed by local jurisdictions within the State on in-state sales of goods. Local sales tax rates, however, vary widely, and in many jurisdictions the use tax exceeds the sales tax. Petitioners—a trade association representing businesses that must collect the additional use tax and a manufacturer that pays it—brought this action in state court, contending that the tax scheme impermissibly discriminates against interstate commerce in violation of the Commerce Clause. The State Circuit Court granted respondents summary judgment. In affirming, the Supreme Court of Missouri reasoned that, because the tax was designed to even exactions on intrastate and interstate trade, the tax scheme should be analyzed under the "compensatory tax" doctrine. The court concluded that, given the high average rate of local jurisdictions' sales taxes, the overall effect of the use tax scheme across the State was to place a lighter aggregate tax burden on interstate commerce than on intrastate commerce, even though in some localities the use tax might exceed the sales tax. The court determined that, in such circumstances, there was no discrimination against interstate commerce on a statewide basis and held that the use tax scheme did not violate the Commerce Clause.

Held: Missouri's use tax scheme impermissibly discriminates against interstate commerce in those localities where the use tax exceeds the sales tax. Pp. 646-657. (a) Although the compensatory tax doctrine saves from constitutional infirmity a facially discriminatory tax that imposes on interstate commerce the equivalent of an "identifiable and substantially similar tax on intrastate commerce," Oregon Waste Systems, Inc. v. Department of Environmental Quality of Ore., ante, at 103, Missouri's use tax scheme runs afoul of the basic requirement that, for a tax system to be "compensatory," the burdens imposed on interstate and intrastate commerce must be equal, see, e. g., Henneford v. Silas Mason Co., 300 U. S. 577, 584-587. Whether the use tax is equal to (or lower than) the local sales tax is a matter of fortuity in Missouri, depending entirely on the locality


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