464
Opinion of the Court
Process and Commerce Clauses . . . do not allow a State to tax income arising out of interstate activities—even on a proportional basis—unless there is a ' "minimal connection" or "nexus" between the interstate activities and the taxing State, and "a rational relationship between the income attributed to the State and the intrastate values of the enterprise." ' " Id., at 165-166 (quoting Exxon Corp., 447 U. S., at 219-220, in turn quoting Mobil Oil Corp., 445 U. S., at 436, 437). Cf. International Harvester Co. v. Department of Treasury, 322 U. S. 340, 353 (1944) (Rutledge, J., concurring in part and dissenting in part) ("If there is a want of due process to sustain" a tax, "by that fact alone any burden the tax imposes on the commerce among the states becomes 'undue' "). The parties concede that the relevant income here—that which falls within the scope of the statutory phrase "not allocable by formula"—is income that, like the New Zealand sheep farm in our example, by itself bears no "rational relationship" or "nexus" to California. Under our precedent, this "nonunitary" income may not constitutionally be taxed by a State other than the corporation's domicile, unless there is some other connection between the taxing State and the income. Allied-Signal, 504 U. S., at 772-773.
California's statute does not directly impose a tax on nonunitary income. Rather, it simply denies the taxpayer use of a portion of a deduction from unitary income (income like that from tin can manufacture in our example), income which does bear a "rational relationship" or "nexus" to California. But, as this Court once put the matter, a " 'tax on sleeping measured by the number of pairs of shoes you have in your closet is a tax on shoes.' " Trinova Corp. v. Michigan Dept. of Treasury, 498 U. S. 358, 374 (1991) (quoting Jenkins, State Taxation of Interstate Commerce, 27 Tenn. L. Rev. 239, 242 (1960)). California's rule measures the amount of additional unitary income that becomes subject to its taxation (through reducing the deduction) by precisely the amount of nonunitary income that the taxpayer has received. And for that
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