Cite as: 522 U. S. 287 (1998)
Opinion of the Court
Commissioner of Taxation and Finance 10-11, appropriately acknowledge, the State must defend § 631(b)(6) with a substantial justification for its different treatment of nonresi-dents, including an explanation of how the discrimination relates to the State's justification.
B
Our review of the State's justification for § 631(b)(6) is informed by this Court's precedent respecting Privileges and Immunities Clause challenges to nonresident income tax provisions. In Shaffer v. Carter, the Court upheld Oklahoma's denial of deductions for out-of-state losses to nonresidents who were subject to Oklahoma's tax on in-state income. The Court explained:
"The difference . . . is only such as arises naturally from the extent of the jurisdiction of the State in the two classes of cases, and cannot be regarded as an unfriendly or unreasonable discrimination. As to residents, it may, and does, exert its taxing power over their income from all sources, whether within or without the State, and it accords to them a corresponding privilege of deducting their losses, wherever these accrue. As to nonresi-dents, the jurisdiction extends only to their property owned within the State and their business, trade, or profession carried on therein, and the tax is only on such income as is derived from those sources. Hence there is no obligation to accord to them a deduction by reason of losses elsewhere incurred." 252 U. S., at 57.
In so holding, the Court emphasized the practical effect of the provision, concluding that "the nonresident was not treated more onerously than the resident in any particular, and in fact was called upon to make no more than his ratable contribution to the support of the state government." Austin, supra, at 664.
Shaffer involved a challenge to the State's denial of business-related deductions. The record in Shaffer dis-
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