318
Opinion of the Court
We do not question Barclays' assertion that multinational enterprises with a high proportion of income taxed by jurisdictions with wage rates, property values, and sales prices lower than California's face a correspondingly high risk of multiple international taxation. See Container Corp., 463 U. S., at 187; cf. id., at 199-200 (Powell, J., dissenting) (describing how formulary apportionment leads to multiple taxation). Nor do we question that foreign-based multinationals have a higher proportion of such income, on average, than do their United States counterparts. But Container Corp.'s approval of this very tax, in the face of a multiple taxation challenge, did not rest on any insufficiency in the evidence that multiple taxation might occur; indeed, we accepted in that case the taxpayer's assertion that multiple taxation in fact had occurred. Id., at 187 ("[T]he tax imposed here, like the tax in Japan Line, has resulted in actual double taxation, in the sense that some of the income taxed without apportionment by foreign nations as attributable to appellant's foreign subsidiaries was also taxed by California as attributable to the State's share of the total income of the unitary business of which those subsidiaries are a part."); see also id., at 187, n. 22.
Container Corp.'s holding on multiple taxation relied on two considerations: first, that multiple taxation was not the "inevitable result" of the California tax; 17 and, second, that the "alternativ[e] reasonably available to the taxing State" (i. e., some version of the separate accounting/"arm's length"
17 The Court stated: "[T]he double taxation in this case, although real, is not the 'inevitabl[e]' result of the California taxing scheme. . . . [W]e are faced with two distinct methods of allocating the income of a multinational enterprise. The 'arm's-length' approach divides the pie on the basis of formal accounting principles. The formula apportionment method divides the same pie on the basis of a mathematical generalization. Whether the combination of the two methods results in the same income being taxed twice or in some portion of income not being taxed at all is dependent solely on the facts of the individual case." Container Corp., 463 U. S., at 188 (citation omitted).
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